In an increasingly crowded and competitive real estate market where the end-users (home buyers and sellers) have less and less control in how the process works, there are now new companies challenging and disrupting the traditional models.
For decades the 6% commission for real estate agents has been pretty standard in the USA. It was followed by 2%, 1% and even a flat fee but no one ever thought of listing the property on the MLS for free.
Because that would have been a loss-making venture, right?
Richr.com – Startup Review By Feedough
Sell your home without paying a single penny as commission.
Yes, Richr lets you list your home for sale on your local MLS for free and makes it appear on more than 750 websites including Zillow, Redfin, Trulia and Realtor.com.
The company defines its business model as homeownership as a service and aims to provide all the services from listing your home to getting finance, contacting businesses providing insurance, legal services, and making the sale right from one platform.
Richr works on the concept of creating a one-stop platform for everything related to selling your home over the internet. The platform works on a simple model where the core service, listing your home on the local MLS is free, and you only pay to the buyer’s agent the amount you decide.
Since the startup is at its initial stages, it’s currently focused on getting more customers on board by providing free core services like listing on MLS and around 750 real estate websites right now.
The company has created a network of brokerages that are willing to list your home for free on the MLS. All you need to do is complete a home questionnaire and specify the percentage you are willing to pay to any agent who brings you a favourable offer for your home.
There are cases when your listing is responded to by individual buyers who contact you directly. In such cases, you don’t even pay the commission to the buyer’s agents.
Now, providing its services for free doesn’t mean that the company doesn’t plan to make money in the coming future. We discussed the same with Richr’s founder, Glenn Orgin, who explained TO us its planned revenue model.
Transaction automation platform
Richr will enable sellers and buyers to communicate and interact with one another, supporting all parties to understand where they are in the sale transaction. These features include tours, offers, direct communication, negotiations, sales contracts, and the ability to communicate with businesses that provide lending, insurance, legal, title, and closing services all in one place.
The platform will essentially create a single sale transaction itinerary and communications platform to let all parties know where they are in the timeline of the transaction. We will charge a nominal fee to use this service.
Richr will provide several financial products, including sale-leaseback, iBuying, equity release, and co-investments. The platform will offer these services to create financial freedom and easier access to capital when selling and buying a home.
Richr will charge origination fees for each of these products.
Richr will offer businesses the ability to provide their services to sellers and buyers at a cost per month in particular areas.
The Value Proposition
Richr found its way in the market by moving away from the traditional 6% brokerage which used to cost home sellers around $18,000 in broker fees.
Besides this, it plans to create a freemium business model where every seller and buyer needs are fulfilled within the same dashboard. This will surely disrupt the way the system works now as it’ll remove many barriers to buying and selling properties in the USA.
How is your product/service disrupting the industry?
Glenn: We give the same exclusive access that real estate agents have to the MLS and give it directly to home sellers and buyers.
How are you providing this service for free? Is this business model sustainable?
Glenn: It does not cost real estate brokers to submit home listings on an MLS. Our future revenue model will derive from transaction automation, financial, and advertising products. We will provide tools for homeowners to generate revenue by renting out their home for storage, co-living, co-working, events, and parking.
The history of your startup (how it all started)?
Glenn: I am a Brit. I bought and sold houses in the UK where agents receive circa 1% for selling a home and was shocked when I moved to Miami and discovered Americans were paying 6% brokerage fees. For the 66% of Americans who have mortgages, that 6% figure is actually a much higher percentage of their home equity, and sellers are just giving it away. In an age where smart technology has made discovery and selling of homes easier, sellers fees don’t need to be so high. In fact, I set out to make selling without the middle-man so simple it could be done from one’s cell-phone, for free.
Glenn compiled an award-winning team to build a technology platform to empower homeowners who want to sell their homes without giving away a large chunk of their equity to agents. Richr.com sets out to equalize the playing field and help individuals market like an agent and choose what to do with their hard-earned equity.
Why did you choose this niche?
Glenn: My background is in real estate investments, and I enjoy building services that bring value to people.
Glenn Orgin: Founder & Chief Executive Officer.
Studied at University of Birmingham, England.
Partner at The Faith Group, a family-run real estate investment company, which has 1.2 million sq ft under ownership.
Serena Orgin: Chief Compliance Officer.
Serena was a Barrister in London, England. She holds an LL.M. in International Law from the University of Miami and is a member of the New York Bar. Serena is also a Licensed Real Estate Associate.
What’s the progress till now and what are you expecting in future?
Glenn: We launched in March 2019 and have seen excellent traction. Our vision is to create a transaction automation platform that will service our financial and advertising products.
Feedough’s Take On Richr
Richr’s plan is to disrupt the real estate market as it is right now. The vision to create one dashboard to fulfil every need when it comes to selling and buying homes is truly an innovative idea which will be welcomed by the target audience.
The point that the company is planning to earn good revenue despite its customers saving more than $5000 makes us ponder on its business model even more.
However, companies like Faira and USrealty which provide a similar service can provide much competition to Richr.
If you live in the US and want to sell your house commission-free, Richr is the perfect choice for you. There are no strings attached to the offer. You list your house on the MLS for free and choose the commission you wish to pay to the broker who finds a buyer for you. There are also chances that your listing will be seen by other buyers on websites like Realtor who contact you directly and you save on commissions entirely.
Besides this, Richr will also provide you with other services which include but are not limited to finance, legal, and advertising.
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A startup consultant, dreamer, traveller, and philomath. Aashish has worked with over 50 startups and successfully helped them ideate, raise money, and succeed. When not working, he can be found hiking, camping, and stargazing.