Over the course of a year, over six million residential properties are sold in the U.S. By estimating the average home price, this accounts for $1.4 trillion in revenues generated from these sales. For anyone who has bought a home, it’s no surprise that a chunk of these revenues includes closing costs and real estate commission fees. In total, around $72 billion can be attributed to real estate commission fees spent by consumers each year. But thanks to one bold company, this figure may be coming down significantly. HomeOpenly, a company based in Silicon Valley, has now outperformed all Redfin brokers when it comes to savings. Despite being only 18 months old, HomeOpenly reports better aggregate savings for 147 Million US homes in all 50 States and Washington D.C. than Redfin.
The Evolving Real Estate Landscape
Over the last few years, several companies have tried to disrupt the traditional real estate market. The traditional market has systematically been conditioned to accept a standard six percent real estate commission. Notable companies like Redfin have created online real estate marketplaces similar to HomeOpenly. However, a significant portion of Redfin’s revenue comes from charging third-party real estate agents a fee for referrals. Redfin currently charges its Partner Program agents 30% of the entire commission for each referral it makes. While the Redfin model aims to reduce closing costs and other real estate fees, its average real estate commission fees still remain higher due to the added referral fees.
“Redfin Corporation is heavily dependent on referral fees for revenue; the same independent agents who wage 30% of their commissions back to Redfin can freely advertise at HomeOpenly,” said co-founder Dmitry Shkipin, “we run our platform as an open system built on fair advertising methods to challenge all major referral fees models with genuine Internet principles and innovation.”
Like Redfin, there are many startup companies that offer savings such as flat-rate real estate listings, buyers refunds, and similar legal financial incentives, but each agent determines their fees locally to promote their own service.
HomeOpenly’s Real Estate Fees Model
The innovative model introduced by HomeOpenly strives to unleash the power of the Internet in changing existing real estate transactions. In HomeOpenly’s open online marketplace, buyers and sellers can quickly and easily connect with local real estate agents. Likewise, real estate agents can easily advertise their real estate commission fees, service levels, and other features.
In essence, HomeOpenly’s marketplace lets normal supply and demand forces determine fair pricing for real estate commission fees. And the best part…anyone, including real estate agents, can interact at HomeOpenly for free. HomeOpenly does not collect any referral fees or real estate commission percentages. The open marketplace allows real estate agents to connect with buyers and sellers without any middle agent interference.
Unlike all referral fee models, HomeOpenly does not sell or share user data outside the agents that a buyer or a seller have specifically selected making the request. Instead, HomeOpenly actively utilizes Privacy by Design approach giving users full control of how and who sees their information at all times.
So How Does HomeOpenly Stay in Business?
Without revenues coming from real estate commissions or fees to marketplace access fees, one wonders how HomeOpenly stays afloat. In essence, HomeOpenly has three sources of revenue to support its real estate model. First, the company generates income through independent advertisers. Like many Internet sites have shown, this can be an effective strategy. In addition, HomeOpenly also generates revenues from aggregate non-user specific real estate data analytics. Today, information and data are power. Also, the company offers optional premium services to agents that do not compromise its organic match results to buyers and sellers.
“Co-founded a year ago working in a team effort with key help from early adopters, friends and fellow Internet companies, HomeOpenly now delivers the best aggregate advertised savings in the US, far outperforming savings offered by Redfin, without any referral fees to anyone,” continued Dmitry Shkipin, “this information directly benefits our users and encourages independent local real estate agents to list their best rates. The best part of our platform is that it only takes a few minutes for home buyers and sellers to acquire local agent results without any strings attached – the user experience is 100% unbiased and secure.”
To date, this model seems to be working well. HomeOpenly has been able to expand and now operates in all fifty states and Washington D.C. Likewise, it recently surpassed Redfin in real estate fee savings. HomeOpenly reports generating aggregate savings up to $15 billion in real estate fees annually.
Is HomeOpenly the Model that Finally Disrupts the Real Estate Industry?
Dozens of industries and sectors have been turned upside down with recent technological advances. The transportation industry will soon have autonomous cars. Blockchain and cryptocurrency have made their way into the financial sector. And artificial intelligence and machine learning demand the attention of small and large businesses alike.
But the real estate sector has been more resistant to change. In addition to a persistent six percent real estate commission fee, customers still want the personalized service of a real estate agent. Thus, while several companies have succeeded in reducing some real estate fees, overall costs remain high.
Given the unique role of the real estate agent in residential property sales, a full “eBay model” is not likely to work. An online real estate marketplace that connects buyers and sellers directly without an agent has not yet been effective. In part, this is because buying and selling a home are big decisions that are done infrequently. HomeOpenly, however, seems to have introduced a platform that offers hope for everyone to experience fair real estate fees. By letting market forces determine what buyers and sellers can negotiate, real estate fees should be more just. This is likely why HomeOpenly has gained an advantage in the real estate industry in such a short amount of time.