Most real estate agents charge a commission — in many cases up to 6% of the sale price of a home — for listing and selling a house on behalf of a homeowner.
For a home that sells for about $170,000, this commission totals just over $10,000. For a home that sells for $500,000, it amounts to $30,000. And for a home that sells for $1,000,000, the commission would be $60,000. You get the point. Depending on the amount of equity a seller has, the commission can make up a significant chunk of any proceeds from a home sale.
Factor in housing markets where there is a shortage of inventory and houses are flying off the market, it can be even harder to swallow giving up so much money in commission. While there are a number of sites — such as Redfin — that offer lower commissions, the fact remains that many homeowners would still love the option to list and sell their homes themselves, with a little help from real estate professionals.
Enter HomeLister, a digital brokerage and real estate site that gives homeowners a way to list and sell their properties online, with support. The end goal is to give sellers more control of the sales process and a way to keep as much of their equity as possible. By automating the sales process, HomeLister says it “fixes the cost of the sell-side agent,” allowing sellers to save $21,000 on average and shortening the median days on market from 16 days to 9.
CEO Lindsay McLean started the Santa Monica, California-based company in 2015 with attorney and real estate broker Jennifer Stein, after her own home-selling experience.
“I worked with a top-notch agent who helped me to purchase my home. However, I found myself doing most of the work for the sale — showing preparations, coordinating showing times, researching home comps in the area and setting the initial sale price,” McLean recalls.
Her home sold in less than a week at the price she had set in a double-ended deal allowing her real estate agent to keep the full 6% commission.
“Ultimately, I ended up writing a commission check that was more than 25% of my equity at closing. It blew my mind,” McLean, a software engineer and real estate developer, told TechCrunch. “My agent was great, but not really worth 25% of my equity for 15 hours of work. It felt incredibly unfair and I was shocked at the economics of a traditional agent on a sale. I had worked hard to build that equity.”
The traditional model of an agent taking a 6% commission is viewed by many as antiquated. So it’s no surprise that homeowners and investors alike have been drawn to the company. To date, HomeLister says it has helped sell more than 3,750 homes totaling over $1.9 billion in transactions and saving its clients collectively an estimated more than $77.5 million in equity. And today, the company is announcing it has raised $10 million in a Series A round of funding co-led by M13 and Homebrew, bringing its total raised to date to nearly $15 million.
HomeLister currently operates in 17 states, with plans to expand into six others — including South Carolina, Illinois and Michigan — in 2022. Ultimately, the goal is to be in all 50 states.
So, how does it work? If a homeowner wants to list their home through HomeLister, they enter an address on its site and then a system will walk them through a listing process. Customers who select its basic plan list for free and pay $599 when their home sells. The company also offers premium and platinum plans that cost up to $2,999, depending on the level of assistance they want. Services — such as transaction management, 3D walkthroughs, professional photography, having an agent review an offer and handle all the sale paperwork, or online ad campaigns — can be added à la carte. All of its services are entirely online and virtual.
“The main difference with the premium package is that you have a real estate professional guiding you from start to finish, including helping you price your home and strategize, and then negotiate offers and any questions throughout,” McLean said.
While the company declined to reveal hard revenue figures, McLean said it grew revenue “by over 3x” from 2020 to 2021 and increased its market share by 450% in the same time period.
Besides a geographic expansion, HomeLister plans to enhance its current offering and bring additional services to its site, such as title services and automated transaction management.
“Most sellers are now comparing us to traditional realtors, and some to low-service flat fee MLS providers who list you and then walk away,” McLean said. “HomeLister is the best of both worlds. You get as much help as you want throughout the process, with the guarantee of a flat fee that is tied to how much work we do, not the price of your home.”
M13 partner Karl Alomar noted in a written statement that it has been a strong seller’s market in real estate in recent years, with demand heavily outstripping supply.
“This period of quick sales has clearly illustrated the inefficiency and cost implications of the traditional brokerage service: a model that is prime for disruption,” he said. “HomeLister attacks this issue with a thoughtful and valuable digital solution that has great traction with sellers and significant breathing room for expansion and growth.”
Satya Patel, partner at Homebrew, pointed out that real estate is often the largest asset for most people.
“HomeLister is re-designing the home selling process to ensure that sellers keep as much of their equity as possible, which should ultimately help buyers as well,” he said in a written statement.
The headline of this article was updated post-publication to correct the fact that HomeLister does charge a commission, just not one that is a percentage of a home sale.
My weekly fintech newsletter, The Interchange, launched on May 1! Sign up here to get it in your inbox.