A Miami real estate startup company plans to expand as the industry faces headwinds
The slowdown in the real estate market in South Florida has led some brokerage firms to cut staff. But one plans to expand by June.
The Aventura-based company Richr allows sellers to list their home on the multiple listing service in Florida for free, bypassing a real estate agent and the average 6% commission fee. The company, a Miami Herald 2019 pitch competition finalist, launched in March 2019 and has helped list 1,800 listings ranging from $100,000 to $3 million.
Now, it wants to cater to buyers, said Glenn Orgin, the company’s chief executive officer and founder. Sellers can set the commission fee, Orgin said, and buyers are able to use that agent commission as a discount on their home purchase. The catch? Buyers either have to utilize the Richr title company and homeowners insurance, or pay a flat fee of $990.
“In times of desperate need, people look for ways to save money. Why use an agent to make an offer when you can use us?” Orgin said.
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The service to buyers would allow Richr to make revenue since launching. Thus far, “we launched a product that did not make money because we wanted to prove that the public wanted access to the MLS at no cost. This is our way of monetizing the model,” Orgin said.
Richr, a venture-backed startup, has used a publicly raised $1 million fund to sustain its five employees, including real estate agents. Orgin aims to add another 15 employees — business development professionals and engineers — by late 2020, should the expansion prove to be successful.
The program will launch in the tri-county area in June and be offered across the state in the fall and winter, Orgin said. Richr aims to complete 500 transactions in Florida by December.
“We’ll have to see how the market reacts,” Orgin said.
Most transactions are expected to occur in the $300,000 range, Orgin said. “It’s easier to move a home that is less expensive.”
But given the headwinds the pandemic has caused on the real estate market, Patrick O’Connell, senior vice president at Berkshire Hathaway HomeServices EWM Realty, said the expansion may face challenges.
“In the age of Covid-19, the broker’s role is even more critical in marketing property and assuring buyers with purchasing a property while observing social distancing measures,” he said. “The overall market is down significantly since the beginning of Covid and many smaller firms are struggling to stay afloat.”
