Glenn Cohen: Efficient Home Sales
Position: Chairman, YHD Foxtons
Contribution: His real-estate agency combines traditional services with Web-based tools such as virtual tours, and commissions as low as 2% (vs. the typical 6%) to attract a growing list of customers
Challenge: To gain share in a fragmented industry of independent agents by branching from its East Coast base into other major metropolitan markets
When Glenn E. Cohen sold his townhouse in 1992, it left a lasting impression. "I paid a fat 6% commission and never forgot that," he recalls. In 1999 he founded New Jersey-based YHD (standing for "your home direct"), a real-estate service designed to use the Web to improve the efficiency of what Cohen regarded as a "backward industry." In 2001, London-based real-estate brokerage Foxtons invested $20 million in YHD. The new name, YHD Foxtons, started being used in 2002.
Through its Web site, YHD Foxtons provides virtual tours of all properties it lists. An online personal organizer allows buyers and sellers to keep notes on the homes that interest them and details related to the entire process. YHD employs a network of specialists -- including lawyers and home inspectors -- who handle many home-buying steps. It even has an in-house finance arm.
For Cohen, whose father was in the New Jersey real-estate business, the goal is to make home-selling less expensive and faster while turning a profit. So far, he's doing that. Some 75% of YHD's sales are generated by a 2% commission. "Margins are very healthy -- far better than for traditional real-estate firms, which earn 6% or some ridiculous number," Cohen says. YHD started out serving only New Jersey, but it expanded to New York and Fairfield County, Conn., earlier this year.
Its listings still make up a small fraction of the area's overall real-estate sales, but Cohen isn't daunted. The 40-year-old New Jersey native predicts that he'll be in every major metropolitan area in the U.S. within five years. He notes that industries from car manufacturing to banking have over the years become models of efficiency, while a similar revolution has yet to arrive in real estate.
"There's no standardization of service, no centralization of operations, and pricing is terrible," he says. "It's an entrepreneur's dream."
Making the selling or buying of a home simpler and cheaper is no small task. If YHD Foxtons can achieve that and at the same time grow, it may show realtors to way to the 21st century.
By Amy Tsao in New York