Just a few weeks ago I was in Utah for the holidays, spending time with the many family members my husband and I both have there. At one family gathering, a cousin began talking about how he bought a brand new home and sold his own home all without a real estate agent on a site called Homie.
It seemed legally risky but he told me that Homie had blown up in the area over the past year, promising to handle all the paperwork while cutting out the middleman, the closing costs and the whopping six percent commission often associated with a realtor.
Johnny Hanna, who had previously developed the successful real estate lead-gen software Entrata, started the agent-less real estate site with a few friends in hopes of taking some of the frustration out of the process of buying and selling a home. He tells TechCrunch Homie has taken over the millennial market along the Wasatch Front, the area linking a mountainous region from Provo to Ogden, Utah, since launching 18 months ago, and it now plans to do the same in Phoenix, Arizona.
Hanna also mentioned he could possibly expand Homie to Vegas, Dallas, Denver and about five to 10 metro areas in the next year.
But so far, the startup has only sold about 1,700 homes on the platform — all in the aforementioned Wasatch Front region. That’s a fraction, though a sizable one, of the 13,600 single-family homes sold in Salt Lake alone in 2016.
Of course, Utah also makes for a perfect market for something like Homie to thrive in with its newer and sprawling suburbs filled with tract homes. You don’t have to physically visit every house in the neighborhood when they’re all pretty much laid out in the same way.
And sales are up overall in the area as more people have been attracted to the state’s booming tech scene, outdoor recreation offerings and family-friendly, low-cost living.
Will Homie be able to meet with the same success in other markets? “We looked at a lot of different markets in the U.S. and identified the ones that make the most sense,” Hanna said. “We had some of the biggest demand in Phoenix.”
Phoenix also has a lot in common with the Wasatch Front. It’s a hot market with a lot of growth potential and the same type of tract housing is popular in the area. You don’t need a human to show you the same house over and over when one is like the next and it’s more about negotiating price.
As mentioned above, Homie also handles a lot of the legal paperwork, and even offers the financing, should you need it. On top of that, the startup provides inspectors, appraisers and other services. “It’s really a one-stop digital shop” for home buying, Hanna told TechCrunch.
For young, upwardly mobile families like my cousin’s, it seems like a good solution that could take some of the hassle out of the process and keep more change in your pocket.
Homie does charge a fee of roughly $1,500 per transaction, but that’s pennies compared to the possibly $18,000 you might pay the realtor on a $300,000 home, for example. According to Hanna, customers are saving about $10,000 on each transaction and have saved more than $17 million since Homie launched its services.
But the platform might not work as well in a market like San Francisco, where all the homes are pretty unique and are going for top dollar with not a lot of room for negotiation. That’s where a bot may not be the best choice for getting the home of your dreams.
Homie also will need a bit more capital with all of those expansion plans. So far, the startup has raised about $9 million in seed funding and is currently seeking another $10 to $15 million in Series A financing to help it scale in the next year.
It also faces competition from the likes of Opendoor and Faira, which also aim to streamline the process and cut out the real estate agent. Opendoor is the bigger contender — out-raising both startups with its $320 million in VC cash and being first to market, starting in 2014. Homie will need to figure out how to take on this juggernaut as it spreads out across the country if it wants to succeed.
But a couple things are certain — younger buyers and sellers aren’t keen on the middleman taking their money and real estate agents will likely all be replaced by automation one day. Hanna, a realtor himself, is okay with that bit. “Change is inevitable,” he says. Even if that means one more human job will be taken over by a bot.