Not every iBuyer preaches disruption, technology-driven efficiency or that agentless transactions are the way of the future.
At DealHouse, agents still matter, and the idea of industry domination never makes it into a team meeting.
DealHouse was built by Chris Chiarenza and operates on Long Island and nearby New York City markets.
A real estate investor for about 15 years, a “fix-and-flip guy,” as he calls himself, Chiarenza got the idea from Opendoor and Offerpad as well as from homeowners and other investors who just wanted to move on from their properties.
In fact, he doesn’t feel the market necessarily needs iBuyers, but they certainly have a place in the industry.
“As far as the actual need for iBuyers? Well, I was always a cash buyer, and we would get 20-30 calls a week, and would refer those to agents because I only buy houses that need to be renovated” Chiarenza said. “But, I saw what Opendoor was doing, and the lightbulb went on, some people just wanted to sell and sell quickly.”
DealHouse is self-funded, and Chiarenza and his team are currently sitting on around $15 million in inventory, at its carry threshold. He’s started talks with potential lending partners.
“I believe the market would’ve continued as is without iBuyers, but I think iBuyers will ultimately raise the value of houses because so many different types of buyers are bidding on properties. It continues to evolve,” he said.”We’ve gotten traction very quickly, faster than I thought.”
DealHouse is wide open about its pricing strategy, saying it usually offers 12 percent less than actual market value.
“IBuying has its advantages, and those come at a cost, but not a huge cost, especially once you add in agent commissions,” Chiarenza said.
He likens iBuying to trading in your car. Everyone knows it’s common to get more when selling privately on the open market, and that car dealers need to buy for less to stay in business.
It’s a rational comparison.
Like the bigger, more-funded brands in this space, DealHouse also relies on the most obvious arguments for iBuying, too: convenience and closing confidence.
DealHouse has a sister company, a licensed real estate brokerage. But it doesn’t use it to buy homes, and thus doesn’t ask for the buy-side commission when a property it buys is on the local MLS. The listing agent keeps the full percentage.
Instead, it buys homes under another company, DealHouse Long Island.
If it receives a referral for a house to buy that wasn’t on the market, it’ll give the agent 2 percent and often let them sell it for them, too. It seeks agents who are full-time and have sold at least 50 houses in their career.
DealHouse doesn’t want to be in the business of listing homes, they want to be in business to buy them.
“So, you know, I usually say that we can work together with agents, it’s definitely beneficial,” Chiarenza said. “Times are changing, technology is changing, the industry is changing, people have to change with the times.”
But with a waiting list of more than 100 buyers for the 39 homes DealHouse has in stock now, the likelihood of at least half of those not making the open market are pretty good, according to Chiarenza.
The CEO’s New York-bred honesty and subtle deal smarts are refreshing to hear in a space dominated by tech-first, funded-to-the-ears “change-makers,” who likely never see most of the homes on their books.
Chiarenza didn’t have to share that he’s at his loan carry threshold, but he did, because doing so wouldn’t change a thing. He understands the risks, and doesn’t have to worry about scaring shareholders or overseas investors.
Although DealHouse doesn’t have its own operating system or proprietary transaction workflow, it isn’t old-school by any means. Sellers use an online form to set up the sale.
New York is an attorney state, so sometimes sellers bring their legal professional’s forms to the deal.
“When they use an attorney, we refer them to, it goes more quickly,” Chiarenza said. The company moved much faster than Chiarenza expected it to. “We get about 50 inquires a week,” he said.
The company is eyeing markets in Connecticut and New Jersey, but it’s driven to keep it manageable.
It’s easy for the industry to feel bullied by billions in web-based businesses, but listening to DealHouse’s story, it’s hard to deny that a portion of the housing market truly wants a different way to sell its houses.
“Agents bring value, and I feel like they’re going to be around for a long time, but iBuyers have their place, too,” Chiarenza said.
His confidence in the two entities’ ability to cooperate may be lost on those agents who see iBuyers as a threat to their value.
“I believe we can cohabitate, and work together to make it a better experience.”
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