An increasing number of technology companies are turning their eyes toward the booming San Antonio real estate market.
REX Real Estate, an artificial intelligence- and big data-powered real estate brokerage, is gearing up for an Aug. 13 launch. The company is one of several recently that aim to take the real estate agent out of the home buying and selling process to cut down on costs.
Meanwhile, homegrown Brokerage Engine is taking a different approach: Rather than disruption, the software service aims to optimize the traditional brokerage-and-agent model.
Brokerage Engine and REX enter a housing market that’s evolving, with startups such as Opendoor and Perch seeking to upend the tried-and-true process of listing a home with a real estate agent.
Those platforms aim to rid the homeowner or home buyer of the analog and in-person aspects of selling or buying a home. The app- and web-based services allow customers selling a home to input their home address, answer a few questions regarding their home, and receive an algorithm-generated offer based on comparable, nearby properties – none of which requires listing the home on the open market.
REX Real Estate will descend on San Antonio with about a half-dozen homes for sale. The company charges 2 percent in fees in lieu of a traditional real estate commission while skirting the multiple listing service, or MLS, entirely. Without having to pay the commission that comes with selling a home using MLS and hiring an agent, REX claims to be able to sell homes faster and charge 70 percent less than traditional brokerages.
“The computers are taking the robotic behaviors that humans have to do in these sales and taking the robot out of the human,” said Jack Ryan, who runs the 3-year-old, Los Angeles-based REX Real Estate. “Humans are still needed for some of the emotional attachment to a house or the stuff that’s too complex for a computer to do right now. But the bottom line is that means we can sell the homes for 2 percent, not 6 percent, because we’ve learned to automate or maximize the advertising dollars to find the right buyer for your house.”
REX uses a combination of artificial intelligence and U.S. Census Bureau data to find a likely buyer for one’s home. The licensed brokerage’s technology scans for data on nearby homes in the seller’s neighborhood and then pores over homes within a 5-mile radius that take into account the following criteria: homeowners with enough positive equity who can afford to buy the home, family size, and surrounding school districts.
Households are then ranked algorithmically from 1 to 1,000 on how likely they are to buy the home that is up for sale on the REX platform.
In March, the tech-powered brokerage launched in Austin. It has listed 40 to 50 homes and sold about a dozen properties, Ryan said. Since then the service has launched in Denver and San Francisco.
San Antonio appealed to REX because it’s what Ryan calls an “aspirational market,” where families try to create better lives for their children, and there is a lot of market activity.
“We like San Antonio because people are investing in homes, it’s entrepreneurial, and it’s growing,” Ryan said. “And because there are a lot of buyers and sellers, it’s tailor-made for the REX model. … We just take the hassle away from you because the markets are very liquid.”
Rackspace co-founder Dirk Elmendorf and his brother Brett started Brokerage Engine, which has partnered with Kuper Sotheby’s International Realty locally and also services an Austin-based brokerage. The company is providing a technological undergirding that the startup believes will make real estate brokers and agents more able to serve the market in a hyper-competitive environment.
“This is oftentimes people’s most important buying or selling decision in their lives, and getting good service in that moment is really important,” said Elmendorf, who serves as the company’s chief technology officer.
Using a software-as-a-service model that charges customers a fee for using its software, Brokerage Engine provides a modern toolkit for real estate brokerages – ensuring that the agent gets all the paperwork done and setting up digital marketing tools. The system also determines how real estate commissions are distributed and provides analytical performance data to the brokerages it serves.
Elmendorf said Kuper Sotheby’s expertise in real estate informs its software, and that’s where the brokerage software platform can stand out from the pool of tech companies trying to disrupt real estate market.
“Everyone gets excited about the idea of disrupting something,” he said. “The truth is right now the real estate market – the traditional brokerage – doesn’t have modern tools to fight the fight. … Disruption has an arrogance to it that if you’re right, that’s great, but otherwise, it’s just kind of frustrating for everyone involved.”
The only benefit selling real estate without a Realtor or a licensed Real Estate Broker, is saving the commission. But as the saying goes, you get what you pay for. The buyer in most cases does not pay the commission anyway. Without the guidance of a well trained seasoned Real Estate Broker, you will end up paying more at the closing table than you will if you hire a Real Estate Broker. The well trained seasoned Broker knows how to negotiate the best deal to put the most money in your pocket at closing. Take note, the importance of using a well trained seasoned broker is the key because every other person has a real estate license today, and therein lies the problem! The Texas Real Estate Commission list of disciplined real estate agents continues to grow. The mere number of licensed real estate agents causes massive competition and this is how these online companies were born, trying to find a different angle to get paid! As a result the only thing a newer real estate agent thinks about is their paycheck they will receive at closing. This is mostly due to the large real estate companies fees that a real estate agent has to pay to their Broker and they can be far in the red before they ever receive the first commission check. These large companies are pyramid based and this is how the large companies are formed. Also, the well trained seasoned real estate Broker is usually a small mom and pop Real Estate Brokerage and can offer less commission and still provide the best full brokerage service because they don’t have the huge overhead. Beware of these online companies because they don’t offer full brokerage services and it can cost you more time and money before you even sell your home, for example, the contract falls through! Any company that offers to buy your real estate if it doesnt sell within a certain time frame will offer much much less than asking price or even market value and still charge their full fees! And It is a legal slippery slope for a licensed real estate Broker to offer less than market value. One more thought, a large commercial real estate transaction would never close without licensed real estate Brokers because of the complexity, the same can hold true buying and selling residential real estate.
Hi LREB – We appreciate your comment and overall concern for consumer protection. I’ll respond to your concerns as they pertain to us at REX specifically. First, REX never expects or asks buyers to go unrepresented. For those buyers who would like to work with REX directly, they are paired with an experienced, dedicated, independent agent that works on their behalf. Second, we would dispute the notion that the buyer doesn’t bear the cost of agent fees. While traditionally sellers are besieged by commissions for both parties in the transaction, the buyer ultimately shares the burden because those exorbitant fees are built into the sales price of the home. The fact that the US real estate industry has not evolved with technology has forced consumers to pay some of the highest commissions in the world. Third, we pride ourselves on being full-service. From photography, to hosting showings, open houses, etc, we do everything you would expect from a real estate agent. However, where we set ourselves apart is our unmatched digital marketing, data, and technology that allows us to target buyers more directly and effectively then anyone else. Finally, you mention that “newer real estate agents” only think about the paycheck they receive at closing and imply that because of this, they are providing subpar service. At REX, all of our agents work on salary, not commission. So, there is no “paycheck at closing” – there is simply an agent who is at the table making sure their client gets the best deal possible. All of our agents are solely judged on customer service, not commission. All of these things allow us to provide a seamless digital alternative to the traditional model, all while charging 70% less and providing amazing service.
Great. I want to come to work for you and receive a salary – what is the salary?