The process of buying and selling a home in the US is obscure, expensive and disorganized. It costs tens of thousands of dollars (10%-12% of the price of the home in transaction fees), takes 3-6 months to close a home, and involves a myriad of people (agents, brokers, lawyers, inspectors, loan officers, etc). This process can be reimagined from the ground up.
Amazon became successful by achieving operational excellency behind the scenes of their marketplace. Most attempts at disrupting real estate in the US have focussed on a discovery marketplace, but none have made a dent in the operations of buying/selling a home.
There’s 3 main stages of this process:
Today, discovery happens primarily through sites like Zillow and Redfin, or via buyer and seller agents. However, this process is very inefficient.
Listings have to be uploaded to local MLS (which only brokers and agents have write-access to), and then they get published across different online search platforms and websites. Buyers have to manually search on these sites for homes based on filters they set. There’s no way for a seller to directly reach the right set of buyers, and a buyer can’t directly initiate negotiation with a seller.
This could be reimagined as a process where buyers and sellers interact directly, where buyers can set up search criteria. Sellers can make listings directly (similar to AirBnb). Buyers will be notified when any new listings are made that meet their criteria. Sellers can directly market to buyers that would most likely be interested in their property since buyers have already set their preferences and have classified their interest. Since both buyers and sellers fill out their profiles, they can pre-vet each other before beginning any further communication.
In the current seller’s market, sellers receive an abundance of offers from buyers and they have no easy way of managing and comparing their options. Furthermore, the credibility of offers can vary (since offers are made with just a pre-approval from banks, rather than elaborate credit checks on the buyers). This wastes a lot of time for sellers and prevents them from being able to move quickly. Also, buyers end up having to submit offers to multiple sellers and this repetitive process could be automated while still being customized.
In a buyer’s market, buyers have an abundance of homes to pick and choose from, but don’t have an easy way to manage and compare homes they might be interested in. They also have no easy way to visualize any potential costs or investment opportunities they may have with any of their options.
By imagining an offer-management tool for both buyers and sellers, redundancy in filling out offers and information can be eliminated while providing a surplus of additional comparative information allowing them to make the best decision.
The closing process is like watching pizza be delivered to you from Dominos, except there’s 20 people involved on either sides and the pizza costs half a million dollars and you end up paying an extra $30,000 in transaction costs to get the pizza delivered to you.
There are many moving parts, requiring coordination from different parties, and all of this happens entirely offline today. A ton of these processes can be automated and even eliminated through digitization.
We know this bit can be successful through what we’ve built and shown with FlareAgent.com and Hutsy.co.