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Hey HN, My site http://RealtyPerks.com, just went live a few days ago and I have always sifted through HN admiring and gaining advice from everyone out there, so I thought I would show my start up, and would love any feedback from the HN community. It's far from done but it gets the message across. We have been establishing relationships with Realtors on the northeast and are gearing up to start Rewarding some new homeowners. Real Estate isn't sexy, and is hardly ever attacked my entrepreneurs, even though its a 60 Billion dollar market. Although recently sites like 42floors have come up and are attacking commercial real estate, which is another vertical within the real estate industry ripe for disruption. (I love their site/concept) I also find it intriguing that there are so many start ups dedicated to gaming, mobile payments, fashion, etc. but literally you never hear about a real estate start up, but the industry is so antiquated! We still have companies like Coldwell Banker dominating their marketplace. Yes, Coldwell Banker where you walk into one of their offices and see chairs with gold and oil paintings and their agent's don't have email but rely on fax machines. Enough of my rant, I just wish real estate marketing got up to speed with the rest of the world, and I hope RealtyPerks does just that. |
The strongest moat that’s defended residential RE brokerage from disruption is the interdependent nature of the business. Because both the buyer and seller are represented by agents in most transactions, brokers must collaborate to close deals at the same time as they compete for listings. Buyers’ agents have an incentive only to show their clients homes whose sellers offer them a standard 3% commission. To attract more listings and still retain interest, sometimes seller’s agents offer to cut their own fees while still offering the full price to the buying agent. The reason that this approach hasn’t become widespread and significantly whittled down commission standards is that the vast majority of sellers’ agents are also buyers’ agents, meaning that both parties have a vested interest in preserving the commissions on either side of the table.
Because of this solidarity among buyers’ and sellers’ agents, the only way for the brokerage business to be hacked and rendered truly competitive is for one half of the equation to vanish. Either FSBO listings will have to become so widespread that sellers’ agents largely disappear from the picture or property search, negotiations, and closings have to be made so simple that buyers’ agents fade to irrelevance. But when one side crumbles, both sides do.
IMO, it's far easier to hack the buying-side process than the selling process. RealDirect and DotLoop are interesting in that they try to essentially automate the process of selling a property yourself (RealDirect by providing appraisal services, submitting listings to MLSes, and curating marketing channels etc. and DotLoop by standardizing legal docs/paperwork), but these companies face an uphill battle in convincing sellers that they are every bit as talented at receiving top dollar for their home.
IMO, the best way to hack the industry is to streamline combine a Trulia/Zillow/StreetEasy proprietary MLS with DotLoop's standardized legal/paperwork management system. The one missing piece is data-driven appraisals accurate enough to convince buyers of their worthiness. Nobody's quite got this down yet, but Kwelia seems to be closest. The trouble is that not enough sales data is available to accurately correlate prices to location/amenities/property info. Although most US cities maintain public data mines that contain title documents, many buyers mask their purchase prices with evasive chicanery that reads along the lines of "sold for $10 and other goods of significant consideration".
All that being said, your model of offering perks is an interesting way of convincing attracting clients to an existing brokerage. Partner with some furniture suppliers/local businesses to offer some exclusive discounts and I think you're onto something.