The process for buying a toaster oven should not be more transparent or more reliable than the process for buying a house.
A toaster oven — even if things go poorly — does not have the power to ruin one’s life. Worst case scenario: one goes to a Walmart and tries another brand. A house is the most expensive thing most Americans buy in their lifetime, and if things go badly, there is no big-box store where one can trade in their failed house for a better model. A toaster oven gone wrong is simply a problem one must live with — a house transaction gone pear-shaped is a problem one literally has to live in.
Sumant Sridharan, COO of HomeLight, told Karen Webster for this week’s edition of The Matchmaker Is In that this was the exact conundrum his firm’s CEO faced when trying to buy a house back in 2011. Real estate agent after real estate agent presented themselves — but, though he knew some of them to theoretically be good ones, he had no way of telling them apart quality-wise.
“The issue came to head one night while he was shopping for a toaster oven,” Sridharan said, “and realized that he could learn everything about a toaster oven before he bought it — the product specs, the official reviews and consumer reviews. There was no way to [get] confused about what a good toaster oven might be like. But, he was in the middle of the most important transaction of his life and he could not get any data on who a good real estate agent would be.”
Sridharan noted that, though he hadn’t had quite the epiphany-generating levels of frustration his CEO had enjoyed, even he encountered the same concerns a few years ago when buying his first home with his wife and working with a real estate agent on referral. An agent, he added, who did a fine job, even though real estate was more his side-hustle than his job.
Good real estate agents, Sridharan said, want clients. People selling houses want good real estate agents. The HomeLight platform, he explained, is an attempt to create the digital meeting ground that both need.
How It Works
The goal, Sridharan told Webster, is direct: provide people looking to sell their homes with an unbiased listing of agents that seem to best suit their needs.
“Agents cannot pay to be placed on our platform — we provide a list to a customer, based on the data we have, [of] who would be the best agent for their need set. When the customer finds the agent they want, HomeLight reaches out to the agent and does the matchmaking to [make] the connection happen,” he said.
Picking agents who make the platform — which currently has about 2.5 million agents in book — is based on a list of 20 to 25 variables, including things like how often they have sold in that customer’s specific neighborhood, if they sell homes quickly, if their listings result in a lot of expirations, or if they tend to sell over the listing price.
Agents, Sridharan noted, were initially a bit confused by reach-outs since the platform was new and they weren’t entirely sure what they were being offered. There was a lot of explaining in the earlier days about what HomeLight was and what it did. At this point, they are mostly happy to hear from HomeLight.
He said, “We don’t send them cold leads. These are people who have been vetted, who are ready to sell and who are looking for the right agent to help them do it.”
There is no real risk involved for the agents, Sridharan told Webster, because HomeLight doesn't charge until a transaction happens, at which point it charges a referral fee. This, he noted, is already a time-honored tradition in the real estate industry of referrals and fees, which means paying HomeLight is already quite akin to something they know well. Moreover, HomeLight knows when to step away and let the seller work their magic.
“We have a solution that really works best for sellers,” he said. “When it comes time to connect with a buyer, that is where we step out and the agent steps in to find that right buyer. Our goal is to really provide tools and mechanisms to make the agent and their client have the most successful outcome.”
Real estate customers, Webster noted, often do what Sridharan said he and his wife did: find an agent by a referral from a friend, family member or other trusted source. Doesn’t HomeLight worry, she asked, that this force of habit will be a drain on its business when a customer recommends the seller’s agent they worked with directly to their friend or family member in the future — instead of HomeLight, which hooked up the meeting?
Not really, Sridharan noted. As of today, over 90 percent of real estate referrals happen offline — the digital referral world is in its earlier evolution.
“Just by capturing a couple of those percentage points,” he said, “we can grow a very successful business, even if that kind of direct referral leakage occurs.”
Moreover, he added, there are ways to fight against that. First, is good old-fashioned marketing, with online search and television being particularly popular channels. HomeLight is in about 80 percent of U.S. markets today, he noted, but that effort is mostly targeting at the extremely active housing markets in places like California, Texas and Florida.
“We are also getting much more interested in getting into the more hyper-local forms of advertising, where the search for a real estate agent so often begins ... stuff like newspapers, billboards and Yelp. We just partnered with Yelp a year ago so that we can showcase agent data across thousands of listings,” Sridharan said.
Beyond the marketing moves, however, the company is increasingly interested in buildout value-added services within the platform itself, so it can offer its customers a more end-to-end solution for selling their homes than merely connecting them with an agent. Staging, title services, escrow, insurance — everyone who has ever sold a home knows that the listing of the property is just the first of many steps to the finish line of a sale.
“Many of these things are things that the agent already does,” Sridharan said. “This is not trying to go around our agents — and more about helping our agents work to provide the customer a better overall value.”
HomeLight has been around for over six years at this point, the first few of which were quite challenging because it found it had a major data extraction project ahead of them. The reason the firm’s CEO and COO remember it being nearly impossible to find real data on real estate agents is because, before HomeLight's start six years ago, it was more or less impossible to find that data in an efficient manner.
“If you understand the industry, you know data is very controversial and difficult to get from many firms. It took us years to figure that out,” he said.
Once it had its data troves and launched in a few test cities, HomeLight eschewed what Sridharan called the “more common real estate plan of one city at a time” and has aggressively been pushing to be part of every real estate market in the U.S., hoping to literally hit that 100 percent by the end of the year.
As for what is next, he said: “Our ultimate goal is to provide sellers with a platform where they get the best outcomes with their home sale and their real estate agent.”
What those improvements will be, he noted, are still developing. Most recently, it’s the addition of a content platform that will allow users to access hundreds of articles that can assist them with the entire home-sale process. The firm is even looking at blockchain, noting that it makes “a ton of sense in real estate” because of all the various middlemen that exist in the process — and the power a decentralized ledger could bring into making those intermediaries less necessary.
“I don’t believe that it is close, but you can definitely imagine a future five or 10 years from now where home transactions are done by a blockchain,” Sridharan said.
When that day comes, he said, HomeLight just wants to make sure it is there to support it — because first, last and always, the goal for the firm is simple: make real estate transactions something the average consumer can understand, at least as well as they understand buying a toaster oven.