Launch HN: Modern Realty (YC S24) – AI Real Estate Agent for Home Buyers
Our mission at Modern Realty is to make home buying easier, faster, and far more enjoyable. We interpret real estate data, giving you an edge on other home buyers.
Since 2024, there has been a growing need for innovative solutions in real estate, especially with tools like Zillow making it easier than ever for buyers to find the right house at the right price. However, the process still requires an agent, even though buyers are doing most of the work themselves. Modern Realty changes this by offering an AI self-service solution.
Raymond and Raffi came face-to-face with this technology's potential while working on AI at Google and handling billion-dollar asset transactions as an attorney, respectively. The AI tools we've built guide users through every step of the home-buying process, from scheduling showings to making offers, all without the need for a traditional agent.
Before we expand further, this summer we've built our core AI real estate agent, which can handle everything from disclosure summaries to competitive market analyses. You can see our platform in action at https://modernrealty.io. We're particularly proud of our offer generation tool, which creates offers that are then reviewed by an attorney at no additional cost.
We're excited to be launching here on HN and would love to hear what you think! If you're in the market for a new home or just curious about the future of real estate, visit our website or schedule a call with us to get started.
309 comments
[ 3.0 ms ] story [ 403 ms ] threadThen of course the realtor wants you to look at houses they represent (as a comp), and also introduce you to their inspector/mortgage/lawyer friends. It seems like the incentives just aren't aligned at all.
I imagine a lot of people in the tech scene feel the same. i.e. would love a "buy now" button that skips all the people steps. But I wonder how much that sentiment is shared by the broader real estate market.
Realtors are paid on commission which means that they want to transact high and immediately. Poor alignment with intent for buyers.
We have an offer drafting service on our website where all you need to provide is your email, phone, property, and price and we can go from there.
This is either naive or disingenuous. Do the math; realtors want to close fast but don't really care about the price the way the buyers and sellers do. The commission difference on a significant gap is not worth losing the deal.
My own realtor convinced me to bid a price that the seller accepted in 30 minutes for my home - immediately == high.
You get it better than the parent commenter... just this morning on a deal the other agent and I each agreed to chip in a bit to keep the deal together, even though the actual commission we will each receive is borderline not worth the effort. Real estate is a relationship business. We take care of clients they will come back and they will refer their friends. Yes deal flow is important, but just transacting high and fast is a good way to burn out both yourself and your clients.
How are you planning on handling cases that abruptly require complexity? At first glance, it looks like using a service like what you are describing would have been an unmitigated disaster and would have cost us a ton of money, and we wouldn't have known that at the start of the process either.
Most Realtors are not attorneys. You said you needed to talk to an attorney but what if your realtor.... was an attorney?
So we have more ability to handle edge cases, not less!
-Raffi
Edit: AI is currently being coded up to mimic my behavior/tone/advice/etc.
You, as a licensed attorney, are training an LLM to give your clients legal advice?
Said every failed half baked AI startup the past year. Show the results when done. Saying that you are working on AI is barely a step beyond saying you have a concept of a plan.
I was in a situation where the seller of the house, after signing our contract, halfway through closing, decided to try to accept another offer that would close faster. The seller attempted to get out of our contract when we wanted to enforce it and close.
An AI wouldn't be calling escrow companies for us. An AI may have a recommendation about whether lis pendens is necessary but it wouldn't be personally taking it to the courthouse before close of day on a Friday. An AI would not be able to watch the property in case the other buyers showed up.
Obviously with a smooth transaction none of this is necessary. Most transactions are smooth, and that's great. But ALL the value of a real estate agent is in the edge cases. I'm asking what would happen to me if I would've used a tool like this instead? When abruptly this sort of work becomes necessary but I've never spoken to a person. In such a time, I don't just want advice, I want an actual agent to help me make a real decision, quickly, and then act on my behalf.
Is that Raffi? How many people is Raffi helping? Is this just Raffi's fancy tech driven real estate office that will be slightly larger than the usual due to leveraging tech?
But yes, when stuff like this happens, we'll have a person do the required representation.
Put it like this: if 90% of realtor time is spent on communication that is done over text an email, then each realtor will be able to serve 10x the clients. But that still leaves time for them to show up at a courthouse on a Friday, as you mention
This might be true in urban markets - I have seen agents with a good book of business who are able to work remotely - but it isn't at all true in rural markets where the culture is entirely hands-on. I still do far too many deals with ink and paper in someone's living room or on the back fender of a pickup truck.
You are kinda leaning into an observation I've made as a Realtor... whether I should go get a law degree. In many states, the real estate agent really is just a marketing person, and once it's time for a contract the lawyer gets involved. In those cases, the challenge I see is that lawyers are not real estate people - it has been my experience that they know nothing of zoning, land use, water rights, fencing, schools, soils, construction, and the myriad of things I'm expected to know about or find resources for my clients about.
on the other hand, when I look at the risks to my business and the ever-increasing regulatory environment, it sure looks to me like the future belongs to lawyers. Better to get a law degree and then become an expert in real estate than be a real estate expert beholden to whatever the lawyers are making us do now.
Is your use of AI just chatgpt API calls? How quickly could you scale given there's still humans in the loop? What are the blockers to getting humans out of the loop?
Have you used your MVP to close any real sales?
Our main service is our texting service which you would text as if it was a normal realtor and it can get you market comparisons, schedule tours by texting agents, asking about if there's offers on homes, etc.
Blockers for getting humans out of the loop is primarily just user trust. It's quite simple to pull APIs that get specific data and text people and fill forms, but real estate agents have a very high CAC problem, due to this trust issue and competition.
MVP has completed 1 escrow via text bot, we got paid 27k, another home went into escrow yesterday, 35 clients touring homes with us. We registered with our real estate brokerage in July.
That's amazing traction! Congratulations!
How much manual intervention did these first couple of sales take? Are you using your own local/hosted model and fine tuning or otherwise incrementally improving it?
Do you think that people want humans out of the loop when it comes to buying and selling real estate?
The quality bar is very low to become a realtor (3 months of online coursework).
Realtor reviews are cooked and completely fake online.
So it is not a big jump to say that the average realtor experience is poor as they are usually driven by a single advertisement or a single Zillow link for most people.
We try to mimic the behavior of the best performing top 1% of realtors and give that experience to all.
The issue is that we don't really have a choice in the matter. In a properly functioning market, you could still have your realtor if you wanted, and I could pretend they don't exist instead of having to help support their lifestyle.
When I sell my current home, the realtor commission would be around $20,000. That's $20,000 cash equity that is taken out of my hands. When I did this simple calculation, that's when beyond the shadow of a doubt, I knew I would not be using a relator -- I don't care how much of a headache it could be. I'm keepin' that $20K.
I've purchased two homes and I'm confident I can handle the paper work involved. I mean, most of the paper work is the attorney's and title company's anyway. The realtor is basically inserting himself in between those companies and then relaying that information to the client. In my case, my realtor was copied on all communications, but that is it. I was the one producing all the documentation, signing agreements, reading reports, following up on inspections, etc.
And I had one of the top Keller Williams agents in my state. The guy is known by everyone.
I can't make sense of paying someone $20,000 to say, "Let me know if you have any questions about the inspection report"; or to tell me, "I wouldn't buy this. There's moisture in the basement. There's a leak in the ceiling. The patio is not level." etc. I'm knowledgeable enough to see things like this, and if not, my inspector will educate me on it and identify issues.
I'm curious why you're paying for an inspector, though? Wouldn't the buyer want to hire their own inspector? Are you just looking for issues that the buyer might complain about? (My experience is that an inspector will _always_ find things that the buyer can use to negotiate the price down.)
I was under the impression that the title company was also chosen by the buyer (or their agent). Although they generally expect the seller to pay for, well, almost everything.
If the buyer is using an agent, I assume you're not paying the buying agent's 3%, right? I wonder if that would dissuade some buyers.
I've been in your shoes (before I got my license). I always had doubts about what my agent was actually saying on my behalf, and what they were telling me about the seller's position. It often felt like the listing agent would magically respond only after I followed up. That's why we're committed to giving you direct insight into the negotiation process, so you're not left guessing about what's really happening behind the scenes.
Not to defend the current real estate industry too much, but if the sellers were not paying $20k for a buyer's agent, the price of the home would likely just be $20k higher. That's an extra $20k that the sellers would get to keep. If they kept the price the same with or without an agent, that would seem to be some pretty irrational behavior. They'd be giving up $20,000 for no reason!
A rational seller is selling for as much as the market will bear, and are only paying transaction costs that they absolutely have to. Again not defending the current system at all- the sellers are the ones who who are paying too much in this case
Just curious, how are you going to advertise your property to real estate agents and consumers in your area?
I can't even get my house into the MLS without using a Realtor, and I'm currently logged into the MLS database server running updates. ;-)
I'll agree that RE agents ("Realtor" is a trademarked term) are essentially unnecessary for the happy path when a property sale goes smoothly. In that case, they are overpaid secretaries.
But the reason RE agents are their own profession is because when a sale starts to wander off the happy path, there can suddenly be a LOT to know, discuss, and do. A good RE agent will be honest with you if the asking price is ridiculous in either direction. They know all the little local details and laws that are easy for a layperson to miss. They'll help you deal with a difficult buyer/seller. They know where the flood plains are. They know about zoning. They know who to call when the weirdest shit pops up. There are few other areas in life where ignoring (or not seeing) non-obvious red flags can ruin a person or family so completely.
I have had bad RE agents that were uncooperative paper-pushers who kept dropping the ball, and I have had good RE agents that were worth every single penny they earned.
If you want to be mad at something, I suggest looking into the National Association of Realtors. It is essentially the union that all RE agents are a part of, whether they want to be or not. NAR essentially owns the bulk of property listings in the US and heavily gatekeep access to it.
For our value add compared to the regular realtor when things go wrong. Our thesis is that because 65% of home buyers use the first realtor they meet, most individuals are getting this "uncooperative paper-pusher who keeps dropping the ball". We can outcompete this average realtor on the quality front.
Our end-game plan is to own our own MLS.
I don't want them. They've inserted themselves in the process against my will.
Really should review submitting to ycombinator in the future :) always feel my ideas aren’t good to pursue.
It's not that your ideas are good or bad. Most of us have mostly bad ideas. Some of us sometimes have good ideas. But there's really no way to tell if your idea is good or bad until you try. No amount of intellectualizing will give you a trustworthy answer.
We started our business with what seemed (to me and my smart friends) like a great idea. It made tons of sense. I had this whole 48-phase plan for how we'd conquer the world. And then ... it turned out that people didn't really want the thing. The idea was actually bad.
By contrast, the business we're working on now has started to work pretty well. I have to admit, the business didn't make much sense to me at first. I could conjure a million reasons we'd struggle to compete. And then ... when we went to market, the thing started to work. Still early days, but there are lots of positive indications.
My biggest lesson in the last year-and-a-half has been that I just don't know that much :)
a) How do offer + contingencies work (contingent on financing, home inspection etc.), will a human immediately have to get involved when any contingencies are involved?
b) Your service will text the sellers agent, and get me the lockbox number so I can tour a property myself without having to schedule with a buyers agent? Just that service alone would be amazing
b) Yes. Technically, a licensed agent has to open the door, but ours will stand outside.
I'm curious about b). If you are sending a licensed agent to the property, wouldn't the typical buyer want the benefit of their knowledge?
Personally, not a huge fan of the cartel. On the other hand, I have worked with agents who have saved me tons of time & money by spotting problems before inspection. If the agent is going to be present, it seems logical to have them contribute their knowledge.
Now ... an AI powered tool to helped realtors and buyers communicate, schedule, track progress, .... that would be a great application.
I think many parts of being a realtor are already automated by realtors. They are already trying to automate themselves.
They use scripts to get first clients and negotiate. They use automated email campaigns to advertise their market and local expertise. They use automatic mailers for algorithmically selected properties. They use APIs & software services to determine similar property suggestions.
So these pieces are already automated by softwares that realtors use.
Our difference is we'll wrap everything up with a bow and just fully acknowledge that we are an automated solution.
Slumlords, racists, and other CHUDs are salivating over this
B) I don’t think you tell the agent your race, and traditional bias protections (namely doing the whole process without meeting in person) would still be in place AFAIU.
B) Yes, I think the AI agent actually can more easily ignore your race / age / gender because it is not programmed to go look up those things and people don't text their agent what they are - hard for the LLM to know these things and start to bias
I challenge you to support that idea in any way.
> because it is not programmed to go look up those things
The concern is what it's trained on. How have you curated your data to avoid introducing biases based on race/gender/etc?
> people don't text their agent what they are - hard for the LLM to know these things and start to bias
The exact opposite. The way people communicate, especially via text, is heavily dependent on their background and is full of social signals. LLMs are trained on data sets that are often annotated with that kind of information.
How would you affirmatively prove that your LLM model wasn't making inferences about those categories that influence it's output?
I understand your wife is in the industry, but that’s honestly a huge bias in this discussion IMO, not a help. No offense intended, of course; I well understand and totally relate to the sinking feeling of changes coming to your industry! But I think it’s just objectively provable that home realtors and car dealerships are two US industries that have been allowed to fall behind the times for a while, now.
Some people still don't want to even shop online! Those people probably won't be convinced to use an AI based service
I bought my first house last year and the amount of back-and-forth was insane. So many different ways to move money around, so many different conflicting and seemingly-but-not-actually-conflicting interests.
My agent recommended we get a sewer scope, even though the inspector didn’t think we needed one. Well guess what? The sewer line was fucked, and could back up at any moment and destroy the finished basement.
Thus ensued many many more emails and small changes to contracts that many people needed to sign. It seemed like such a random thing, but all of a sudden $10,000 was on the line that nobody knew existed. All because my agent had worked in that neighborhood before, and knew that those sewer lines were all old!!
After that experience, I’m convinced you cannot automate out the human element of real estate. There is so much nuance, and the stakes are so high.
But like you said, I think there’s room for a LOT of automation in tools that realtors use. And if you can make realtors more productive, maybe you can get fees down.
I think that’s compass’s main draw. They make a bunch of fancy internal tools for their realtors to use, so that they can do more business at a lower rate. At least I think I remember hearing that on a podcast once…?
For most seller agents, if they will send you that one text that says there's other offers, and that's a lie, and they don't respond to other inquiries about it... is there a way to tell that this is a lie? I'm not sure this is possible even for the best buyer agent
Every time someone mentions real estate to me, I immediately think back with intense resentment to the thousands upon thousands of dollars I paid brokers just to unlock crappy studio apartments for me in Boston. I was just out of school and barely had any money, but I was still paying a huge premium over the cost of rent for ~nothing. So annoying.
This company is another rent seeking middleman.
Residential definitely is a lot More of a ridiculous market. But ultimately as an agent, you get hired to work with mostly irrational actors (sellers and buyers).
As someone who is very interested in AI and taught myself how to code (I don’t know any other real estate people who know anything about code), I think it’s going to be incredible hard to uproot the brokerage industry.
It’s challenging to get buy in from many different types of old school, fragmented actors in the space. I’d love to see someone prove this can be done, but I think it’s a challenge, so best of luck. Curious to follow along.
I think proptech needs real professionals who have been in the trenches to be involved because there’s just too much nuance in the industry outsiders have no idea about.
If not, you'll never unseat the seasoned professionals of the UK real estate sector ;)
The whole point of real estate agents is that as a seller I don't trust my house being open to any random buyer.
Move that fee to 1% for buyer agent and you have a massive market.
But even then, the buyer's agents would "refund" the buyer ~2% of the fee as a cashback incentive to use a specific agent.
but recently, the rule changed so the sellers are only required to pay the 3% fee to the seller's agent and buyers need to negotiate their own deal with the buyer's agent.
Currently, there are many brokerages competing on buyer's fees, dropping the fee to 1% or offering a flat-rate fee.
I'm very skeptical that a 1% buyer's agent fee (matching the existing players) would move the needle much.
I just sold a house a couple weeks ago. I agreed to pay my seller's agent 2.5% out of the sale price. I also, in the contract, offered to pay 2.5% to the buyer's agent. In the event that my seller's agent was also the buyer's agent, that 2.5% would be refunded to me. What actually ended up happening was that in the offer that we ended up accepting, the buyer asked us to pay 3% instead of 2.5% to their agent. We agreed.
The structure of the MLS / commission system incentivizes sellers to take out these large fees because they will be rewarded for doing so. Only when the system is upgraded to allow sellers and buyers to find each other and pay market rates will the fees go down (we want to provide our own MLS in the longer term future)
See this is the bit where a good Realtor makes their money... on nearly every deal I do, I am saving or making more money for my buyers and sellers over what they could either do on their own or what they would get from another Realtor. Why? Because I have a strong analytical approach to the market and I actually do my job. The typical agent waits for offers to come in and makes no effort to negotiate a better outcome for their seller. Likewise, many agents are lazy and have no idea how to advise their buyers on what to offer or how to create an overall compelling offer, IE: what are the possible levers we can use to create a competitive offer apart from cash on the barrel? It makes me cry when I see agents who don't even know what acting in their client's best interest means - but I don't blame them, I blame the public that makes no effort to interview or get to know their agent. Way easier to pick the person from your church or who you went to high school with than to actually interview and ask questions. I often wonder - does the public also act ignorantly when picking a lawyer, an accountant, a doctor, or other professionals?
The trouble is that it’s hard to distinguish between “friendly and nice” and “competent”. This is how people end up paying a financial advisor almost 2% to buy index funds.
It would be nice if we could rely on certification by third parties as a mark of competence, but clearly that’s not enough.
It’s the buyer’s money, which becomes the seller’s money, which gets paid to the agents. Realtors need to stop lying about who pays the fees.
If the seller uses 10% of the sale price to buy a boat, are you going to say that the house buyer bought the boat?
Houses aren't sold at a fixed price. Buyers all put in bids and the seller chooses the best one.
The amount paid for the house isn't going to be less if there were no agent fees. The buyer is paying the specific price because there are other buyers who would pay slightly less. It isn't like buyers are adding money to their offer because of agent fees, and sellers aren't going to sell the house for less if they didn't have agent fees. The price point is market equilibrium, which means the agent fees come out of the seller's total.
Now, you might try to argue that more sellers would enter the market if sellers made 6% more on selling their house, which would increase supply and decrease price, but that's a big stretch... sellers are usually selling their house for reasons besides making 6 percent more.
Buyers are the ones paying everything.
At 6%, that means the seller is willing to accept 94% of the sale price for the deal. So with a lower fee or simply less middle men feasting on low information transacters, a buyer with 94-100% could purchase that house and both parties would be happier.
Buyers historically have never negotiated the fee paid to their agent, other than choosing an agent that would refund part of their fee.
Negotiated, no. Paid, yes. If the government adds a 6% tax on shoes, I promise that doesn't mean a 6% drop in Nike stock. It just causes the price to go up.
I would argue, though, that it is more accurate to say it is paid by the seller, though, since they are the ones who agree to the percentage with the agent, and who signs the contract to pay the agent.
The buyer is the only source of money. The rest of it is just a shell game.
We say the person who makes the choice for the purchase is the one who paid for something… the seller signs the contract with the agent, so they are the ones paying.
Anyone selling a house using an agent isn’t someone who manufactures houses. They are mostly people selling their own home because they are moving to a different home.
They are going to put their house up for sale, buyers will make offers, and the seller will choose the best offer. The buyers are making offers based on what they are willing and able to pay; they don’t care whether 100% of that sale price goes to the seller or if only 94% does. They are making the same offer no matter what.
And sellers aren’t going to take 6% less if they don’t have an agent. They are going to take the same offer whether they get 94% of it or 100%; they are taking the best offer made.
Even your app example isn’t how it works. There is no “break even” price for a digital good that doesn’t have a COG (cost of good). App manufacturing has a fixed price, and then every unit sold costs them zero dollars.
They are going to set the price to be what maximizes the value of “cost per unit * units sold”. That equation is going to be the same no matter what the App Store percentage is. The only thing the percentage does will be to change the amount of money the company makes and change the equation on whether it is worth making the app at all; once the app is created, the only thing that will determine the price is the equation above, not the cost per sale.
So many people seem to have this idea that prices for things are based on some “cost per good + profit margin = price”, but that isn’t how any good is priced. Many goods end up being priced in a way that is close to that, but that is only because of robust competition. Prices are set by the seller trying to figure out which price will generate them the most profit; the cost to make the good only sets a price floor, where if they can’t get more than that amount, it simply isn’t even worth it to make and sell the good. It has nothing to do with the price ceiling.
Obviously seller can decide if agree on minimum price. Otherwise I doubt if someone would sell if bidding would end at $1k for a home. If seller wanna sell apartment for $100k then they expect that someone bids with $105k to covert agent fee.
> And sellers aren’t going to take 6% less if they don’t have an agent.
Why not? I many times did a deal with AirBnB host after few weeks of renting by talking with them directly and asking for the same rent minus AirBnB fees. They had no problems with that because they would earn the same amount and only cutting the middle man.
> the cost to make the good only sets a price floor,
Fee based on percent like 6% doesn't have any floor. You really believe that if we now change this fee to 66% this wouldn't have any impact on buyer and buyer would be fine because this 66% fee is paid buy seller?
I get that middlemen and trends can affect price anchroring. So it isnt completely black and white.
https://www.interactivebrokers.com/en/pricing/commissions-bo...
The real estate market is still largely price fixed and quite inefficient.
Went to great lengths, considering they've lost a few major court cases and are now prohibited from their prior shenanigans.
https://en.m.wikipedia.org/wiki/National_Association_of_Real...
If you want to save on commission, then get the pics taken yourself, and pay a listing service a few hundred dollars for your property to show up on Zillow/Redfin.
[1] https://www.nytimes.com/2024/08/16/realestate/realtor-commis...
As in all things you will get what you pay for. I’m not interested in fighting with anyone about what a realtor is worth but I will say:
* All agents are not created equal
* A good agent is absolutely worth it
* 6% is only high if you don’t value your time and/or if you are ok getting a worse deal because you don’t know what you are doing
You are not paying an agent hourly for the amount of time they work on your transaction, but for their knowledge and experience - which cost them significant amounts of money - to guide you through the transaction and not shoot yourself in the foot. There is a fine line to walk between getting rejected outright and a deal never happening, and overpaying. You also might be buying a lemon (and not just from the perspective of a home inspection - people *regularly* want to do things with properties and transactions that just won't fly. They need to hear that from somebody on their side before they wind up losing much more than a couple percent). An agent will help you avoid them. Add on top of that how agents can help avoid the many lawsuits there are when people feel slighted and/or are actually slighted in RE transactions, and real estate agents are a decent value.
Agents are functionally like mini-attorneys + advisors for real estate. You wouldn't walk into a court room without a lawyer, and it is not a whole lot smarter to enter into a real estate transaction without an agent.
Even at $60K there are things an agent can do to swing the value of a house that much or more. Maybe you, the seller, will do some/all of those things, maybe you won’t.
Agents are effectively on-call 24/7 (your agent wasn’t? Sorry, see above: not all agents are created equal) and they often work in the off-hours for every other profession (aka nights and weekends).
Here is the thing, /most/ people buying or selling a $1M+ houses are not nickel and dimming. I sure HN has an outsized group of people who disagree, cool, I’ve seen it first hand.
I find it ironic that on a technology forum people are so quick to jump to “agents aren’t worth it” with so many people think the same thing about software developers and/or their quotes for building software.
This isn't exactly an honest comparison. The vast majority of software engineers do not make a percentage of the earnings of the product they're developing. If I work for a company making 150k/year, I don't suddenly start making 300k/year if the company sells my software for twice as much. Likewise, I can't charge twice as much for consulting just because the company I'm consulting for makes twice as much money.
An agent makes a commission based only on the value of the house, which incentivizes them to sell more expensive houses. When I purchased my house, I did most of the work (found the house, hired a home inspector, found my own mortgage, used my own lawyer) - the agent existed because it was basically required, and made 11k for roughly 15 hours of work. If I was wealthier, and could have afforded a more expensive house, they could have made 20k for 15 hours of work. In both cases, they did the exact same amount of work (minimal); why did they make more in the second scenario?
Now that I know how the system works, I will be avoiding agents if at all possible when I sell my current house and buy my next. They're about as useful as used car salesmen, but somehow have convinced the entire continent that the housing market will fall apart without them.
* A good agent is absolutely worth it
People aren't really arguing against these things. I don't get it, if the settlement didn't really change anything, why is everyone making such a fuss about it?
My other question is, is there a linear correlation between effort to sell a home and its price? Is a 3 million dollar home 3x the effort to sell over a 1 million dollar home? Because I pay 3x the money to sell it...or am I paying for the "connections"?
I doubt it's much harder to sell a 600k house than a 300k house, but it could be quite a bit harder to sell a 4m house than a 2m house just because there's so many less buyers in the pool and they're likely to be a lot more particular than just wanting a roof over their head.
It's not about the price per se, it's about the house. If median income in an area is such that the $600k house is "luxury" then it is going to be a lot harder sell. Or for example, I've got a property right now at $559K that is extremely unique and needs probably $150K+ worth of work - so there it sits. Meanwhile, sometimes those $300K houses are super hard to sell if they need a new roof, new HVAC, etc but no one in the area has the $15K it is going to take to actually do the updates because they have just barely enough cash to make the down payment.
I feel like I need to comment here that just because $600K is the cost of a shoebox in a place like Silicon Valley doesn't mean that it isn't a lot of money in many other markets. There are many places in this country where $10K or so in needed repairs to a home might truly be a breaking point for some people.
$3MM anymore may not be a particularly luxury property anymore in many markets. That said - it can cost $$$$ / month for staging and $$$$ for drone work, video and photo work, all the social media and other marketing. Even that $300K house someone else in the thread mentioned, I am in it easily $1000 in my marketing costs before the sign even goes up.
Other agents will have such demand, their fees will remain high.
It’s not clear to me as a potential buyer that I want to go with the commodity, especially in quirky areas like TICs in San Francisco. We’re in for an interesting ride, best of luck to this team!
Sitzer-Burnett involved a very narrow definition of collusion... essentially one Kansas City MLS had a mandatory input field for a seller-paid buyer commission. Realizing the risk of copycat lawsuits, the NAR got involved and decided to settle. Both Sitzer and Burnett should have gone after their own agents rather than turning this into a national issue.
>My prediction is fees will decrease significantly
And my prediction as an agent is somewhere between "business as usual" and "buyers are going to pay more out of pocket and will find it harder to buy homes." Further - many buyers will opt to not use an agent and I'm already making popcorn waiting to see what a clusterfuck that will be as buyers and sellers sue each other into oblivion.
Realtor services are valuable, but they aren't worth 6% of a person's largest investment. On the median home that's $24k, which is considerably more than other professional services related to buying a home.
All the buyer offers we received were also expecting 2.5%.
The more things change, the more they stay the same.
At the end of the day, it's not your agent's job to decide which agents he will work with, it is to sell your home and leave as much money in your pocket without exposing you to unnecessary risk. You'll still have the title insurance, the inspections, and the buy/sell agreement, so what is his problem with someone coming to the table without an agent if their paperwork is in order? To me, him insisting to only "work within his network" sounds like a huge red flag.
Any market structured where you have some people doing many transactions and some doing few ends up skewed to benefit the person doing many while screwing the person doing few.
It's true with realtors, IPOs with investment banks, car dealerships, funeral homes etc. and it's a hard problem to fix.
Car dealerships are mostly middlemen between customer, manufacturer, and state government for registration and tax collection.
I just can't see how you eliminate the need to have locations to store and move around 5000lb metal objects without them.
If you have faith in the brand, is it that much more absurd to buy via transfer?
My friend needed body work on his Model 3 after someone hit him. They sent him to a traditional dealership body shop an hour away that was booked solid for 3 months. His insurance only covered a month of rental. His life situation allowed him to do the remaining 2 months without a car but not everyone has that luxury.
Tesla has to do this via partnerships and has little control over the customer experience. Great for people are willing to suffer for the brand but most will take the path with least headache.
Has learning to code generated any benefit to you? What areas do you think have space for code to help buyers?
I think there are many, and - 'AI' or not - a clever tool can generate real value for buyers. Things like mis-zoned units, unreported square footage, signs of buyer motivation, estimates of homeowner equity, etc. can be estimated by good buyers agents but could be made available to everyone for a small subscription.
which could maybe turn out better in the short term as tools for human agents, but still
TLDR: Oftentimes the agent not being proactive is the cause of the buyer's behavior.
We are working on morfi.com, trying to build better software for mortgage professionals, and it's challenging.
You can see it in reporting from firms like MeridianLink, mortgage (and probably real estate) lag behind their peers in the adoption of technology.
https://s28.q4cdn.com/477693378/files/doc_financials/2023/q4...
CRE professional here (about a decade in the industry) who was a coder first. I think there's plenty that can be disrupted in real estate, and specially commercial real estate, where there are a lot of old problems that are ripe for solutions. It's like you said though - those who experience the problems and actually know how to write software to solve them are rare. We are in a good position for opportunity.
I think that brokers can (and should) be replaced by something more efficient, but the real problem for disrupters is regulation, IMO. A program/app/SAAS cannot hold a real estate license, and therefore cannot do things like quote rates, terms, or manage transactions. As of right now, it's illegal in most states.
As for the website that OP created, I think it was a nice attempt, but it seems very half-baked and the case for its value is not clear at all. There's some pretty design and not a lot of substance there.
I wonder if the app could use the same "legal workaround" that political SMS spammers use. The app queues the messages, but an intern mashes the spacebar 100 times to spam 100 different people, therefore a human sent the message, therefore the spam is legal.
Now hire someone with a real estate license to mash the spacebar for your realtor app. Does it suddenly become legal?
I don’t think you’re making the argument you think you are. If an agent is there to be the rational for the irrational, then an AI listing agent talking to an AI buying agent are two rational beings getting more done than ever before, on behalf of sellers and buyers who are free to be themselves.
I have family that are brokers are frankly they aren’t very smart but they know how to hustle, so they do decently well. They offer a service and do that but the costs for what they do are really weird in the margins.
It seems like the most perfect example of a bullshit job but somehow it benefits both sides enough that it persists because home ownership is such a (reasonably but problematically) aggressively promoted thing.
Very confusing tbh.
There's a ton of money and data flowing through this industry. There are plenty of dilettante agents who are far overpaid. There've been a number of startups trying to tackle this (ZipRealty, Zillow, Compass OpenDoor).
My cynical take is that these startups begin with consumers, but end up serving agents and brokers, because that's where the money is.
So I don't think displacing the agent relationship is going to be a winning strategy, because buying a house is a rare large purchase of a non-fungible asset which can positively or negatively affect your life. (Not talking about investors.) Just like folks hire lawyers for divorces, accountants to review ISOs, or business sellers hire brokers, there is value in hiring an expert for high-stakes, rare purchases.
This is a great book about the value of middlemen: https://www.amazon.com/Middleman-Economy-Brokers-Everyday-Ma...
However, there is plenty of room to improve the user experience and make things simpler, and this seems like a good start.
i.e. is there any product in any industry with middlemen, available today, that reliably performs like the 50th percentile professional ?
Out of curiosity, do you foresee regulatory trouble? Realtors are an extremely powerful lobby in the United States, and I wouldn’t be surprised if they were one of the first to do some serious pushback against LLM-related automation under the guise of “protecting consumers”. You mention the recent National Realtors Association changes in your YC profile, which I did not know about (https://www.cnn.com/2024/08/17/business/nar-realtor-settleme..., TLDR antitrust settlement seeking to protect buyers in particular from predatory realty practices), but inspires both hope for the future and concern that the NAR is on active defense mode.
Specifically I guess I’m asking about your use of the word “traditional agent”, since on some level you two (or just the attorney partner?) seemingly would still be considered “agents” of some kind, given that you’re looking over offers by hand, and offering personalized support to users. Is there maybe a legal dance at play there already?
On a completely separate note, if you find the time/interest: will this ever scale to sellers’ realtors as well? If you unicorn-to-the-moon-super-scale as Mr. Graham is hoping for everyone in YC, what’s the endgame market look like? My laymen intuition says you’ll always need experts involved at certain points in the process to protect buyers from lemons and sellers from signing deceptive contracts - do you agree, or with the right regulations and AI could this all be as automatic as buying anything else online?
Legally, we are still agents.
Eventually the plan is to support sell side as well. We are tackling buyers first. The reasons: Because realtors are paid for on commission, the incentive is to transact immediately and high. This has bad alignment for the buyer, but good alignment for the seller. Sellers also require a lot more in person logistics like staging and photography.
>> The founders of Modern Realty realized that since buyer agents are paid for by commission, they will encourage you to buy immediately and high. Modern Realty allows you to transparently control your transaction.
I believe this could be a flawed premise. It's no secret agents are after the quick sale, but it is far easier to convince the seller to accept an offer 20 under than talk up the buyer.
There is no practical ceiling on what people will spend to feel comforted and encouraged, or to have their choices applauded.
Let's break down the communications that realtors currently do to comfort buyers (mostly over text, which is also how we communicate):
Tell you comparably priced properties - we do this. Remind you the steps in the process - we do this. Tell you basic stats about local transactions (such as telling dejected buyers that only 1/6 home offers get accepted in the bay) - we do this. Send newsletters for market updates - we do this. Tell you what other agents are telling them - we do this.
I think if someone really needs a person putting a hand on their shoulder, then we aren't that. But we have implemented many of the typical comforting realtor actions
I think that is injected opinion from commenters here. & yes, we are targeting buyers who already believe that they need a service like this due to their past or current experience
Everything you've described could be achieved with a basic web app.
Not seeing what AI brings to the table here other than being a fake human that gives inaccurate advice ~5-10% of the time. Which seems risky when I am making the biggest financial decision of my life.
There simply isn't any "right answer" for how much a house is worth.
I've used countless web-based valuation services and they all had quite large price ranges as well.
So you agree that AI does bring something to the table if it can narrow the range to ~5-10% ?
Human appraisals are a joke and should be a narrower range than what I've seen. It's never exact, even a house for sale is just an Ask Price for what they hope someone will pay. It does no good to a buyer if their agent advise buyers on prices and values and what to offer if this range is too wide or margin of error too large. It basically comes down to offer X% below ask if you like it, offer ask if you love it, offer X% over ask if you will cry over losing it. No AI needed or agent needed at all, this is just a personal finance decision making process and more about your emotions & budget than anything else.
There are definitely workflow and process elements that can be automated. But if wealth management is any indication, there are a lot of people willing to pay a premium for having a person involved. Not sure why real estate would be different.
The wildcard in all this is the NAR court decision. If buyers have to pay for their own representation, that might make them shop around a little more.
People definitely would be open to real estate w/ software. Otherwise, by this logic, why do people use Zillow? Why don't they just drive to their local Relator office to ask about local listings? How could you trust an online algorithm to show homes instead of someone describing homes to your face?
We are seeing that the fraction of home buyers that sign with the first buyer the meet is declining - more opportunity for us!
Actually why not both? People check Zillow for a ballpark, or end up finding an actual place, and then book a tour through a local agent at Zillow (who might suggest other places too).
Your product seems like a replacement for Zillow, with a conversational touch. I can see a scope for its use, but not sure how it's a moat. The moat here is the database of homes and the local agents network that Zillow uses.
The problem is the monopoly realtors have. Regulate it better, or break it up, and the market can definitely handle the rest.
In the FAQ I see this but no mention of the standard terms of the buyers agreement:
> Do I need to sign a buyer agreement?
> We will let you know if you need to sign a buyer agreement. You will for sure need to sign a buyer agreement when you submit an offer through us, but otherwise we can work out a timeline.
I know you just launched so not assuming any bad intent but it would be good to share pricing information for the services you offer. I have had to deal with lots of “Call us for pricing” in my day job. So, for stuff like this I just move on if I don’t see at least a price range listed somewhere upfront.
How would a prospective customer know that?
What does this actually mean though?
Or are you an information service specializing in real estate information?
There's very strict regulation around unlicensed individuals performing activities requiring a license (negotiating, showing property, etc). Thus I would be surprised if they have AI doing this for a client!
Some examples from the market we are looking in.
1. Flat fixed fee and refunds extra: https://arrivva.com/
2. Minimum 1.25-1.5% but refunds 50% of any commission paid above: https://www.walawrealty.com/buy
Minimum for me to work with a company is transparent pricing. Even a range based on levels of service is cool. But, I am not going to waste time on a phone call with no clue as to fee structure.
https://realestate.usnews.com/real-estate/articles/what-the-...
I've been very pleased to use an attorney on a simple hourly fee who did not have such gross conflicts of interest.
Sorry, I guess.
That being said, I think as long as you are honest that "better pricing" isn't your goal then fair enough. It isn't the service for me, but I'm sure some folks will certainly be excited about it.
> Our service is rendered by an AI.
I really don't know what their eventual value-add is. I doubt anyone's going to be paying 2.5-5% to househunt with an AI.
But here in the comments, they say their mission is to get rich with AI. Tricky! I wonder which claim is right.
Transparency is a killer feature for realtors that would set them apart from the masses. AI is a nice to have feature.
> We have the same pricing model - negotiable
Nobody wants to start off with an adversarial discussion with the person they are trying to hire to help them.
Also, I'll point out that on your front page, you say:
> We are more responsive (24/7), provide better service, and offer better prices.
But here you are saying you offer the same prices.
Sounds like you just said you don't care about that, and your real mission is to maximize your profits.
The default question when we charged a discount price was - "but what am I missing out on if I choose you?" - and even when we said "Nothing!" clients bought into the discount pricing signal already and could not be swayed. This question is never asked at full price
There’s flat fee agents that will do exactly this without AI and at a cost of $500-1000 where I live. You should do that and go for volume. Edit: Oh and their offer doc includes a clause that effectively negates the 3% buyer commission and nets seller the same amount without letting their agent keep the full 6%
If you could normalize this, you will have truly disrupted the industry. As is, your an ai substitution for status quo
Isn’t the point of replacing a human agent with software that your margins are better and can charge less to the end user?