raboisGet ready for yet another online real estate startup. This one is codenamed Homerun, and it promises to change the way people sell their homes online by making the transaction simple enough to complete in a few seconds.

The most notable aspect of Homerun, at least at this early stage, is its high-profile founder: venture capitalist and former Square and PayPal executive Keith Rabois. He’s now on the investment team of Khosla Ventures, a job he plans to continue even while running Homerun from San Francisco.

“My belief is that if you added a frictionless, convenient, simple process, more people would sell their homes,” Rabois tells VentureBeat.

That’s a bold claim, and it actually is antithetical to what online real estate execs, such as Zillow CEO Spencer Rascoff, have espoused in recent years. Rascoff has argued that the home buying and selling process is so complex, not to mention life-altering, that people want the hand-holding and side-by-side emotional support of a broker.

Spencer Rascoff
Spencer Rascoff

“The real estate transaction is too infrequent, too expensive, and too emotional for people to select an agent primarily based on price,” Rascoff noted at a conference in Seattle in 2012.

Homerun is still in the early throes of development, employing just four folks. But could it eventually build a technology that automates, or at least disrupts, the traditional home selling process?

That was the promise when companies such as Redfin started, touting a new way for people to buy and sell homes using the power of the Internet.

But, over the years, Redfin and others have morphed to look like more traditional real estate companies.

Certainly, Multiple Listing Services, which control how properties get listed, are not bastions of innovation. But online real estate companies for the most part have looked at ways to work alongside the traditional players, rather than bypass them altogether or wipe out their services.

When Zillow first started, many in the industry feared that the former Expedia executives would do to real estate what they already did in travel. That is, completely upend the transaction process, inserting themselves in the middle.

However, Zillow has very much steered clear of that path.

Homerun appears to be jumping right in to that mix, with Rabois telling TechCrunch that they are creating “instant certainty, liquidity and convenience for normal people to sell their homes.”

The company plans to launch later this year in the U.S., and Rabois is still being a bit cagey on details. There is one component that appears right on track with Zillow, with Rabois saying it will do an automated valuation of properties. (Good thing for him that Zillow just lost the first round of a patent battle around its Zestimate technology).

“We have to value the home, sight unseen,” Rabois told VentureBeat. “You can put in your address and we tell you what it’s worth instantly. And we’ll want to buy it from you for that price.”

It will be interesting to get a closer look at Homerun when it steps up to the plate.

But for now it seems a bit far-fetched to believe that people will enter a real estate transaction online with the same type of behavior they do when buying a book or a bag of diapers.

Comments

  • http://blog.findwell.com Kevin Lisota

    Best of luck with that idea. There is a reason that online companies have embraced the existing model. The purchase of a home remains a fundamentally different process for the consumer than buying a book on Amazon.

    I’ve watched 100’s of home buyers go through this process over the last 6 years, many of them extremely technical folks who love the “one-click” buying of consumer goods in their daily life. Selecting a home remains different. There is a natural progression of browsing online, attending open houses, pre-qualifying for a mortgage, picking an agent, getting familiar with neighborhoods, selecting & comprising on features in a house, and then finally placing offers. The offline/in-person visits remain the most critical part of the process for consumers, because online shopping is never the same as in-person when it comes to houses. It is usually a process of 1-6 months for a home buyer, sometimes longer if they are picky. I don’t believe any amount of technology will ever change that, and anyone hoping to make a buck in real estate needs a system to facilitate the in-person aspects of the deal.

    I also don’t believe that “transactional friction” is why people don’t sell homes more often. They sell homes for life reasons like change in job, income, family, schools, etc. It is also a tremendous hassle to move. They also sell homes based on market conditions. They aren’t holding back on selling their homes because it is too costly or time-consuming. They hold back because they either don’t need to move or because the market value of their house isn’t where they want it to be.

    Certainly technology can improve various parts of the transaction, but it doesn’t remove the due-diligence part of the buying process. The quantity and depth of inspections, HOA reviews, inspection negotiations, etc have increased over the years, and trying to simplify the price negotiation does nothing to change this. This makes the process more of a hassle, but is beneficial compared to how people bought houses 20-30+ years ago in a less-informed way.

    A real estate deal is highly emotional for sellers and buyers, and will remain so. Buyers and sellers have visceral reactions to this transaction that drive their decisions that remain ill-suited to online tools and negotiation. Both parties want to feel good about the deal, and that requires conversations, negotiations, persuasion, coaching and time to think and talk about stuff with their agent, friends, family, etc. Anonymous online negotiations don’t get past these hurdles, and in fact make them worse.

    I’m all for optimization of the real estate transaction via technology, but the “eBay for home sellers” isn’t it.

    • Never?

      Your comment screams that this model threatens you somehow. I for one would gladly buy a home entirely online, if certain conditions are in my favor, i.e. 360 virtual walk-throughs, reliable pros/cons ratings, and most of all A GREAT DEAL! For example a fixer-upper that has great potential, or sits on substantial property etc. You’re right in that many will still prefer the traditional system and pay a realtor big money to bake them cookies and have balloons in the frontyard. But some here would like a no-frills transaction to buy/sell a house without going through the whole open house silliness with obnoxious realtors.

      • Mike

        Won’t happen, there is far too much regulation in the process to allow it. Escrow alone would kill this. Have you ever bought a home? There’s a reason people actually get a stamp with their signature made to take in when signing papers after rigorous financial background checks and confirmation of ones identity. It’s not buying a $1200 laptop, it’s often a half million dollar life changing event.

  • starcrost

    I can argue both sides of this. OP makes good points on why this new disruption model wouldn’t work. But on the other hand, I think of other major purchases that can be transacted without “touching”: 1) Colleges/universities – how many students and parents choose schools w/o ever stepping foot on the campus.? 2) Engagement rings – It was so long ago that “experts” scoffed at the notion of purchasing 5-figure engagement rings without seeing them in-person prior to the purchase. What I really think is the core issue is the fact that shoppers don’t want to be thought of as “suckers,” as in friends/family/others saying “OMG I can’t believe you’re surprised that the house wasn’t what you thought it was going to be! Didn’t you check it out first?! What’d you expect?”

    • Sure

      But that may be exactly the point, some will continue to be reluctant and argue they’d never buy a house entirely online, while others might be open to the idea. It is those others that this business model is after. And this might be a market large enough to make a killing, or even disrupt the traditional market. It sure wouldn’t be the first time in history.

    • Sure

      It’s probably not for the faint-hearted with potential for buyer’s remorse.

    • John Scrofano

      I could see this emerging as the B2B side of the residential market.

      I’m with Lisota (who we used to buy our house and loved FindWell), that most consumers are going to want a buying experience that involves the confidence that only comes with a real person (agent).

      However – there are a lot of real estate investors (including PE funds like BlackRock) who have the experience, expertise, and confidence in their own skills to make purchases online (with minimal diligence that can be performed remotely). They would have the capital, processes, and efficiencies to run these properties as rentals or redevelopments. IF the efficiencies of technology are able to reduce transaction costs sufficiently, it could make more properties viable for investment.

  • Tom P.

    I don’t think people are reading what he is actually saying. “If you added a frictionless, convenient, simple process, more people would sell their homes.” This is 100% true. Sell, not buy. If I could sell my house right now in a single click for my Zillow Zestimate amount, I would do it. Of course, I know I can’t. It’s not a real price, and I’d have to go through the entire existing sales process, pay agent fees, etc. But what if it was a real price, and could be sold in a single click? I would do it.

    The interesting part becomes who the buyer is. I’m assuming Homerun is actually the buyer, not a consumer, so this doesn’t require a home buyer to agree to a blind purchase. How they value homes, acquire metadata, carry inventory, and find buyers is another story. I think it’s interesting, so I won’t write it off just yet.

    • Krbaird

      Well said TP…

  • http://adamgering.com/ Adam Gering

    Zillow’s original business plan involved the sale (auction) of homes online. They found people don’t buy homes online.

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