Editor-in-chief Sarah Wheeler talks with founder and CEO Brad Rice American Funds Home Loan and family pie, about how his company simplifies the sales process for homeowners who want to sell their homes themselves. Ironically, the technology he developed could also benefit real estate agents.
SW: Why was this platform developed?
BR: This is really the result of decades in the mortgage business. When I make loans, there are a certain number of people who don’t need an agent – because the buyers and sellers know each other in some way. When you have this situation, they don’t want to pay real estate commissions because they don’t need anyone to market their property. They just need someone to help them with the paperwork. Most loan originators who do a lot of business, they happen to help people do just that. You already know all the ingredients without really thinking.
I’ve always wondered, why can’t it be easier for people to do this? every year i see Nar Some reports indicate that this market accounts for approximately 10% of the overall market. I thought: That’s a big beachhead market. I started thinking about this in 2018, which was a transitional year for me in business. I think, you know, I bet the technology is mature enough that we can look at the idea of helping people who don’t need an attorney, but in a way that anyone can easily do it – whether they have experience or not, and use technology to promote it.
SW: So are you a technical person, or do you have to go to a technical person to realize your vision?
BR: I’m not a technical person, but when I owned my own large mortgage company (from 1999 to 2007) we had built out the technology of our operating company, so I was very familiar with the process of recruiting developers. This is what I do. We actually hired a team from Silicon Valley Beach. The same team that originally created Snapchat also created the Nike app, a massive consumer-facing app.
It’s a really cool process because they’re usually very young and they’ve never bought a house, so we have to educate them. This really allows us to construct it in a way that anyone can understand, because they have to understand it.
SW: This is a very timely topic. After a commission lawsuit, people wonder if they need an attorney. Many technology providers in the real estate space try to reassure agents that they are not trying to take your job. What do you think?
BR: On the surface, this is indeed the case. But we definitely support a market that already exists – they don’t use real estate agents anyway. We just provide them with the technology to be able to do that. But behind the scenes, we are very real estate agent friendly. I’ll give you two reasons.
The first one is that we invite buyer agents into the platform, so we open this inventory to them. Traditionally, your FSBO sellers just don’t want to work with an agent, and we show them that they’re missing out on a huge portion of the market. The buyer can invite their agent into the process, or conversely, the buyer’s agent can come in and then invite their buyer into the process. We’ve been able to create quotes, negotiate quotes and generate contracts all from our mobile devices without the need for back-and-forth emails and follow-ups.
Statistically, 67% of FSBO sellers eventually get fatigued and hire an agent. So agents can use it as a lead generator, or you can look at it as a way to solve the secondary problem of many people thinking they want to sell on their own, but then they realize they’re not really ready Well done. So now we have the ability to attract these sellers, educate them throughout the process, and find them local listing agents.
SW: How is Homepie different from a traditional FSBO?
BR: Over the decades, many solutions have emerged to try to help homeowners sell. If you go to Google For Sale By Owner today, you will find that many people have no skills at all. They are either a flat fee option for sellers, a conduit to the MLS just to get syndicates out of it for which they pay a small flat fee, or a poster board that provides services to other businesses. They really don’t solve the long-term problem. So we thought, we’d create this for the FSBO beachhead market. We provide them with technology that makes it easy for anyone to decide whether to buy or sell.
We want to provide options for anyone looking to sell and let them know there is a way to do so with confidence. It’s like a turbo tax – simplify something very complex and buy it in small chunks. We started in California, which is our backyard. We also solve problems faced by California FSBO sellers. Then we carved out a market in Florida—a completely different market with different problems and solutions. We opened nationwide about a month ago, but that was a limited service offering. Nonetheless, we can now serve every state.
SW: How do you solve the problem of getting buyers to see your home? Is the seller here?
BR: Ten years ago, this wouldn’t have worked, but people have become more comfortable in this mobile society where we can use Airbnb and all kinds of things to go to other people’s homes. And younger users, they are more comfortable with this process. Initially, we built a way to virtually view families into the system so they could connect through our system, where all communication was done through instant messaging.
The bigger challenge is seeing it in person. If it’s a vacant house, no problem, you can put a lockbox in there – there are very sophisticated lockboxes out there these days. But people don’t use it that way. Sellers would rather invite them over when they arrive and show them around the property. That’s what’s happening, the seller is just managing it directly. I think eventually, from a scale perspective, this will be another way for us to bring in agents, but for now, that’s been taken care of by the sellers themselves.
SW: In a typical real estate transaction, there is a distance between the seller and the buyer. Why is it not important here?
BR: When you’re talking about peer-to-peer transactions, you don’t have the same fiduciary duties as an agent. So the seller can say, no, you don’t sound good to me, I’m not going to show you my property. However, most sellers are very pragmatic. They just want to get the best price.
SW: What makes your technology unique?
BR: What makes us unique is that anyone can build a list in minutes. So if you’ve ever used a service like Auto Trader to sell your car, it will be a very similar experience. You can upload your own photos, or it is highly recommended that you use a professional photo package to take photos because you want people to stop scrolling. Another great piece of technology we have is our negotiation tool, which makes it easy for buyers and sellers to negotiate. We took a traditional offline process and digitized the entire process, so all the same complexities as standard quote negotiations are built in, but it all happens instantly. We’ve seen this happen in a day – there will be three or four counters in an hour and they’ll get a contract. That creates a final agreement, everyone signs it, and then they start playing.
SW: What role does artificial intelligence play in this process?
BR: We use artificial intelligence in our chat system, and during the listing process, we introduce artificial intelligence to help sellers with their descriptions. That’s what we’re currently doing, but there are plans to introduce artificial intelligence to help provide services people may need after moving. For example, use photo recognition technology to identify if a home has solar and be able to offer them solar options after closing, or identify if they have old aluminum windows and offer them some newer window solutions.
I have been a huge supporter of buyer’s representation since I started Homepie. They have a wealth of local domain knowledge that you can’t get by searching on Google. You can get some ideas from Google, but you just don’t know things like: Is this a neighborhood where I can walk to a coffee shop from my house? We’re looking at technology and bringing in machine learning to get input from sellers who feel like they live in that home. So they’ll answer 20 questions during the checklist, and then we’ll start building that profile.
SW: You run both Homepie and mortgage businesses. How do these things work together?
BR: Mortgages are obviously an important part of the home buying and selling experience, but we didn’t build Homepie as a connector to Amerifund. The plan goes much further than that: eventually bringing all lenders onto the platform and making it available to users as a service. But obviously, owning a mortgage company allows us to gain some insights that we wouldn’t otherwise have. When you go into the transaction itself, there are about 42 verticals, depending on your geography. In addition to this, there are over 400 people who own homes.
SW: What keeps you up at night?
BR: a lot of! Now, the real uncertainty is how this whole thing relates to real estate. You know, I have very close friends, I have real estate agent clients, we’ve been close for decades, and my son is also in real estate. Real estate agents are in this uncertain time where they don’t know: Will people sign a buyer’s agreement with me? Will my clients bypass me and go directly to the listing agent? I think that was probably the biggest pressure today.
