Two brothers who paved the way for online stock brokerages in the late 1990s are now looking to revolutionize the real estate industry in a similar way by offering an online buyer’s agent service with rebates to home buyers.
Joseph and Avi Fox on Wednesday launched BuySide Realty, which gives home buyers access to property listings, licensed real estate agents and technology used to make and manage offers via the Internet, among other things. The company will give 75 percent of the buyer’s agent commission back to buyers who close on a home using the BuySide service.
“The Web for real estate until now has really been about information,” said Joseph Fox, CEO of Chicago-based BuySide Inc. “But at the end of the day, if you are truly self-directed, maybe it’s time to go to an online buyer’s agent… and get some money back.”
BuySide has launched just as some real estate markets are starting to slow, tipping back to the buyer’s favor and more brokerages are shifting focus back to buyers. The company also follows Seattle-based brokerage Redfin’s February launch of an online offer system by which buyers in the Seattle market can make purchase offers on the Internet.
“It’s an overwhelming trend,” said Redfin CEO Glenn Kelman, referring to the many new companies launching online real estate services. “Real estate is moving to the Internet and consumers will be the beneficiaries. This, in part, validates what we do. I’ve often wondered why there aren’t 100 companies doing this.”
Redfin’s online offer service, currently available only in Seattle, will be available in parts of California next month, he said, starting with the San Francisco Bay Area, then Los Angeles and San Diego.
“Demand for the service is good,” Kelman said of the first two months. The company had its first close in March using the Redfin Direct online offer system and now has closings every week, he said.
BuySide Realty this week launched in California, Florida and Illinois and has plans to expand to other states. Joseph Fox expects the company to be operational in two more states by the end of the quarter, though he wouldn’t disclose which ones. The company has offices in San Diego, Miami, Chicago and Omaha, Neb., and is licensed in 27 states, Fox said.
Consumers visiting BuySideRealty.com can search property listings, schedule a home visit, get open house schedules, get pre-approved for a mortgage, make offers and manage the offer process, tracking when the offer was submitted and whether the seller has accepted.
The company offers 24-hour customer service and has licensed Realtors available to answer questions from 8 a.m. to 11 p.m. in each market seven days a week. Buyers are assigned a specific agent when they sign up, but can speak with any of BuySide’s agents when they need help.
Similar to an online brokerage service such as Charles Schwab, BuySide agents will assist home buyers in scheduling home visits and making offers, but they will not advise buyers on specific offer prices and decisions, according to Fox.
BuySide agents are employees of the company, he said, and receive a salary rather than a percentage of the sales price like most traditional agents.
“There really is a significant opportunity here,” he said, though he noted that the online buyer’s agent service isn’t for everyone. “This is not going to take over the couple million traditional agents out there.”
The Fox brothers are no strangers to new online service companies. The duo founded online stock brokerage firm Web Street Securities in 1996, took it public in 1999 and later sold the company to E*Trade in 2001. Like BuySide, Web Street aimed to empower self-directed consumers by providing online tools and real-time information to make investing decisions at a reduced cost, according to Joseph Fox.
SmartMoney magazine named Web Street Securities the number one online brokerage for regulatory compliance and the company was named among the top three online brokers multiple times, according to Fox.
“People didn’t believe in 1996 that online trading would be a big thing,” Fox said. Comparing that market to what he and his brother are now trying to do in real estate, he said he expects the online buyer’s agent business to boom in coming years, with about 100 companies competing in the next five years.
“I believe that online buyer’s agents will capture 10 percent of the buyer’s market in five years,” he said.
BuySide Realty has a partnership with Chase, the home mortgage unit of JPMorgan Chase & Co., which will provide pre-approval services to BuySide clients at no upfront cost. “We thought that was an excellent way to make sure we’re sending a qualified buyer to the listing agent,” Fox said.
The company also offers a free referral service to listing agents. Buyers who use BuySide give the company feedback on the listing agent who worked on the seller’s side, he said. That feedback goes into a database, which consumers can search to find out information on a listing agent when they need to sell.
“New real estate Web sites are popping up every day that provide more and better kinds of information — but information is just the beginning,” Fox said. “The most dramatic impact of the Internet is that it enables consumers to achieve major cost savings or, in our case, actually earn them thousands of dollars on a typical home.”