A startup touting rock-bottom fees, transparent bidding and a mobile app “in lieu of a traditional agent” is the latest upstart brokerage to launch with millions in the bank.
Reali‘s business model revolves around an app that offers listing search, the ability to make and view offers, submit paperwork and chat with a “live expert.”
The brokerage launched yesterday with five agents in Palo Alto, California and $2 million in funding from a real estate investment firm owned by Reali’s two founders and a number of Silicon Valley investors.
Reali is betting that today’s homebuyers and sellers need less handholding and are happy to rely on technology to transact if it means paying less.
The company’s co-founders, Amit Haller and Ami Avrahami, aren’t starry-eyed 19-year-olds bumbling into an industry they don’t understand. They previously founded a real estate investment firm, Butterfly Investments, that manages over 1,000 rental units, according to Haller.
“A handful” of people transacted with Reali’s platform before its official launch, Haller said.
Comparisons to other products
Reali’s mobile app lets buyers create and submit binding offers.
Like Haus and Faira, Reali shows every offer that’s made on its listings to every buyer that’s interested.
Reali also presents buyers with inspection reports to help avoid downstream negotiations that tend to occur if an inspection turns up undisclosed property flaws.
If a buyer purchasing a Reali listing works with a buyer’s agent from another firm, the startup charges its seller client a 4-percent listing fee. It pockets 1.5 percent for itself and pays the remainder to buyer’s brokers.
But the startup’s real goal is to double-end transactions. It’s working toward that goal not only by providing a buyer platform but also by making it easy to tour its listings without agents.
How buyers use Reali — without agents
Buyers can use their smartphones to unlock and enter Reali’s listings while flying solo.
Once indoors, they receive messages from beacons that are strategically deployed throughout the home. The notifications call attention to both perks and flaws, Haller said.
Upon entering a kitchen, buyers might learn the countertops are made of imported marble. But if they ventured onto the patio, a notification might pop up reading “this patio has severe rotten wood underneath and needs to be replaced,” he said.
Reali charges all buyers a flat fee of $2,950.
When representing buyers purchasing a home listed by a competitor, Reali collects that fee after rebating the full commission split.
Reali uses technology to “significantly reduce” face-to-face interactions with clients, but its agents still show buyers other brokers’ listings in person.
These showings are “more about providing the access vs. hovering behind [buyer clients],” Haller said.
Haller argues that the notion that consumers benefit most by using agents that represent their interests alone is a “myth.”
“At the end of the day, neither the buyer nor the seller really knows what’s going on in negotiations between the two agents,” he said.
If buyers can see exactly what they’re up against and know everything they need to about a home right off the gate — warts and all — a property will sell for what it’s worth, he said.
To earn the trust of both buyer and seller, Reali stands behind its service and disclosures with a warranty, Haller said. The warranty “guarantees that you are fully satisfied.”
Since Reali has tight control over its agents — who are paid salaries, not commissions — “we can assume much more liability and we don’t need to be afraid of anything to need to be hidden,” he said.
Editor’s note: The story has been updated with additional comments from Reali.
