This post is part of our new Future of Real Estate series which interviews the leading founders and executives who are on the front lines of the industry to get a better understanding of what problems the industry is facing, what trends are taking place, and what the future looks like.
The following is an interview we recently had with Alex Farrill, Founder & CTO of Open Listings.
1. What’s the history of Open Listings? Where and how did you begin?
AF: After going through a frustrating homebuying experience, I realized how antiquated the process was. Unlike so many other industries, technology just hadn’t made homebuying any easier. It’s still slow, expensive, and inefficient. So, in 2015, my co-founders and I started Open Listings to tackle making homebuying simple and more affordable. Initially, we started as a bi-coastal effort from SF, LA, and NY. Now, we’re headquartered in Los Angeles with a team of 35 employees and 100+ local agents in California and Washington.
2. What specific problem does Open Listings solve? How do you solve it?
AF: Homebuying hasn’t evolved with how today’s generation of homebuyers expects to buy. According to Zillow’s 2016 Consumer Housing Trends Report, 43% of first-time millennial home buyers would rather shop alone than with an agent.
We’re putting the control back into those buyers’ hands by letting them do all the things they’d normally have to wait for a real estate agent to do—like find homes, book tours, and get property reports—all in an app. By using a mix of software plus real estate experts, we’re able to make the homebuying process more efficient. This allows us to refund our buyers 50% of our commission fee when they buy—on average, over $7,000.
3. What’s the future of real estate?
Prediction #1: The real estate agent’s role will become more specialized. Today, 80% of a traditional agent’s time is spent driving people around or looking for new clients rather than providing their expertise where people need it the most, which is the offer to the closing process. Because of this, traditional agents are expected to be marketers and salespeople rather than help buyers feel confident about their home purchase. This is a lose-lose situation for them and for their clients. So much of the upfront lead generation and house hunt part can be digitized, which will then allow agents to better spend their time providing expert advice when it matters.
Prediction #2: Buyers will demand digital, 24/7 self-service. As digital natives start buying homes, these buyers will opt for an always-on house hunt vs. personal hand-holding. Much like they use services such as TurboTax and Wealthfront for their finances, they’ll turn to an app first for their house hunt. Why? Simply because it’s faster and more transparent. They’d rather have everything at their fingertips instantly than wait for a single individual to get back to them. Expect to see more of a customer support model, where buyers have an entire team ready to help rather than just one person.
Prediction #3: Homebuying fees will continue to decline. As the homebuying process becomes more digitized, automated, and efficient, agents will be able to serve more buyers at scale and drive down the cost of doing business. As home prices rise and the traditional agent’s role has diminished, there’s no real reason for commissions to rise or for buyers to pay current premiums.
4. What are the top 3 technologies trends you’re seeing in real estate?
Trend #1: Evolving media formats – 360° views, drone videos, VR tours—it’s becoming easier to give buyers realistic, immersive insight into each property without requiring a visit.
Trend #2: Mobile everything – More than 50% of offers created on Open Listings are from a mobile device. Mobile shopping has fully transitioned into mobile buying, and users expect to have full capabilities on whatever device they have with them at that time.
Trend #3: Accurate AVMs – Gone are the days where agents can value properties more accurately than software. Better, richer data and new valuation models are replacing human intuition for agents, appraisers, buyers, and sellers.
5. Why is the real estate industry ripe for disruption?
AF: While there’s elements of the house hunt buyers can do themselves online, like looking at listings, homebuying hasn’t evolved or drastically changed in 100 years. People under 50 are the least likely to say they’re “very satisfied” with the home buying process. Only 3% of NAR agents are under 30, while 50% of today’s homebuyers are under 36. Today’s homebuyer is missing a peer to guide them through this process in a way that meets their needs and expectations. We’re here to do that.
About Alex Farrill
Alex Farrill is a founder and CTO at Open Listings, a Y Combinator W15 company. Alex founded Open Listings after he and his family bought their first home and saw first hand the need for improvements in homebuying centered around customer experience and consumers’ evolving expectations for other purchases they make in their daily lives. Previously, Alex was the Chief Data Scientist at RUN (acquired by Publicis) where he built a mobile-focussed DSP for real-time bidding and analytics systems for cross-screen attribution. Alex holds a B.A. in Mathematics from Columbia University.