Editor in Chief Sarah Wheeler talks with Brad Rice, founder and CEO of Amerifund Home Loans and Homepie, about how his company is streamlining the process of selling for homeowners who want to sell their home themselves. Ironically, the technology he’s developed can be a benefit to real estate agents as well.
SW: Why did you want to develop this platform?
BR: This really came out of decades of being in the mortgage business. When I originated loans, there were a certain number of people that just didn’t need an agent — because the buyers and sellers knew each other in some fashion. And when you have that scenario, they don’t want to pay a real estate commission, because they don’t need anybody to market their property. They just needed somebody to help them with the paperwork. Most loan originators who do a decent amount of business, they happen to help people doing this. And without really thinking about it, you already know all the ingredients.
And I always thought, why couldn’t it be easier for people to do that? Every year I would see the NAR reports come out and say that this market represented about 10% of the overall market. I thought: that is a big beachhead market. I started thinking about it in 2018, it was kind of a transitionary year for me, in business. And I thought, you know, I bet technology has come far enough that we could take a look at this idea of helping people that didn’t need an agent, but do it in a way where it’s easy for anybody — whether they had experience or not, and use technology to facilitate it.
SW: So are you a tech guy or did you have to go find tech guys to implement your vision?
BR: I’m not a tech person, but when I had my large mortgage company that I grew from 1999 to 2007, we had built technology that we ran the company on, so I was very familiar with that process of hiring developers. And that’s what I did. And we actually hired a team out of Silicon Beach. It was the same team that had built Snapchat when they started and they built the Nike app, so big consumer-facing apps.
And it was a really cool process, because they were typically very young, they had never bought a home so we had to educate them. That really made it where we could build it in a way where anybody could understand it, because they had to understand it.
SW: This is a very timely topic. After the commission lawsuits, people are wondering if they need an agent. A lot of technology providers in the real estate space try to reassure agents that they’re not trying to take their job. How do you look at that?
BR: On the surface, it does appear that way. But we are definitely supporting a market that already exists — they don’t use real estate agents anyway. We’re just providing them with the technology to be able to do it. But under the covers, we’re extremely real estate agent-friendly. And I’ll give you two reasons why.
The first is that we invite buyer’s agents into the platform, so we’ve opened up this inventory to them. Traditionally, your FSBO seller just doesn’t want to work with agents and we show them that they’re missing out on a big segment of the market. Buyers can invite their agent into the process or the other way around, a buyer’s agent can come in and then invite their buyer into the process. We’ve enabled the ability to create an offer, negotiate that offer and produce a contract — all from a mobile device, without having to go through the back and forth of sending emails and follow ups.
Statistically, 67% of FSBO sellers ultimately get fatigued and they hire an agent. And so agents can use it as a lead generator or you can look at it as a way to just solve a secondary problem, which is that a lot of people think they want to sell on their own, but then they realize they’re not really up for the task. And so now we have the ability to take those sellers, educate them through the process, and get them with a listing agent that’s local to them.
SW: What is the difference between Homepie and traditional FSBO?
BR: There have been a lot of solutions that have come out over decades trying to help for sale by owners. If you just go Google For Sale By Owner today, you’re going to find a lot of them don’t really have any technology at all. They’re either a flat-fee option for for sellers, a conduit to MLS just to get the syndication out of it where they pay a small flat fee for that, or they’re a poster board that feeds other businesses. They’re really not solving a long-term problem. So we thought, we’ll create this for the beachhead market of FSBO. We give them the technology that makes it easy for anybody that decides they want to buy or sell.
We want to give the option to anybody that wants to sell, to know that there is a way to do it with confidence. Like Turbo Tax — taking something very complex and simplifying it into bite-sized pieces. We started in California, that’s our backyard. And we solved the issues that California has for FSBO sellers. Then we opened up in Florida — a completely different market with different problems and solutions. About a month ago we opened up nationwide, but that’s for a limited service product. Still, we can now service every state.
SW: How do you solve the challenge of letting buyers see the house? Is the seller just there?
BR: A decade ago, this wouldn’t have worked, but people have become far more comfortable in this kind of mobile society where we’re going to other people’s homes using Airbnb and all sorts of things. And the younger user, they’re far more comfortable with this process. Originally, we built into the system a way to view a home virtually by giving them the ability to connect through our systems where all the communications were done through instant messaging.
The part that was a bigger challenge was the in-person viewings. If it’s a vacant home, no problem, you put a lockbox on there — and there are very sophisticated lock boxes these days. But people aren’t using it like that. The sellers would just rather invite them over when they’re there and walk them through the property. So that’s what’s happening, the sellers are just managing it directly. I think eventually, at scale, that’ll be another way we could bring agents in, but at the current time, it’s been solved by the sellers themselves.
SW: In your typical real estate transaction, there’s a little bit of arm’s length between the seller and the buyer. Why is that not important here?
BR: When you’re talking about a peer-to-peer transaction, you don’t have the same fiduciary duties as when you are an agent. So the seller could say, no, you don’t sound very good to me, I’m not going to show you my property. But, most sellers are pretty pragmatic and they are just looking to get the best price.
SW: What differentiates your tech?
BR: We’re unique in that anybody can create a listing in minutes. So if you’ve ever experienced selling your own car using a service like Auto Trader, it’s a very similar experience. You can upload your own photos, or what’s highly recommended is getting a photo a professional photo package because you want people to stop the scroll.
The other standout technology we have is our negotiation tool, which makes it easy for the buyer and seller to negotiate. We’ve taken that traditional offline process and digitized that whole thing so all those same complexities that you have in a standard offer negotiation, they’re all built in, but it all happens in real time. We’ve seen it happen in one day — there will be three or four counters within an hour, and they’ll get a contract. And so it produces that final agreement, everybody Docusigns it, and they’re off to the races.
SW: What part does AI play in this process?
BR: AI is used in our chat system and during the listing process, we bring AI in to help sellers with the description. That’s what we’re currently doing, but the plans are bringing in AI to help people with services that they may need after they move. For example, using photo recognition technology to recognize whether a home has solar or not, and be able to give them solar options after they close, or recognize whether they have old aluminum windows and offer them some newer window solutions.
Ever since I started Homepie I have been a big proponent of buy-side agents. They come with a lot of local domain knowledge that you just can’t get by googling. You can get some idea from Google, but you just don’t know things like: Is this the neighborhood that I can literally walk from my house to the coffee shop? We are working on technology and bringing machine learning in to get from the sellers that feel they have living at that home. So they’ll answer 20 questions during the listing process, and we’ll begin to build that data.
SW: You’re running Homepie and a mortgage business at the same time. How do those things work together?
BR: Mortgage is obviously a big piece of the home-buying and home-selling experience but we didn’t build Homepie as a connector to Amerifund. The plan is much bigger than that: to ultimately bring in all lenders into the platform and give that as a service to the users. But obviously, having a mortgage company enables us to have some insights that we wouldn’t otherwise have. There are about 42 verticals that are required when you’re going through the transaction itself, depending on where you are geographically. And then beyond that into homeownership, there’s over 400. So the idea is to really give everybody the whole pie, if you will.
SW: What keeps you up at night?
BR: A lot! Right now, it really is the uncertainty of where this whole thing lands with real estate. You know, I have very close friends, I’ve got real estate agent clients that we’ve been close for decades, and my son is in real estate. Real estate agents are in this uncertain period of time where they don’t know: Are people going to sign a buyer’s agreement with me or not? Are my customers just going to circumvent me and go directly to the listing agent? I think that that is probably the biggest stress of today.
