One Texas company wants to revolutionize how homebuyers negotiate with their agents, particularly on one thing many buyers and sellers balk at: the amount of commission real estate agents make on a sale. Typically about 3 percent goes to the buyer's agent and another 3 percent to the seller's agent. On a $200,000 sale, that's a total of $12,000 that's really coming out of the buyer's pocket since the buyer puts up the money (even if on loan from a bank.)
Enter Jason's House. This Houston-based startup company that just launched out of beta is creating an environment where real estate agents compete for buyers. Think of Lending Tree, but instead of mortgage brokers sending you their best rates, it's real estate agents telling you just how much of a rebate they are willing to give you off of their commission if you buy your home through them.
"The main tenet of Jason's House is not to have the agents compete against each other, but to have the selection customizable to suit you," CEO and co-founder Nicholas Ripple tells AOL Real Estate. "Buyers are doing more of their own legwork for finding a house. Fees to agents should be falling as agents are performing less services, but instead they are rising."
Potential homebuyer Ben Matthews, who is looking to purchase a small two- or three-bedroom home in the Heights neighborhood of Houston in the next six months, tells AOL Real Estate that he does not like the idea of paying a lot of commission to an agent. He did it when he used one to help him find his rental. His thought was to buy a home without using an agent, but when a friend of his recently did so, he realized that the full commission went to the seller's broker, rather than half being left on the table. So when Matthews saw a post on Facebook about Jason's House about a week ago, he checked it out.
"So far I have read some agent profiles and said I want to connect to them, but I have not talked to any of them personally," the 29-year-old single engineer said. "Basically Jason's House is giving me a way to interview agents, see their resume, what town they live in, and what kind of rebate they might give.
National Association of Realtors data reveal that a whopping 66 percent of buyers and sellers interview only one agent before selecting one to work with. Only 20 percent interview two before deciding.
Jason's House will help buyers do a bit more research about an agent before choosing, but so will a new product being offered by Trulia, an online marketplace for buyers.
Trulia announced the launch this week of its "Find an Agent directory," which would connect site visitors to what it is billing "the largest agent search directory in the industry." A press release states that "The agent directory makes it easy to search for and find the right real estate agent with at-a-glance results and the option to filter based on relevant experience, local expertise, sales history, active listings and client recommendations."
In a phone interview with AOL Real Estate, Korina Buhler, the product PR manager at Trulia, said "The old way of getting agent referrals from friends and family will never die, but you no longer have to just trust their word. Now you can see an agent's history to know if they'd be good for you."
Buhler says that although homebuyers and sellers can't yet rank agents or choose them based on customizable services, such as if they would give a commission rebate or offer a lower commission, "it is something we are considering," she says. "We are not there yet."
"Jason's House remains unique in the marketplace in that we are the only service allowing agents to reward homebuyers with a portion of their commission fee based on how much work the buyer has completed," says Ripple. "Neither Trulia nor Zillow is offering what Jason's House offers."
Home-seekers fill out a short questionnaire online at Jason's House (and no, there's not really a Jason behind Jason's House, but there is a John, a Todd and a Kyle -- in addition to co-founders Nicholas Ripple and Drew Daniels (pictured above, from left to right). Clients reveal how far along in the process they are, such as if they are just starting their home search or if they already have the home in mind that they want to put an offer on. The system then gives a rating to the buyer -- from a Level 1, at the beginning stage, to the highest, a Level 5, who is ready to buy. Agents then also can be selective about which type of buyer they want to reach out to, or how much they are willing to reduce their commission to obtain each type of buyer.
Broker Jaron Hall signed on in the beta stage and has also been telling the three agents who work for him to consider joining. "It is an opportunity to drive people to your Rolodex," he says.
Hall admits that the Jason's House model is better suited for brokers than it is for a regular agent who has to share commission or pay a fee to the brokerage. Since, as a broker, Hall keeps his own commissions, he is in a better place to negotiate down his rate. But even for a regular agent: "Something is better than nothing," he says.
Ripple, a former oil & gas industry engineer, says that he came up with the idea for the business model when he was house-hunting with his girlfriend, who is now his wife. They bought their two-story townhouse three years ago. "We found the home ourselves and, still, the agent walked away with lots of money. We would never buy a home without an agent, but my thought was that commission should be less if an agent only has to show you one home instead of driving you around to 60."
The process is not meant for home sellers. "We are only for homebuyers [and agents] because sellers have a lot of options from for-sale-by-owner to flat-fee services," says Ripple. "But there are no real options for buyers."
However, Jason's House is not a discount service. Ripple says it is a win-win. The buyer is in control of which real estate agent he or she chooses, but at the same time, the agent is also always in control. "The agent sets the fees. The agent chooses which buyers to potentially work with." The agent can even set parameters to bid automatically if a potential homebuyer fits a certain criteria. The homebuyer can view each agent's offerings side-by-side in a comparison table to make the selection process that much easier.
"We add value to buyers," Ripple says.
Jason's House is currently only serving the Houston market and hopes to roll out to the rest of Texas in the next six months, and then nationwide in a year or two -- after first targeting key metro areas such as Chicago, New York and parts of Florida.
In the meantime, Trulia's agent directory is already national. "The agent directory makes it easy to search for and find the right real estate agent with at-a-glance results and the option to filter based on relevant experience, local expertise, sales history, active listings and client recommendations."
Finding a real estate professional is a crucial step in the home search process. "Our data shows that more than half of the buyers and sellers searching Trulia aren't currently working with an agent, but are actively trying to find one," said Pete Flint, CEO of Trulia. "Trulia's new agent directory offers people a simple way to research and contact an agent that meets their individual needs, while also providing a powerful way for agents to connect with prospects and grow their businesses."
In addition to the consumer benefit, Trulia said in a press release that it is providing agents with a place to easily connect with a large audience of qualified buyers and sellers who are seeking out the guidance of real estate professionals. Agents can improve their ranking and visibility in the directory through a number of factors, such as responding quickly to leads, selling more homes, and securing more listings.
Well, it seems, as competition heats up, so will options for homebuyers searching for an agent.
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Why Homebuyers Can't Evaluate Real Estate Agents
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