We believe that buying and selling a property is too expensive and have developed a method to drastically reduce the transaction costs of real estate while increasing transparency.
Zillow, OpenDoor, and OfferPad are all implementing iBuyer programs which means they purchase properties directly from consumers. However, the fees they charge are *more* than standard commissions instead of less.
They’re also focusing on the consumer (retail) market because it’s bigger (65% of the total). However, when you look at the value provided by real estate professionals, this is the area where they provide the most value. Homeowners who, on average, purchase a home once every seven years can benefit from their knowledge. But investors know their market and buy and sell properties much more frequently and thus the value to cost ratio for a real estate professional is much lower. So we’re pursuing the Innovator’s Dilemma strategy and targeting the smaller market where we can be most impactful!
Initially, there are two groups: property management companies (PM) and real estate investors. For PMs, we increase their customer lifetime value while also adding an additional revenue stream (≈ 5-7% of their profit). For investors, we provide an analysis of each property and highlight deviations from the broader portfolio. When they sell, we also allow sellers to save between 1-5% on commissions and buyers get validated data, so they have a very good understanding of their projected returns.
What I Will Do With $5,000
We have 2 verbal commitments for upcoming pilots and will use Excel/email to cheaply validate our assumptions before rebuilding our app.
For pilot support:
-$350 for our contract graphic designer to improve the Excel template’s aesthetics
-$650 for our lawyer to refine our pilot agreement and clarify data use and ownership
For web application V2:
- $2250 for our UX designer to incorporate learnings from the pilots
- $1750 for user interviews/validation of prototype