Iowa-based ShowPal is trying to make for-sale-by-owner deals more successful and more appealing to a broader segment of homeowners.
Chad Torstenson was frustrated when he sold his house. The Des Moines-based emergency medicine doctor did the calculations, and the money he paid in commissions took three-and-a-half years of paying his mortgage.
“I went to work every day for three-and-a-half years, and it was gone in 60 days,” Torstenson told Inman.
The experience inspired him to look at the options available to do his next real estate transaction as a for-sale-by-owner deal — but he quickly found he wasn’t satisfied by the tools out there. That discovery led him to launch ShowPal, a new tech startup that aims to make FSBOs more successful and more appealing to consumers.
ShowPal announced its launch in its first market, Des Moines, last month. So far, the company has facilitated the sale of five homes that it added in April and May before announcing its launch, and since its announcement, has added one to two homes a day, Torstenson said.
According to the National Association of Realtors, FSBOs made up 8 percent of home sales in 2016, and the “typical FSBO home” sold for $190,000 compared to $249,000 for home sales involving agents.
ShowPal offers sellers a home appraisal, real estate photography, online home-show booking and alert system, listings on Zillow and Trulia, social media marketing, yard sign and lock box, and ID verification of buyers before home showings.
ShowPal allows buyers and sellers to make and accept offers online and also offers a “ShowPal Property IQ” with more information to go along with the home appraisal.
The company charges between $999 and $1,999 depending on what plan sellers choose, with $499 paid upon signup and the rest paid at closing. Sellers also have to pay attorney costs.
Unlike other startups like Purplebricks trying to cut down commission costs that are quick to emphasize they are far from FSBO, ShowPal embraces the FSBO label. Torstenson is a proponent of owners taking control of the real estate process.
“I don’t wish any harm to real estate agents. I don’t think they’re bad people,” he said. “But if I’m a consumer and I want to sell a home, I have a choice to make to either hire an agent or go the FSBO route. I didn’t see a current FSBO model that allowed them to take that route.”
ShowPal has a partner real estate attorney who assists with the closing process. The startup also does offer brokerage services for potential customers who decide they want to work with an agent through a partner firm, ShowRealty Group. The brokerage specializes in working with homebuilders.
The startup has so far been funded by a $2 million family-and-friends seed round but is now in talks to raise funding from accredited investors, Torstenson said.
Torstenson started raising that seed round in 2018 and launched the company with a chief technology officer and the services of a software consulting firm in April 2018 before announcing its first market in July.
The company hopes to attract both homeowners who were already interested in FSBOs and see ShowPal as a better way to complete the FSBO process, and homeowners who have been skeptical of FSBOs before but are convinced to try it out with ShowPal.
“We will get the FSBO clients who were already going to be FSBO clients, but we also think we will erode some of the consumers who would have gone with a traditional agent,” Torstenson said.
The services ShowPal offers are a lot for a FSBO — in part made possible by its small scale at the moment in Des Moines. As the company figures out its next steps, part of the challenge will be transferring a high-quality FSBO service to new markets.
“If you have a tech-laden service, a solution-laden FSBO model, if we can execute, there’s no reason that in every market we go into in three to five years, we can’t have 25 percent of the market,” Torstenson said.
Torstenson is still a practicing emergency medicine physician, working five to six days a month. He works on ShowPal during the rest of his time.