Talk about buying a house, and it’s usually the sale price that gets a lot of attention. But there are lots of other costs that go along with that final number. Among them: commission taken by a real estate agent, which can be as much as 6%.
To entrepreneur Daniel Sperling-Horowitz, that’s an “incredible” amount of money that cuts into what buyers and sellers are shelling out.
It’s also the kind of problem that Sperling-Horowitz recognized could be solved with a marketplace that can bring buyers and sellers onto one platform, and use technology tools to handle the specifics of the transaction. That’s what he and cofounder Martin Terskin created OfferMarket to do.
“Our whole goal is to empower buyers and sellers to transact without agents,” he said.
Founded in the spring of 2020, the company does this through a marketplace that is designed for “off market” real estate sales. These are properties that aren’t listed on the Multiple Listing Service, or MLS, used by services like Redfin and Zillow. These opportunities include homes that are for sale by owner, flip-and-fix deals, wholesale real estate and more. “There are so many listings that are available that most buyers aren’t aware of,” Sperling-Horowitz said.
To do this, sellers can create a free listing, of which hundreds populate the site. Or they can sign up for OfferMarket’s “Get Offers,” feature, which is essentially a managed marketing campaign where OfferMarket takes care of photography, a 3D home tour, coordinating showings, documentation and closings. The platform matches buyers and sellers, with an interest in getting each a good deal.
The company also works on the back-end to complete the transactions, such as coordinating the necessary documents and communicating with the title company. This essentially eliminates the two agents representing the seller and buyer that would normally be involved.
It’s not a no-cost transaction through the platform, as there is a fixed fee for the buyer of $5,000. But Sperling-Horowitz said it is designed to bring savings. He pointed out that a recent house that sold for $475,000 would typically have $28,500 in commission built in, based on typical fees. So that’s $23,500 in savings. When it comes to progress, the company is on track to process 100 transactions this year.
For Sperling-Horowitz, the startup came about through a combination of experience with marketplaces and an interest in real estate. He was a cofounder of Columbia-based Zentail, as it built a business centered on automating ecommerce over the last decade. Along the way, he moved to multiple properties around the area between Baltimore city and Howard County, but didn’t want to sell them due to the transaction costs. So, he ended up owning a small rental portfolio.
As he did so, he recognized two things: He liked real estate more than ecommerce, and that many of the principles from ecommerce could be applied to real estate.
“We imagined if Amazon were to create a real estate marketplace, what would it look like? And that’s what we think OfferMarket is,” he said. He left Zentail in March of 2020 to build the company.
Along with the space for buying and selling, OfferMarket also takes similar principles to Amazon in that it is building software not just for the platform that users see, but also to make its own processes more efficient. Sperling-Horowitz and Terskin, who is the CTO, are the two employees, and they are working with contractors along the way. But overall the focus for the University of Maryland alums has been on bringing on tools.
“Were very, very focused on building software that avoids needing to hire and build overhead,” Sperling-Horowitz said.
It’s not bringing on investors, either. The company is bootstrapping by choice, as it seeks to build a profitable business without the need for outside capital.
On its current path, OfferMarket may not become the Baltimore startup that has the biggest team, but it seems like a plausible candidate to join an often-undersung group of tech companies that are solving a market problem with technology, and building a sustainable business while doing so. And in the process, people will save some money.-30-