Real estate startups touting revolutionary low-fee models are coming out of the woodwork these days. Most of their predecessors have fizzled because they haven’t provided the expertise and handholding that have proven time and again to matter to most consumers.
- Many real estate upstarts with big plans for disruption have fizzled out, but that hasn't stopped new ones from sprouting up.
Real estate startups touting revolutionary low-fee models are coming out of the woodwork these days.
Most of their predecessors have fizzled because they haven’t provided the expertise and handholding that have proven time and again to matter to most consumers.
But these upstarts may be worth keeping an eye on. Sooner or later, one could hit the jackpot.
Here are three that officially launched in the last two months. They include a non-brokerage that allows homebuyers to make offers and pocket the buy-side commission, as well as two hybrid brokerages targeting homesellers.
This California real estate startup claims to have pioneered a way for homebuyers to submit a “professionally, legally binding offer” on a home without an agent or attorney and walk away with the buy-side commission.
The company charges an upfront fee ranging from $149 to $795, depending on service level, as well as an additional fee of $499 if a transaction closes.
Home Savi is not a licensed broker, so it can’t collect the offer of compensation made to buyer’s brokers.
But Home Savi’s clients can because the startup’s offer form stipulates that buyers get that cash, said CEO Trey Evans.
“Could an agent make the case to a seller that they won’t agree to our contract because they’re entitled to the entire commission?” he said. “Sure. But I would like to be a fly on the wall for that conversation.”
Buyers can prepare an offer on Home Savi’s platform for free. Once they pay the upfront fee, they can submit the offer and use the platform to manage tasks and deadlines, with the option to get help from a consultant.
Home Savi has raised $500,000 in seed funding and is “in the process of a larger round of funding,” Evans said.
RezList is one of the latest real estate startups to claim to provide a traditional level of service to homesellers while charging far less than a traditional commission.
Sellers pay a flat fee of $4,000, plus a typical offer of compensation to buyer’s brokers. What purportedly sets the startup apart from other low-fee brokerages is that it does not turn the customer experience into an assembly line of specialists. And unlike some of its peers, RezList’s agents don’t earn salaries, noted Catherine Arthur, a spokeswoman for RezList, in an email. (Presumably, they earn commissions, like traditional agents.)
“RezList doesn’t utilize call centers and connects you in-person with the same agent from the first phone call to closing,” the company said in a press release.
Though there’s nothing on its website to indicate it, RezList also markets its listings on the multiple listing service (MLS) while making a typical offer of compensation to buyer’s brokers. That means seller clients would actually pay a commission of $4,000, plus the typical 2.5 or 3 percent buy-side commission paid to buyer’s brokers.
The company told Inman in an email that it can afford to charge a low listing fee, in part, because it anticipates converting about one-third of seller clients into buyer clients, who it will represent for a typical commission. Other factors that make the low listing fee possible are its technology and multi-pronged marketing campaigns.
“Thirdly, the listing of a home has become so automated by technology that the actual costs to get a property marketed properly are quite low,” RezList said.
But RezList’s team doesn’t appear to be a bunch of starry-eyed newbies stumbling into an industry they don’t understand. It purportedly “offers more than 45 years of combined real estate and banking experience and expertise, and a proven track record of success in sales, leasing, and development.”
RezList has launched in San Francisco and San Diego and has plans to soon expand to other markets, including Orange County, Sacramento, Phoenix and Lake Tahoe. The company has raised seed funding of $250,000 “and will be seeking additional investment in the very near future for expansion.”
“The time may finally be at hand for technology to disrupt the long-standing real estate brokerage model,” Realicity (formerly Metripol) recently announced in a press release.
Founded by an experienced real estate broker and a former asset manager, the hybrid brokerage is tackling New York City first, with plans for a nationwide rollout.
It markets homes in the multiple listing service (MLS) and across other channels, while providing a platform with a showing-scheduling tool and “full transparency” into offers from prospective buyers.
Like some other hybrid brokerages, the startup plans to achieve efficiency, in part, by encouraging sellers to negotiate directly and anonymously with buyers online.
Its technology allows sellers to “compare and counter offers or accept with a click of a button.”
The startup charges a flat fee of $9,900 at closing. Agents are available to provide support — “they can be as ‘hands-on’ or ‘hands-off’ as the seller wants,” the company says.
“The time for real estate digital disruption is finally here,” the company concluded in its press release.
“And, for New Yorkers looking to sell their homes, now may be a good time to start thinking about how best to spend their newly found $50,000+!”