Dave Lawrence
on

When Grant and Kelly Clayton started a FULL SERVICE brokerage that only charges 1% commission, everyone said he was crazy.

"You'll go broke."

"You'll ruin the industry."

"You'll never make it"

This is just a tiny glimpse into the kind of pushback Grant deals with every day.

But with a bulletproof conviction in the discount brokerage model and a solid path toward hitting 140+ home sales this year for his team, he simply isn't fazed.

One of our favorite things about interviewing our amazing customers at Follow Up Boss is learning about all the different ways to win in real estate. And whether you agree with it or not, discounted listings is one of the business models quickly picking up steam.

So when Grant said he'd be willing to give us the discounter's side of the story, we jumped at the chance to learn more.

Ready? Let's dive in.

Table of contents

  1. The big idea: An Amazon approach to running a real estate business
  2. How it works: Behind the scenes at a successful discount brokerage
  3. The challenges of running a hyper-lean team
  4. What's next?

The big idea: An Amazon approach to running a real estate business

When Grant and Kelly Clayton moved to Covington, Louisiana, they noticed the homes there were selling like hot cakes.

Grant's dad was a commercial real estate developer. Grant, a former basketball coach had grown up around real estate and the fire was immediately lit.

He and Kelly decided to get their licenses and become Realtors. 

But the dream became a hard-hitting reality the moment Grant and Kelly realized they were giving up half their commissions to their brokerage. 

"Within a year we knew we were going to leave," he remembers.

"We were kind of at a crossroads. We went to a brokerage with dramatically better agent commission splits so we could either continue to charge what everybody else charges and just have more profit per transaction, or we could charge less money and try to do a lot more transactions. It seemed to us that the more modern companies like Amazon, Netflix and so many others, all focused on volume and value because that's what the modern consumer wants," Grant reasoned.

They took the leap and started discounting their listings.


Grant can handle the haters. Source: 1% Lists via Facebook

"We were at a party and there was a Keller Williams buyer's agent there and they made a comment to somebody else at the party saying, 'Oh, they charge less money to list houses sometimes, they shouldn't be doing that.'"

It wasn't mean or backhanded—just one of those hotly-debated real estate topics right up there with how much you should pay for leads and what to do about Zillow Instant Offers. And it got Grant thinking. 

He went home to Kelly and the two of them hashed it out.

Today's real estate customer had two main choices:

  1. Go FSBO
  2. Pay 6% commission

They decided to become option #3.

If we are going to offer a discount to our clients, we might as well tell everyone about it. "So that was our goal, become a full service real estate company, but only charge 1% for it."

Got questions? We did too.

How it works: Behind the scenes at a successful discount brokerage

As you might imagine, getting the math right is crucial to the success of Grant's business.

Rather than renting a massive office on Main Street, Grant and Kelly keep their overhead as lean as possible.

"We run a company that will do over 100 million in sales this year and we have an office that's smaller than most people's bedrooms," laughs Grant.

Most people would scoff at the idea of meeting a customer in an office that size. But according to Grant, it's not as silly as it sounds.

"If you stop and think about it, a lot of the expenses that real estate brokerages have aren't expenses that help sell properties. They're there to recruit agents and do marketing for the brokerage itself," he explains.

Grant and Kelly gauge every single expense by the following criteria:

  • Will it make our agents more profitable?
  • Will it really help our clients?

If it doesn't tick the above boxes, they don't buy.

"Our office expenses are $400 dollars a month including all utilities. That's all we need," says Grant. "It's just not where business is done anymore."

The office at 1% Lists has just enough room for Kelly and a couple of admins.

Grant and his agents are out in the field producing.


There's still plenty of room to play at the 1% Lists office. Source: 1% Lists via Facebook

The secret to zero-overhead lead gen

For sellers, it seems too good to be true. For Realtors it seems straight-up ludacris.

But for Grant, the 1% listing model is the only way to stay relevant in an industry being relentlessly disrupted by outside influences.

"Everybody else in the industry is trying to save their clients money. Lenders are offering better mortgage rates, home inspectors are offering better prices for home inspections. But if you interview ten different Realtors, somehow they all still charge 6%."

The way he sees it, if you're not offering value first and foremost, you're running a race to the bottom. And while it may sound radical, this core philosophy works wonders for creating simple, cost-effective lead generation.

Grant's approach to lead gen falls into two very distinct categories:

  1. 100% digital
  2. 100% old-school

"We actually put door hangers on doors," says Grant with a chuckle.

This summer, Grant hired a bunch of local teenagers to "carpet bomb" neighborhoods with his door hangers. It's a slightly more modern approach than your classic door-knocking, but one that definitely helps spread the word about his brand.

On the new school side of things, the team does a lot of work with targeted Facebook marketing going after both buyers and sellers based on the demographics in their geographic area.

They also do some SEO and Google pay-per-click.

No print, no open houses.

"Today, almost every house sells online. If you include signs in the yard, 98% of houses sell without open houses and without print media. So basically, print media and open houses now only account for 2% of all sales. Everything else is happening online. My 85 year-old clients whip our their iPads to go look for houses," he laughs.

Grant's agents focus on standing out on social media, one of the few digital marketing strategies that doesn't require a boatload of money.


Source: 1% Lists via Facebook

When a 1% Lists agent goes on a listing appointment they take the time to show their clients statistical data as to where home sales originate. It is important they understand the odds of selling the house through the MLS, real estate websites like Zillow, and other avenues. It is also important for them to understand which of these marketing areas their agent can actually be GOOD at and which ones are impossible to influence like IDX Feeds.  

The trick, according to Grant, is to be completely transparent about the math and marketing behind every listing.

Grant and his team put their sellers on the MLS, pay for professional photography and handle all the paperwork. "They get syndicated out to every website, including all the other brokerage websites, and then we go to work on social media," he explains.

Right now, Facebook is the sweet spot for Grant and his three-agent team. Together, they're on track to sell between 140+ houses this year.

"Most agents have no clue how much more profitable you can be doing this. We will go from $37 million in sales last year to probably over $100 million this year," he says. 

In February alone, they listed $10 million in properties, in a population area of just 100,000 people.

"It's nuts what we're able to accomplish."

Because Grant and his team have secured so many listings, they organically get a lot more buyers—buyers who typically pay between 2 and 3%.

"We'll list five, six, seven, eight houses a week sometimes and then we'll pull one or two buyers a week from those. I think if most teams were doing that many transactions, which is just about a transaction every other day, they'd be pretty happy."

By only charging 1% on the listing side, Grant and his customers can get a lot more aggressive in incentivizing other agents to bring a buyer by offering higher than average buy-side commissions.

Sell your business model, convert leads faster.

"Most teams spend a ton of money on Zillow and Realtor.com leads," says Grant.

"We don't spend a single dollar on it. We just haven't found a need to. We chase listings and we chase for sale by owners and expired and withdrawn listings. But we do it tactfully."

There is no hard sales and no aggressive chasing in the 1% Lists' lead conversion playbook.

"That's one of the perks of running a discount real estate brokerage. People seek us out as opposed to us seeking people out. If you look at the bigger companies where everybody's charging the same thing and doing the same thing, you need ten thousand agents because the only way to get deals is the network. In our case, people are seeking us out because we're more cost effective and we still offer a great product," he explains.

Grant divides leads and agents into groups inside Follow Up Boss, based on area. 

"We'll only have three or four agents in a population area of 1.3 million people like New Orleans, for example. Then we'll divide those people up into groups and tag them using the Follow Up Boss tagging system. Anybody who reaches out for a house in their area automatically gets tagged to an agent that is very familiar with that area, and it's the same process from a listing standpoint."


From there, Grant's job is to make sure the agents are following up. 

And he has no bones about kicking an agent out of the Round Robin if they aren't doing their follow up.

"With the 'Task' system inside Follow Up Boss, you get a notification in your phone. It's so easy. You'd almost have to try to be lazy enough not to follow up."

It's a simple system that seems to be doing the trick.

"Our conversion rate is as close to 100% as possible and I would love to say it's because we're so awesome, but it's not that. It's because we have a great product."

Most of Grant's incoming leads have seen his website. They've read his 1% value proposition. They just want to make sure there's no catch.

"It kind of sells itself," says Grant.

Because of his own experience with a top producing real estate team, Grant is determined to bypass the red tape and make the sales process as simple as possible for his agents.

"You never ever have to over promise and under deliver. Just spell out what you do. That's it."


"What I find interesting is that companies seem to be going in one of two directions. It's either Saks Fifth Avenue, complete Mercedes Benz over-the-top service, but you're paying a ton of money for it. Or, you're going after the people who want value. I personally think the companies that people are most loyal to are the ones where they don't know anybody. I mean, tell me under what circumstances you would stop shopping on Amazon or cancel your Netflix account despite the fact that you have no personal connection to those companies," he explains.

The way he sees it, real estate is the only industry where no one's trying to provide the best value and the best service. 

And no matter how "crazy" it may sound to your average Realtor, that's the gap Grant is determined to fill.

The challenges of running a hyper-lean team

A transaction every other day is A LOT to keep up with.

We wanted to know how Grant copes. He had two words for us: 

"Mary and Kelly”

Grant’s team’s new admin is a complete and total rockstar. Mary keeps my team on track, she helps Kelly stay on top of all the listings pouring in. My wife Kelly is the broker and she has done an amazing job overseeing the company making sure everyone is in compliance and all of our agents and clients are taken care of properly.  

When you think about it, everytime we grow Kelly’s job gets exponentially bigger and we are growing at a sales rate of 200-300% every year as well as adding more agents. It’s a lot to keep up with but she somehow she does and she gets better at it every day. 

Grant also provides his agents with a complete business system including warm website leads, branded email addresses, document management through Dotloop, and more. 

"The goal is to have almost no expenses for our agents so that they're very profitable even charging 1%," he explains.

Of course, it doesn't hurt that Grant and Kelly's agents take home a whopping 85% of their commissions. But with an aggressive split like that, you need your agents do be doing as much business as possible.

"The hard part was learning how to manage all this."

To handle the increase in volume, Grant had to move quickly to streamline his operations and train his agents to go completely paperless.

"We were originally with a CRM company that provided us with a website and lead capturing tool and all that stuff in one. The problem with that is they basically give you a template website that's designed to capture buyers and that's not our thing. We don't want people to come to our website and immediately think, 'Oh, they want me to search for homes.'"

"If you go to our website, the first thing you'll see is a slider showing how much money you'll save by working with us," he explains.


Source: 1% Lists

"We wanted a very custom website designed to capture more sellers and we needed something on the back end to manage everything. The one thing we liked about the all-in-one system is that it was very seamless and we needed something that was on par with that but with our own custom site," says Grant.

But finding a CRM that would let him do both wasn't easy.

"We searched for what felt like forever and finally came across Follow Up Boss and it's been fantastic. Now I get to have my own custom website, but I also have a really, really good CRM that integrates well. It's as close to perfect as possible," he says.

Keeping the team motivated and accountable

"I think one of the ways my team stays motivated is because they're not dealing with non-stop rejection for seven hours a day, our product is pretty easy to sell" laughs Grant.

“Thankfully the guys on my team are very self motivated. Cody Currier joined me about 2 years  ago and has done an amazing job. Scott McLaughlin came over to us early this year and he was a top producing agent for years that thrived with the 6% business model so this is like shooting fish in a barrel for him. “Uncle” Tony Bertuccini is making great progress in Baton Rouge for my team as well.”

We also have over a dozen individual agents doing their thing throughout central, south, and east Louisiana. 

Our culture is very different from the classic high-pressure office environment.

"It's just a very laid back thing. You know it's not push, push, push, push, push. You don't have to kill yourself every day. I will never make that video, 'You're not killing yourself enough.' It's really just like, look here are your tools. You have a product that nobody else can touch. All you gotta do is let the world know. If you want to do 30 deals a month its possible with this product, if you just want to do a few and offer great value to your clients that’s fine too"

Grant also created step-by-step marketing plans based on where his agents are in their business. "I just wanted to make it extremely easy and approachable for everyone," he explains.

But even with his super-solid backend systems and industry-beating commissions splits, Grant still meets agents who just can’t wrap their head around his model.

"The problem we have with Realtors as of right now is that they've always thought they are valuable because they put houses on the MLS, because they're the only ones that can do it."

But with today's tech, "Listing houses is not hard work."

For Grant, building a roof in the Louisiana heat is hard work. Being a plumber is hard work. Selling real estate, on the other hand, is finally becoming the white collar job is should be.

"If you had to get a major surgery, would you go seek out the surgeon who's like, 'Man I'm the hardest working surgeon there is?' No. You're looking for the guy or the girl with the biggest brain that knows what the heck they're doing the best."

Grant predicts that as technology continues to disrupt the industry, and as agents and customers start to move away from large brokerages, the demand for better value in real estate will only increase.

What's next?

"The next step for us is to start franchising," says Grant.

Grant and Kelly have already been approached by private investors looking to get on board with the disruptive 1% business model. The plan is to start by building a bigger presence in New Orleans and Baton Rouge, prove the market, then rinse and repeat.

"It's definitely in the works for us. The hardest part is finding brokers in other areas because you can imagine, with us being who we are, it's tough. Target doesn't invite Walmart to come hang out. That's our biggest hurdle right now," he explains.

Only time will tell exactly how the future of the 1% Lists brand will evolve, but one thing's for sure: It's going to be a real estate franchise like no other.