The word “home” has always reminded me of the safe, comfortable place where I’m surrounded by family and affection. But for a long time, I’ve wondered why the act of buying or selling a home is more associated with stress than joy.
When it was time to sell my first home, I had a vague understanding that it was going to cost me 5 to 6% of the value of my home, which seemed like a lot. But then I did the math and realized that the agent’s fee would be close to 50% of the appreciation of my home. I had put my money at risk, made the improvements, maintained the home and someone else would get the profits. The price was going to be higher for the buyer, and lower for me, because of the large fee for the middleman. So, I put the house on the market myself, quickly found a buyer near the asking price, and had a lawyer handle the documents for a small fee.
Then, it was time to buy a home. My wife and I did the shopping online, looked at numerous homes, and finally found the one for us. We contacted the seller’s agent, who introduced us to his client, and then the agent left for a two week trip to Italy. While the agent was away, the seller and I swapped information, had good conversations, agreed on a price and nearly completed the paperwork. Because I was able to speak to the seller directly, we communicated without our messages being garbled by middlemen, and we became lifelong friends in the process. However, when the agent retuned from his vacation, he still collected his large fee.
As I drove around our new neighborhood, the For Sale signs I saw every day reminded me that agents would be receiving 5 to 6% of the value of each home that sold. It also brought to mind my Goldman Sachs days. First, if I could put no money up and get 10 to 50% of the appreciation of an asset, that would be an awesome business to be in. Second, I remembered what happened to the commissions for selling or buying shares as technology impacted the stock markets. Commissions dropped 90% in a short time, going from a quarter or an eighth to pennies or less per share. Buyers bought for lower prices, while sellers sold for higher prices. And even the industry itself improved, as brokers became incented to give good advice, not just move shares.
Each year, consumers pay $70 billion to realtors and brokers. Yes, you read that correctly – $70 BILLION in commissions – every year. Wouldn’t buyers and sellers be better off if some of that money stayed in the sellers’ and buyers’ hands and went to funding their kids’ college education, providing the down payment for buying their next home, or furnishing the new house? Couldn’t much of the process be improved by a digital platform which would do everything a broker would do for most homes, but with better marketing and service, at a fraction of the cost, just like what was happening in other markets?
That’s how we got to REX, as in Real Estate Exchange. We have three big beliefs. We believe we can make the experience of buying and selling a home much better at a fraction of the cost. We believe we can improve the process by removing the impediments between buyers and sellers. And we also believe we can share our success with children and families who lack safe, comfortable homes.
So, if you are looking for a better way to create that secure special space for yourself or others – come on in and welcome home!