These companies and others have entered the market claiming
to make real estate transactions faster and smoother — and
sometimes less expensive, at least in theory. There’s this notion
that real estate transactions should be instantaneous because of
technological advances, but time is actually a safeguard.
REX Real Estate Exchange takes a
different approach. The startup tech
company, which does most of its adver-
tising on Facebook, charges a 2 percent
commission to the seller, while expect-
ing the commission for the buyer’s agent
to be paid by the buyer. This sounds
straightforward, but it’s not customary
for buyers to pay a 2-3 percent commis-
sion, and many buyers don’t have the
cash for this additional expense. Also,
REX doesn’t list homes for sale on the
local multiple listing service, which
means many buyers might not know
the homes are for sale unless they visit
REX’s website.
These companies and others have
entered the market claiming to make
real estate transactions faster and
smoother — and sometimes less expen-
sive, at least in theory. There’s this no-
tion that real estate transactions should
be instantaneous because of technologi-
cal advances, but time is actually a safe-
guard; if someone is buying or selling
the largest investment of his or her life,
it’s important to have time for necessary
inspections, negotiation based on those
inspections and a contingency period so
buyers and sellers are sure about their
decision. Let’s not rush the appraiser
either, because speed can reduce the
quality of the work.
Just 10 years ago, it took about 90
days to sell a home in this region. Now
it’s about 30 days. How much faster do
we really need to be?
Tech companies talk about real
estate like it’s as easy as the click of a
button, but it’s complicated because
humans are involved. There are real
people trying to negotiate, advocate for
their interests and navigate the com-
plexities of the housing market. Can
things be less stressful? I sure hope so.
But are real estate transactions innate-
ly stressful because of all the moving
parts? Yes.
CLOSING ADVICE
1
Read the fine print: Some of these
tech companies are telling us real
estate transactions are as easy as the
click of a button, but the irony is that
it can actually end up being more
expensive to sell to a company com-
pared with the traditional model.
My advice is to consider how much
you will net with a sale to a tech
company.
Companies such as Opendoor or
Zillow might offer to buy your home
at a price that looks reasonable, but
the fine print makes all the differ-
ence. These companies are allowed
to claim they don’t charge real estate
commissions, but they have a 7 per-
cent “service fee,” basically in lieu
of a commission. That 7 percent fee
is competitive with the traditional
real estate model that usually costs
a seller 5-7 percent, but there’s more
to consider since these companies
often try to buy homes at a discount
and often ask sellers to give credits
within the purchase price so repairs
can be made after the home sells.
While it’s tempting to say, “John
down the street got $435,000 from
Opendoor,” it’s important to find out
how much John had to credit Open-
door for repairs, which makes all
the difference in whether John got a
good deal or not.
2
Look past the marketing: Tech firms
insist they will make life easier for
everyone, but let’s not forget their
main goal. Like the rest of the indus-
try, they are here to make money,
and that’s the bottom line.
On the positive side, some tech
platforms are trying to help make
real estate transactions more con-
venient for sellers, and that’s going
to appeal to a segment of the market
that doesn’t want to deal with buy-
ers walking through a house. Ulti-
mately, the market will decide how
popular these services become.
The way we do real estate transac-
tions could be very different in the fu-
ture, though for now tech companies
are barely making a ripple in Sacramen-
to’s housing market. Will they eventu-
ally make a splash? We’ll see. n
Ryan Lundquist is a certified real estate
appraiser at Lundquist Appraisal Com-
pany. Read more at sacramentoapprais-
alblog.com. On Twitter @SacAppraiser.
Have you used one of these
tech companies to buy or
sell a house?
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