We already have at least twice as many realtors as we need, and now we are loading up with middlemen too – everybody wants a piece of the pie! There is an escrow company now that will input your listing into the MLS for $50, as long as they get the escrow!
These guys think they have the magic mix – I’m still not sure what it is – but they are taking it nationwide. But they will find out that somebody needs to do the actual work! Thanks to Susie for sending in this article!
http://finance.yahoo.com/news/800-million-startup-helps-pad-113000231.html#
An excerpt:
Compass cofounder Ori Allon says real estate is one of the last sectors of the American economy that hasn’t been transformed by data and technology.
He says when he talked to buyers, sellers, developers, and agents, everyone felt they were getting the short end of the stick. And when everyone feels like they are getting screwed, the market is probably inefficient.
Launched in 2013, Compass (formerly Urban Compass), has already shaken up the real estate industry in New York and DC. Now it’s raised another $50 million to expand all over the United States.
The funding raise, which was led by Institutional Venture Partners (IVP), brings total funding to $123 million and values the company at $800 million, according to a source familiar with the matter.
Allon is a startup veteran, having already sold two companies — one to Google and one to Twitter. But Compass is far-and-away bigger than both combined.
Here’s how it works.
Compass helps people find neighborhoods and places to live — either renting or buying. And while there is a sleek interface on the user side, IVP General Partner Todd Chaffee says what really impressed the firm was the agent-side technology. This tech has attracted over 350 agents to the company already, with more of half of them in New York.
Allon says what makes Compass special is that it can significantly reduce the amount of time it takes to find a home and it’s a cleaner experience than alternatives like Craigslist. Compass listings appear on a Google-like map, which also includes pictures of the homes. And if you want to see an apartment, you can schedule a viewing on Compass, which will put together an itinerary for you.
Compass acts as a broker, and the service (including fees for the agent) totals 0-15% per completed rental deal. Fees are significantly less for homebuyers, and at 6% (taken on the seller side), are in line with most high end brokerage firms.
Read full article here (watch their video):
http://finance.yahoo.com/news/800-million-startup-helps-pad-113000231.html#
I think its nothing new to tie services, but wasn’t that all outlawed long ago…? Escrow can’t even bring cookies to open houses anymore, right? maybe I’m wrong about that. Nevertheless, since its tech, they are “disruptors” and all of the rules that have been created over years and years shouldn’t apply. Like a cab service running on an app instead of a 1-800 dispatch number shouldn’t have to be licensed or otherwise follow any of the rules….
So this company hasn’t even proven itself to be profitable, yet is worth almost $1 Billion dollars!? LOL!
Bream me up, Scotty!
From the article:
1. real estate hasn’t been transformed by data and technology (ask zillow about that)
2. everyone feels like they are getting screwed – the market is probably inefficient (nice choice of words)
3. significantly reduce the amount of time it takes to find a home (ha!)
4. cleaner experience
For the the ‘disruptors’ reading this, here is your tip of the day. Once you build an app that can convince homeowners to sell their SD coastal home, uproot their entire life as they know it and move to Arizona, Vegas, Austin, S. Carolina, etc., then give me a call. We have all the data and technology we need – what is wanted and needed is more people who want to sell!
And money is not the answer – you can sell your house today for more than ever – yet the listing count is lower than last year!
“2. everyone feels like they are getting screwed – the market is probably inefficient (nice choice of words)”
I think the photo of Mr. Allon may also inform the reader that this man might be a real piece of work. To me, he looks like he might be a silicon valley hoodrat. He gets a couple of buyout deals from some program he writes, and all of a sudden he’s an expert on real estate, and the human condition.
His strategy, as I understand it, would attract every insect around to the real estate community. Who’s going to be up and ready to jump when you “schedule a meeting” to see an apt rental or house for sale on your iPhone? “Professional real estate agents” who aren’t of very high quality, that’s who.
To me, the problem of silicon valley is it socially empowers a lot of psychopaths, who all of a sudden get a say in the weave of our social fabric. Most psychopaths never see jail. Many are “successful.” I think Mr. Allon might be primarily interested in Mr. Allon, and everything else, to him, would by incidental.
Going by his record, his goal is more likely to get somewhat established to be bought out simply for turning himself into an industry gadfly. They buy him out to cancel his noise.
Normally, that’s a pretty inefficient way to go about creating a business, but for parasites, it’s very efficient.
Well I’ve got a property I recently bought for $3.5M and I am willing to sell it for $230K today.
Any takers?
That is just what Zillow did x100 with Market Leader.
Capital destruction at its finest.
Try $355M to $23M.
You can find countless stories on the internets of how it’s no big deal, Zillow is brilliant, it was all in the works when Trulia was bought out etc.
The deception is hilarious. OR not.
You can also find stories and even videos where Benjamin Bernanke was heard stating subprime was contained and there would be no recession.
These guys are going to get smoked when things turn.
Completely smoked.
bubbleinfo 2 !
Cheers,
🙂
Jim,
This entire thing looks & sounds sketchy. It sounds like one of those overnight successes out of the dot.com era of 1995 to 2000.