The Internet has disintermediated almost every business that used to rely on brokers — except for the real estate industry. There, we still pay huge fees to agents who often do very little for their money and aren’t necessarily on our side. Allre, which is launching at TechCrunch Disrupt SF 2014 today, wants to bring the real estate business into the 21st century by giving buyers and sellers a single platform for buying and selling their homes. We already buy everything else online, after all, so why not a house?
Allre was founded by Kathy Dryden, who used to be a real estate agent, and Dave Mercer in 2012. In her work as an agent, Dryden realized that many clients — but especially millennials — considered it a hassle to work with an agent, especially now that they can get their information from a multitude of different services like Zillow, Trulia, Redfin or Estately. In the end, they barely need an agent, but to close the deal, the seller still had to pay the full fee (and given that most sellers will figure that into their price, the buyers indirectly pay, too).
At first glance, Allre looks to be a new play on For Sale By Owner.com, but it’s quite a lot more than that. While it does offer sellers the ability to list their homes, the real power of the platform is in the fact that it lets you handle the transaction completely online. You start with your basic listing, then you add some images and/or videos, set the standard terms for the transaction (title, escrow, etc.) and your listing is online.
As Dryden noted, one thing that’s often a roadblock for sellers who want to go direct is that they don’t know how to price their homes. For them, Allre offers a pricing tool that takes the data from the previous year’s worth of sales in a neighborhood and creates a list of comparables. Sellers are always in full control of the price they set, but buyers get access to the same data, too.
Buyers — who are all verified and have to show a pre-approval letter from their banks — can then find listings on the site and set up a time for a showing (or attend an open house, which can also be scheduled on Allre).
Once they are ready to buy, they get three options: Instabuy; a traditional offer; or a real-time online negotiation. With Instabuy, buyers simply accept the sellers’ terms and that part of the deal is done. Allre founder Dryden likened it to the “By Now” options on eBay — just for a somewhat larger transaction than your usual Hummel figurine splurge. Users who opt for the traditional offer process can either submit their offers (which can always be lower or higher than the asking price) and go through the negotiation process that way, or opt for a guided real-time negotiation that happens completely online.
Once the deal is done, Allre will help walk all parties through the rest of the process to get to the closing date as smoothly as possible.
Of course, there are still parts of the process that involve other parties, and some things — like home inspections — can obviously not be handled online. To get Allre where it is today, Dryden had to negotiate with a large number of major players in the real-estate ecosystem. The company has a deal with one of the largest closing services in the world, for example (though it can’t disclose that company’s name yet). It also has a partnership with Prime Lending in place to help buyers with their financing. Getting all of that in place is one of the main reasons it took Allre so long to launch.
To make any marketplace work, there have to be enough buyers and sellers on the platform. That may be a challenge for the company, as it needs to get its name out to enough homeowners and it has to overcome the inertia that still pulls buyers and sellers into the traditional real estate ecosystem. Dryden, however, believes that the MLSes are losing traction. Plenty of real estate transactions already happen outside of the regular channels, and many houses are sold today without ever being listed on an MLS (and Allre doesn’t get involved with MLSes at all, either).
The company expects to make additional revenue from referral services for things like mortgages and home warranties and inspections. Allre will also feature ads on its site.
Dryden, who is quite outspoken about the state of the real estate industry, argues that buyers and sellers are now at a point where many will feel comfortable handling such a huge transaction online. Starting today, the company is open for its public beta.
Q: What is your business model?
A: We don’t charge our users anything to avoid issues with real estate regulations, but we will partner with companies that offer home insurances etc to collect affiliate fees.
Q: How do you go to market? How do you get enough buyers and sellers?
A: san Diego is our home market, that’s where the majority of our contacts are. We have investors who will give us exclusive inventory. We’ve also been building an interest list for quite a long time.
Q: You mentioned some regulations that would be in the way. If you charged any fee, would you have to deal with a lot more hurdles?
A: If we charged a fee, we could be considered a broker and then real estate regulations apply to us.
Q: Could a buyer and seller still use an agent and use your platform?
A: Yes – we encourage our users to do what makes them feel comfortable. We hope that our platform will allow them to pay lower fees.
Q: This is complex stuff and looking at your site, there’s a lot going on. How can you make this even simpler?
A: It’s really difficult to show everything we do in six minutes. There are about 15 moving pieces at any time. We have a dashboard that helps you managed your real estate life on Allre. Our goal is that once users get familiar with the technology and they can see how everything works, they get more comfortable.
Q: Obviously, this is right for disruption. Key here is to get buyers interested.
A: We did a study. There are a few ways people find houses: Google searches, friends and family, neighborhood knowledge and the MLSes. But owners can also use sites like Zillow to market their homes and that will bring traffic to Allre.