Thanks to technology, the current real estate brokerage industry is like the wild west. As a seller, there are tons of alternatives to listing your house with a traditional real estate agent. As a buyer, the days of driving around with an agent from house to house for months on end are coming to an end too. I’ve been researching the real estate technology market obsessively for the past year, and these are the biggest disruptors I see.
1. As a seller, you can now be guaranteed to have an offer in 24 hours and close on your sale in 3 days
There are numerous well capitalized “instant offer” start ups that will make an offer on your home within 24 hours and purchase it cash within 3 days. The largest to date is probably Opendoor, which currently operates in Phoenix, Dallas, Las Vegas, and Atlanta. According to this recent article, they are averaging $100M in home purchases per month! After entering your home details on their website, they will provide you an offer within 24 hours. They make their money by charging a 6.7% average fee according to their website, to cover costs, then make any necessary updates, and re-sell it. This has worried some sellers that their offers may not really be market value as they claim, but some sellers may still prefer the convenience that a guaranteed 3 day closing provides. Knock is a competitor, which actually lists your house, and if it doesn’t sell in 6 weeks, they will purchase your home for a price that was previously agreed upon. Another competitor is OfferPad. Even some more well known companies like Zillow and Redfin are getting in on the action in certain markets. As they say, time is money, and if you want the certainty of selling your home fast with no hassle, these options are worth looking into.
2. As a buyer, you can bid for houses online and see what others are bidding
Among some real estate brokerage startups, there is a push to offer transparent bidding. For example, if you are interested in purchasing a house listed with Northern California brokerage Reali, you can see all the other offers interested buyers have submitted and adjust your offer accordingly. Of course, transparent bidding benefits the seller most in highly competitive markets such as San Francisco, where multiple offers are almost guaranteed. In a slower market, this could actually hurt the seller as prospective buyers realize there are no other offers on the house, or that the offers are low. Faira, out of Seattle, also offers transparent bidding, along with some other interesting disruptions to the typical buying and selling process described later in this post.
3. 24 hour on demand showings are a thing
The brokerage and property searching website and app Redfin, offers on demand showings through their “Book It Now” service for certain listings (although the few random houses I checked in my area did not have this feature available). As a buyer, just click the button on one of their listings, enter some information, and you can instantly schedule a time to view the house. A local Redfin agent will let you in and accompany you on the showing. Since Opendoor listings are unoccupied, they offer showings everyday between 6am – 9pm which can be scheduled via their app, and allows the prospective buyer to tour the house on their own. Curbcall is another technology that can integrate with a brokerage website and allow buyers to instantly be connected with real estate agents in the area who have indicated they are available (kind of like an Uber or Lyft for real estate). It’s not clear to me if there is any syndication with a showing availability schedule or if the agent still has to manually book a showing for the buyer. Toor lockboxes, whose founder secured a deal on Shark Tank with Barbara Corcoran and Kevin O’Leary, will sync with an identity verification service allowing buyers to be screened and approved for showings on their own. The app on their phone would then allow them to schedule the showing and open the lockbox via blue tooth for a small window of time with their phone. Toor also allows users to find nearby agents to accompany them on showings they have scheduled within the app.
4. You can now purchase a home without a buyer’s agent
The aforementioned disruptor, Reali, allows buyers to tour their own listings without a buyer’s agent. When it comes time to make an offer, that is also done through their app along with the guidance of a “Reali Expert”. It seems to me the Toor app would also enable this practice with their identity verification feature, tour scheduling, and bluetooth lockbox technology all in one app. Faira, also allows buyers to make offers on their listings without the help of a buyer’s agent, which they claim increases the pool of buyers since “35% of the offers made on Faira come from buyers without agents.” I’m skeptical of this benefit since finding an agent to represent you in the buying process is already incredibly easy.
5. You can buy real estate services ala carte
When I first started researching the industry, there were two companies making headlines in the ala carte services space: LevelRe and GoldenKey. However, as of the writing of this article, LevelRE’s website seems to be down, and Golden Key has pivoted their business model to the “instant offer” type service in the first section. Previously, after logging in to LevelRe, you could purchase separately an appraisal, an open house, professional photos, and many other ala carte real estate services. This would be great for sellers who don’t want to go the for sale by owner (FSBO) route, but also don’t need all of the services typically provided by a full service brokerage. For example, when I was selling a house we were flipping, before becoming a real estate agent, I really only wanted help with a few of the home selling tasks. I ultimately went with a flat fee MLS listing service, which is nearly the same as doing a for sale by owner. I learned a ton of lessons that I will cover in full detail in another upcoming post. As far as the ala carte model goes, I still think it is a worthwhile addition to the real estate industry and wouldn’t be surprised to see new firms fill this space in the future.
6. VendCasa Realty Brings a Refreshing New Business Model to Michigan
So where does VendCasa fit in? We’re not a venture capital funded multi-state instant buyer brokerage, or a hip app-based transparent bidding startup. However, we recognize the value of maximizing the incredible technology we all have available at our fingertips to work fast, keep overhead low, provide amazing service, and pass on the savings to our customers and the community. You can feel good about yourself using VendCasa Realty knowing that you will have more money in your pocket, and that you’ve helped a family in the community keep a house over their heads.