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Maybe our phones listen to us, or maybe Meta’s algorithms are really that accurate, but somehow my Instagram feed plated me an ad by Perisphere, a new consumer-facing app for selling and buying homes.
If you see it, you’ll likely notice right away what stands out about it, and that’s the ad’s unmistakable targeting of consumer distaste for paying real estate commissions. The “0% commission home listing platform,” its website header proclaims. Scroll down and you’ll find, “Homes are less affordable than ever. Realtors are charging more than ever. We are long overdue for change.”
Are they right?
It makes sense for me to be shown such an ad, as I’ve been talking a lot lately about the consumer real estate experience and how the commission lawsuits all but prove that it needs some form of fixing. Blame attorney Michael Ketchmark, spite Zillow (the most nonsensical scapegoat of them all — might as well blame Bigfoot) and stomp your designer heels all you like, these lawsuits were originated by consumers. Your customers.
And I doubt Perisphere is the last startup I’ll be pitched that directly references current consumer sentiment about real estate agents. Prevu, a rebate-driven, largely web-based brokerage just closed on a $6 million round of funding. Another lightweight, consumer-facing brokerage called Aalto has twice the number of software engineers as agents and has every intention of using technology to create a more consultant-level relationship between consumers and its company.
“We’re not anti-agent,” Perisphere co-founder Jackson Reiter told me. “We just think it [the transaction process] needs to evolve.”
Reiter was a real estate agent in the New York-New Jersey area, and when he and his two co-founders came together wanting to buy rental properties, they built themselves a pricing model to analyze opportunities. They decided that they could likely make more money offering their technology than they could owning rentals.
The app is available to agents to be used as an alternative marketing resource for sellers. But the technology is purpose-built for an individual to fully scan their home using Perisphere’s onboard computer vision solution. The app uses what it calls “AfterImage,” the same AI type behind Restb.ai (but not its product), to read still images and video, inside and out, and marries what it learns about a home to external macroeconomic data sources to create a valuation Reiter and his team think rivals the Zestimate.
The company earns a flat fee per transaction and is building a waitlist of sellers for when it arrives in the market sometime in Q2 2024. It has plans to streamline the transaction and integrate listing feeds.
Reiter said that with the increased frequency of people buying and selling, paying commissions ultimately erodes a person’s savings, making them poorer in the long run. While I question his math a little, he’s absolutely right that consumers would enjoy paying less, and there are countless active legal cases to prove it.
And then there’s the experience itself. The emotional ups and downs, the showings, the tours, the paperwork, the absurdly lethargic mortgage process and a host of other pain points only further the argument that as it stands today, buying and selling a home is fun for only one group: The people who get paid to do it.
Thus, it has to be asked: Do these lawsuits further justify iBuyers? Is Opendoor’s streamlined, consumer-centric message more relevant now than ever? Maybe the problem all along was market timing. I would imagine the last thing it wants to do is risk damaging an industry relationship it managed to somewhat stabilize, but that’s not something shareholders care about.
A June 2022 study by Clever revealed that sellers would accept less for their homes in exchange for an easier process. From paperwork pushing to showings and staging to inspection results and their looming legalities, people are willing to take $45,400 less for their homes to avoid the current home sale model, including the option of choosing a closing date — that’s how much people don’t like selling or buying homes.
Still, the same study showed that most consumers don’t know what an iBuyer is, a challenge to which the guys at Perisphere should pay close attention. Only 27 percent of Clever’s 994 respondents could accurately describe the role of an iBuyer, and many associate it with corporate flipping.
Opendoor was funded a lot of money and runs national television campaigns. It’s hard to capture the public’s attention when up against more than a century of market dominance, entrenched legacy business models and billions in government lobbying.
But Opendoor didn’t have Sitzer | Burnett. Perisphere does. And so too, inevitably, will a number of other eager upstarts who will directly target consumers with new, AI-empowered ways to buy and sell.
