Twenty years ago, if you were involved with the Web in Boston, one of the people you likely ran into was a forward-thinking Cambridge real estate broker named Bill Wendel. In 1995, before most people had Internet access at home, he opened the Real Estate Café outside of Harvard Square.
Wendel saw the Internet as “a tool to correct the problems in the industry,” giving buyers more information and lowering the fees they paid as part of buying a home. But in 1995, there wasn’t a way for buyers to search the primary database of for-sale properties — so Wendel opened a storefront where they could do that, long before Trulia, Redfin, or Zillow came along.
But even as searching for a home went digital, many parts of the process — like setting up showings, crafting an offer, securing financing, and sealing the deal — remain stubbornly analog, requiring phone calls, meetings, signatures, and extensive paperwork-tracking. Why?
“That question is worth a graduate-level course,” says Wendel. “The industry knows it is ripe for disruption,” he says, but entrenched players are content with the status quo. After all, fees paid out to agents on a $1 million sale can reach $60,000.
Several local startups, however, are trying to chisel away at the status quo.
Ted Werth, founder of Bedford-based RoostWise, says people “are used to hailing an Uber from the app — they conduct their lives through their mobile devices.” His app, available for iPhone, tries to make it possible to get an Uber-like response time from real estate agents when you want to see a property.
“We have first-line agents who work for us who will contact you within five minutes,” says Werth. But when you go to view the property, you meet another broker who specializes in that community — one who is independent, rather than a RoostWise employee. If the process moves forward, that broker uses the RoostWise app to keep you apprised of where things stand. For instance, has the offer been signed? Has the appraiser’s report been completed?
Werth says the company isn’t focused on reducing the fee that buyers or sellers pay — in part because RoostWise gets a fraction of that fee. “The first thing you have to do is improve the quality of the service that is provided,” he says. “Then, you let the efficiencies of the new business model lead to a change in costs.”
RoostWise raised $800,000 from investors this summer, and launched its service in Massachusetts in September.
Others are trying to change the traditional fee structure, such as Owners.com, a site based in Luxembourg that has a technology and marketing team in Boston. A buyer receives a rebate equivalent to about 1.5 percent of brokerage fees after the closing, explains Cameron Bruns, the company’s vice president of brand and consumer engagement. (The rebate comes from the 3 percent commission that traditionally goes to the buyer’s agent; on a $500,000 sale, it would equal $7,500 in savings.)
But instead of working with an agent who drives you to properties, you do that on your own. An agent at an Owners.com facility in Atlanta helps to set up showings, prepare an offer, and guide you through the process, either by phone or e-mail. (The company also offers fixed-price packages for homeowners interested in selling their homes independent of an agent, known as “for sale by owner.”)
In 2016, Bruns explains, the site will develop more Web and mobile tools to supply buyers with data enabling them to make intelligent bids on properties. “You want to be competitive and aggressive, but you also want to have good information,” Bruns says. “This type of house, in this neighborhood — how often do they come on the market and how quickly do they sell?”
A two-year-old startup in Salem, Easy Mortgage Apps, hopes to simplify things for buyers and mortgage lenders by offering a mobile app that displays where things stand. “You fill out a loan application online or on a piece of paper,” says chief executive Michael Kelleher. “But from that point on, your interaction with the loan officer and the bank will be through the app.” You’ll be able to see when an appraiser is slated to show up and when the closing is scheduled.
Easy Mortgage Apps is already working with 80 banks around the country; getting loans done more quickly can cut costs for lenders and help buyers avoid rate-lock extension fees when the process drags out.
Corinne Fitzgerald, a Greenfield real estate agent who is president of the Massachusetts Association of Realtors, says it’s not accurate to portray her members as technophobes. “Realtors embrace technology, and we have for many years,” Fitzgerald says. “But it is not and will never be all technology — it’s a person-to-person business.”
When I did a Twitter poll of people who bought homes in 2015, some said the process was becoming more digital, save for steps like getting the bank to cut a cashier’s check or showing up for the closing. But Tom Wentworth of Winchester was more typical: His purchase was “an entirely analog, old-school process” with “endless paperwork” and faxed documents.
Remember Bill Wendel, the guy who saw how the Internet was going to change buying a home way back in 1995? I called him the other day to find he was still working to make home-buying more “consumer-centric and affordable,” in his words. This past Wednesday, he was among the organizers of the Boston Realty Party (held on the anniversary of the Boston Tea Party), a gathering focused on fomenting revolution in the real estate industry. One of the topics they explored: using digital payment systems like Bitcoin to reduce transaction costs.
Is Wendel frustrated by the slow pace of progress? (After all, only a decade passed between the Boston Tea Party and the end of the Revolutionary War.) “If I were looking backward, I definitely would have folded my tent at some point,” Wendel says. “But every week — no exaggeration — every week someone is doing something innovative that can be a dot in this continuing quest.”
Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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