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Real Estate

Cardinals of a different feather: Inside Samson Properties’ unique model

Samson Properties offers 100% commissions, relying on title for revenue. Can this work?

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Samson Properties CEO Donny Samson

Donny Samson is quite aware of this particular moment in residential real estate history.

“I don’t have any headline-worthy goals like 20% in 20 major markets,” Samson said about future plans. “But I think we’re going to bring our models to more and more states.”

Samson is the CEO of Samson Properties, a rapidly growing Northern Virginia-based brokerage. He is alluding to Compass CEO Robert Reffkin, who failed to deliver on a stated goal to have 20% market share in 20 major American markets by 2020. Samson has a different business model and branding than Compass, but both brokerages identify as “agent-centric.”

Samson is so agent-centric, in fact, that its agents receive a 100% commission split and services like training, office desks, and help with marketing. In return, the Samson agent is asked – not told, asked – to refer clients to Cardinal Title Group, a title insurer wholly owned by Samson.

“I try to kill them with kindness,” Samson said, giving agents “the resources to build that relationship” with Cardinal Title.

From one perspective, the U.S. real estate agent is in peril. The Department of Justice Antitrust Division is in its ninth month of a broad inquiry into what consumers pay on real estate commissions, which DOJ officials appear to think is too much. DOJ has swooped into lawsuits against the National Association of Realtors and top brokerage firms.

But RealTrends’ recently unveiled list of the top brokerages in the country, for which Samson is 19th by sales volume, revealed a different outlook. The fastest-growing brokerages, from full-service outfits like Compass to companies like Samson, Fathom Realty, and United Real Estate, businesses that RealTrends’ senior advisor Steve Murray call “low-cost brokerage models,” give agents more commission money and more services than five or 10 years ago with less upfront fees.

Samson Properties is perhaps the ultimate example of the agent – feared to be left for dead – seemingly in the driver’s seat.

“Donny Samson has been transparent about what he’s doing,” said Don Gurney, a longtime Century 21 broker in Pasadena, Maryland, who has observed Samson Properties’ regional rise. “It’s going to be interesting to see how he keeps making it without hitting a wall.”

The differentiator

Donny Samson’s father, Danny Samson, founded Samson Properties in Chantilly, Virginia, in 2001.

“My dad and a few of his buddies wanted to start a company where they played by their own rules,” Donny Samson recalled. “What my dad had was a passion for recruiting.”

Donny Samson was the company’s 25th agent when he joined the family business in 2003, he said. Today, Samson reports that it has 5,300 agents with 21 offices in Virginia, 11 in Maryland, and one in the District of Columbia.

“Recruiting wise, they have certainly sent me a lot of postcards and emails,” said Mynor Herrera, a Keller Williams broker in Bethesda, Maryland.

“There’s a running line in my office,” said one Washington, D.C. agent, who requested anonymity in order to speak candidly about a competitor. “Has Danny or Donny Samson invited you yet to play golf?”

At first, Samson Properties’ pitch was fairly standard for a low-cost brokerage model of the 2000s. They let agents keep 80% of each commission, while retaining 20% for the brokerage. That changed amid the Great Recession. In 2009, Samson Properties, still led by Danny Samson, created Cardinal Title Group, and soon thereafter gave agents a 100% commission.

“We were a smaller company, and we needed a little bit more of a differentiator,” Donny Samson said.

Donny Samson claimed that his brokerage began turning the corner in 2016, around when he took the position of chief operating officer. “We were able to make enough money from the title,” Samson said, “to provide services and support for agents.”

In 2019, Donny Samson took over the company from his father. Donny Samson claims that his company is profitable. But he declined to provide net income or other financial figures.

Flying with the cardinals

It is difficult to ballpark what Samson Properties pays in expenses, but here are some costs the company incurs. According to Donny Samson, the 5,300 agents are assisted by a media team of three people, a marketing team of 10, an agent service staff of 10, and 30 brokers on staff who also give training. There is also a concierge staff of 20 people, and an “in-house print center” for marketing and other materials. Also, Samson Properties foots the bill for agents to use KVCore, software to create websites, interact with customers, and process administrative work.

Samson also employs at least 100 staff at Cardinal Title, Donny Samson said.

The 32 offices represent a leasing cost but also subleasing revenue. Each locale, Donny Samson explained, has free office desks. But about 450 agents pay between $250-$500 a month to rent their own private office, Samson said. That’s revenue that tallies to approximately $2 million a year.

Here’s where things get interesting.

Samson reported $9.6 billion in 2021 sales volume, a 71% leap from 2020. The company totaled 20,210 in 2021 transaction sides (If you represent just one side of the deal, buyer or seller, that counts as a side). According to Donny Samson, the average Samson-brokered home sale in 2021 was for $475,000, over $100,000 more than the national median sales price, but hundreds of thousands of dollars less than the Northern Virginia median sales price.

Now, for any brokerage, these large numbers bear a small relation to revenue, much less net income. Typically, the more telling number is sales volume. A brokerage gets a percentage of the percentage their affiliated agent gets from the final price of a home sale. But for Samson, what matters more is the number of deals. Each deal is a chance to hawk Cardinal Title.

An agent can choose to recommend Cardinal Title, and that recommendation mostly falls to the buyer’s agent. “Buyers get to choose title in our region, so we have a better chance of title business on those transactions,” Samson said.

Still, the CEO said he does not push agents to represent buyers. “We don’t encourage our agents one way or another,” Samson said. “Listings have a ton of value as well. They lead to additional listings, increased brand awareness, increased market share and buyers that come from having those listings.”

Occasionally, particularly in a high-demand market, the listing agent can leverage their choice of title insurer. The seller’s agent, Samson agent William Restrepo noted, can say, “Hey, Mr. buyer, if you want to make your offer a bit better, you should use Cardinal Title company because it’s the one we want to work with.”

For the Samson business model to work, a consumer must also agree to use Cardinal Title.

This is no sure thing. Jason Secrest, a Coldwell Banker agent in Washington, D.C., said he warns clients not to use Cardinal, because it can be “10-20% more” than other title insurers.

Donny Samson said that Cardinal Title’s price is competitive but declined to give an average price per transaction. Agents who work for Samson estimate the price at a little over $2,000 per deal.

Ultimately, Samson claims it has a capture rate of 60%, meaning a buyer represented by a Samson agent uses Cardinal Title 60% of the time. 

Also, about 90% of Cardinal Title’s business comes from Samson agent referrals.

Now, generally speaking, for brokerages this is really good. Steve Murray of RealTrends said that he has spoken to various brokerage firms over the years about title capture rate, and places the average rate at 30-40%. This rate is dependent, Murray noted, on state-by-state regulations and whether attorneys have to be involved, or not. 

That complicates the picture for Samson as attorneys are typically part of the title insurance in Maryland, but not in Virginia.

Samson also snares a $345 fee per sales, which may generate an additional $7 million in 2021 revenue (20,210 sides multiplied by $345). And Samson agents who have yet to meet the annual performance goal of either $3 million a year in sales volume or eight transactions, must pay an additional $495 per sale, which adds a few million more dollars. 

Also, Samson owns a 5% stake in regional mortgage lender First Heritage Mortgage of Fairfax, Virginia.

The title revenue plus agent transaction fees plus office rental plus earnings in equity from First Heritage is an accounting of Samson’s revenue sources. It would appear to generate between $35 million and $45 million annually.

The smallest publicly traded residential real estate company by revenue is RE/MAX, which reported $330 million in 2021 revenue. 

Wait, do Samson agents like this?

The early 1970s was a time when many parts of the economy were being regulated by the federal government for the first time – including a ban on the kickbacks real estate agents grabbed for title company business referrals. The wall between real estate and title remains under the Real Estate Settlement Procedures Act, a wall that prevents Samson from achieving a 100% title capture rate.

“I don’t make them use Cardinal,” Donny Samson said. “I can’t make them. It’s illegal. I kill them with kindness.”

Samson agents interviewed for this story professed up and down that, indeed, the company’s 100% commission plus services and company camaraderie propel them to use Cardinal, and not pressure from company executives.

“I had no problem recommending Cardinal, as long as they did a good job for my clients,” said Tina Rodgers of Alexandria, Virginia.

“Are we required to use Cardinal Title?” said Susan Jacobs, an attorney in Gainesville, Virginia. “No, but why would we use another company when they have dynamite processors?”

Jacobs enthused about services Samson provided including hundreds of free postcards printed and mailed for each listing and brokerage-subsidized Facebook ads. “Coming to Samson was like giving myself a raise,” she said.

Samson is not allowed to punish or reward agents based on using Cardinal. But the brokerage can say nice things about those who use the title insurer. “At my first company meeting,” Jacobs said. “I was shocked to hear Danny Samson call each person’s name who had either recruited another agent or who closed at Cardinal Title and say, ‘Thank you.’”

If Samson agents “drink the Samson Properties Kool Aid,” as one company salesperson put it, there lies skepticism from those outside the compound.

One issue is “shabby branding,” according to one Northern Virginia-based Compass agent, that can stick out in Samson’s upscale neck of the woods. Donny Samson did note that agents self-brand, with lettering and logos that differ from each other. “Consumers don’t care as much about brands as they used to,” Samson said. “They trust the individual agent.”

A larger issue is the perception in the Beltway that Samson agents are not as competent as agents elsewhere (“Every time I deal with Samson, and there’s no drama, it’s a victory,” one D.C. agent said.) Donny Samson, of course, disputes this, though he notes that 30% of Samson agents are new to real estate.

Also, over half of Samson agents, the CEO said, have not met the requirement of either eight transactions a year or $3 million in sales volume in order to have their $495 transaction fee waived. That means over half of Samson’s agents are significantly under 10 deals a year, the average number of transactions completed by a NAR member agent.

Nonetheless, Donny Samson is confident his company figured something out about brokerages today.

“I think we have the right model for the future, no question,” Samson said. “Disruptors and iBuyers are never going to get more than a little market share. Ultimately, the consumer is going to trust their agent.”

Comments

  1. “Occasionally, particularly in a high-demand market, the listing agent can leverage their choice of title insurer. The seller’s agent, Samson agent William Restrepo noted, can say, “Hey, Mr. buyer, if you want to make your offer a bit better, you should use Cardinal Title company because it’s the one we want to work with.”
    while the above is okay, it’s a slippery slope when seller’s agents “encourage” buyers to use their preferred and imply that it will get that buyer the ratified contract.
    ”Code of Virginia § 55.1-1006. Choice of settlement agent.
    A purchaser or borrower in a transaction related to real estate in the Commonwealth shall have the right to select the settlement agent to provide escrow, closing, or settlement services in connection with the transaction. The seller in such a transaction may not require the use of a particular settlement agent as a condition of the sale of the property.
    2009, c. 140, § 6.1-2.21:1; 2010, c. 794, § 55-525.22; 2019, c. 712.

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