Manufacturers started the race to using bots to cut down manufacturing costs and increase efficiency. Of course, that led to job cuts, and it has continued to do so. Moreover, they also transferred some of the manufacturing overseas to save even more money. It now seems the real estate is also doing the same thing. Some real estate online startups are working to replace realtors with bots. While they are careful to target only specific house designs and neighborhoods, this could lead to greater savings cuts for homeowners. On the other hand, it seems that realtors may be forced to work harder to convince people to use their services.
Jake, a young man in Utah recently sold his house and bought another using one the sites; Homie, which uses bots to do most of the legwork. He says that he found the sites were offering a much better deal in terms of the helping with paperwork. They were going to charge much less compared to the 6% that realtors would charge to help him find a suitable house and do all the paperwork.
It may have been risky, but he felt confident that Homie, which had become popular locally, was the right thing for him. Homie is a startup by Johnny Hanna, who has had experience developing similar software in the past. He first developed the software Entrata, which is used to help real estate businesses generate leads. His mission when he started the business with his friends was to help people sell or buy their homes. He had seen many homeowners going through all the frustrations of selling or buying a home, and he thought bots could help cut down some of them.
Today he says that his site Homie has become popular in the markets where millennials are the majority homeowners, such as Wasatch Front, which is the area between Ogden and Provo, in Utah. The success it has experienced since it launched less than 2 years ago has inspired him to want to expand to other places. These places include Arizona and Phoenix, and possibly Dallas, Vegas, Denver, and up to 10 metro areas in the coming five years. So far, they have been able to sell around 1,700 homes using their platform, and they were all within the Wasatch Front area. When you consider that in 2016, over 13,600 homes that were sold within the Salt Lake region alone, it’s clear that they still have a long way to go.
They chose to Startup in Utah because it is newer, and most of the homes share the same construction design. That means if you see one home, you have practically seen hundreds others, which share the same design and construction. Moreover, the number of sales has gone up as more people come in to seek opportunities from the many tech startups, recreational offers, and the low cost of living.
What Homie does is handle the legal paperwork, and when a client needs it, they offer some financing to help them complete the purchase. It’s therefore a one stop shop for home buyers. They don’t need to look for inspectors, or appraisers, or any other services needed when finalizing a sale. That’s why it looks so attractive to young buyer and sellers that know how beneficial online platforms at times. Overall, its selling point is that you will have less stress when selling your home and a lot more pocket change left.
Homie charges its clients about $1,500 for each transaction hey handle for them, which is a lot less than the $18,000 that they could have paid when dealing with a realtor, selling a home priced at $300,000. On average, a customer should expect to save about $10,000, and collectively, Homie has helped its clients save over $17 million, since it opened its doors.
While the future looks great for Homie, it may not excel so much in places such as San Francisco where each home has a unique design. Moreover, where there is no room for negotiation and the home is expensive, homeowners might find the real estate bot services less attractive and choose to deal with a Realtor. Homie has so far raised close to $9 million, and it is now seeking an additional $10 million or $15 million at best to help it scale its operations in 2019.
It’s main competitors are Opendoor and Faira, both are doing the same thing that Homie is doing but they have been around for a while. Opendoor is the stronger of the two, having about $320 million in Venture Capital, which is more than two other startups have combined. Overall, it is clear that the real estate market is about to change and every homeowner needs to plan for that.