“This is brilliant!” “It’s about time.” and “When will you be in (fill in the blank state)?” are just a few of the responses we’ve heard from homebuyers and sellers during the six months since we introduced REX in beta.
I’ve launched many new products and services and have never seen the depth of emotional response people are having to the REX offering. So I’m posting my thoughts on why that is.
Bottom line, the residential real estate industry is broken — both in terms of dollars and human experience.
Most consumers who have bought or sold a home have experienced the antiquated process and felt the pain of seeing 5-6% of the home’s value paid to a real estate agent.
That’s A lot Of Money In Commissions
That’s six million homes sold each year generating $72 billion in commissions (6 times the size of the taxi/transportation industry) paid to 1.8 million agents or 1% of the entire US working population!
The Internet Changes Things
Thanks to sites like Zillow and Google, homebuyers and sellers are able to do more of the work to find and sell homes themselves. But they’re still paying the same exorbitant commission which is often 25-50% of their home’s appreciation.
And a six-step telephone-game process is still required just to see a home, marketing methods remain basic and old-school, and signing reams of paper forms is laborious and unnecessary.
Customers Are Not Happy With The Old Way
So it’s no wonder satisfaction ratings have been dropping year after year. Sellers give the experience a “D” grade which, for many businesses, would be a going-out-of-business number.
Despite this great dissatisfaction and nearly 75% of home buyers finding their home on their own, 91% of homes continue to be sold through agents — because consumers have not had a better alternative. For-sale-by-owner doesn’t work for most busy homeowners because they don’t want to be left on their own for a transaction they do once every seven years and don’t know how to market their home using digital tools. And even Discount Agents still post homes to the MLS, obligating the seller to pay a 2.5-3% commission to a buy-side agent on top of the seller’s agent fee.
This massive transaction cost means buyers are paying too much for their homes and sellers are earning too little.
REX Has A Better Way
And it shouldn’t cost that much. We know because our team has executed thousands of transactions and we’ve built a powerful platform that enables our concierge to provide consumers with white-glove service, giving them more power and transparency, for a great deal less – just 1%*. And since REX goes around the MLS, marketing homes directly to consumers rather than to real estate agents, there’s no surprise additional 2.5-3% buy-side commission.
Are there great real estate agents? Sure! I know some well. REX isn’t against real estate agents. But we believe consumers, like you, deserve an alternative that saves many thousands of dollars and provides a more enjoyable experience in the same way Uber provides better experiences than taxis for many people.
And the positive, passionate reactions we’ve seen from smart homeowners have bolstered our commitment to doing the right things for consumers and for the industry.
*At the time of publication, the rate was 1%- a limited time offer. It is currently 2-2.5% Dec 2020.
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