Some of you already may know that HomeLight, one of the most successful referral fee brokers, has recently raised $109 Million in funding. This leaves HomeOpenly with only a small chance to deliver a functioning Open Marketplace for residential real estate markets in the United States. At this point, an actionable help from the DOJ and the FTC to restore competitive practices in the industry is required, it is not optional.
In the last three years, our startup had silently fought the biggest battle on the Internet — broker commission kickbacks. Today, we come very close to losing this battle. HomeLight alone claims to have “driven well over $17 billion of real estate business nationwide” since inception. Assuming a 25% referral fees paid on this volume of originated commissions:
This yields a mind-blowing estimate of $4.25 Billion in commission kickbacks paid to HomeLight from participating brokers across the United States. Almost all of it is profit, since HomeLight doesn’t perform any services typically offered by real estate brokers.
As a reference, US consumers spend about $72 Billion in real estate commissions each year in total.
Billions in these junk fees, of course, now reside in hundreds of thousands of mortgages, collecting interest.
At this rate, homeowners may very well end up at a permanent annual loss valued at $15 Billion in junk fees from all such schemes combined. There is no better proof that the power of the Internet can be used to deceive, just as much as it can be used to deliver transparency.
Kindness — at HomeOpenly we design our platform with kindness and equality. There is no room for collusion and needless loss of equity when it comes to our homes. We will continue to defend the value-driven approach to real estate transactions across the United States.
Gratitude — at HomeOpenly we consider it a privilege to offer a better real estate experience with the use of Internet technology. We will continue to offer our technology openly and freely to all our users. The Internet without functioning Open Marketplaces seems boring, unlawful, and careless. Once fully-scaled, Open Marketplaces will forever change the landscape of technology as we know it in countless industries: ride-hailing, delivery services, fintech, legaltech, and many other B2C verticals.
What’s next? Those who know better can do better. HomeOpenly will continue to build a superior real estate portal not to simply disrupt one or two consumer brokering schemes, but to disrupt the core of consumer brokering.
Eventually, this means burning all of the capital currently positioned to support real estate consumer brokering schemes. We don’t expect companies like HomeLight to ever return Billions in hidden referral fees to consumers, but we do expect to eventually break this broker mentality at its core.
In 2019, the home transaction is the most abused experience on the Internet: mega price-fixing, mega home-flipping, mega broker-to-broker collusion. Consumer brokering in real estate is utmost effective due to the use of Internet advertising channels such as Google Ads. A simple ad, worth a few dollars to HomeLight, is easily converted into tens of thousands in fees. HomeLight claims to make such conversion every two minutes. These are appalling statistics.
Building a better product based on trust requires HomeOpenly to place consumers’ interest above all else. Saving consumers from $15 Billion in junk fees every year is a single most effective mechanism to lower the cost of homeownership.
Our mission to improve homeownership experience requires us to deliver an Open Marketplace. It is impossible to deliver affordable housing solution anywhere in the United States without an efficient and competitive transaction experience.