Can you please name only one industry where compensation hasn’t changed in decades? REAL ESTATE!
“I’m not saying the fees are too high or too low, but they shouldn’t be the exact same as they have been for the last 50 years” claims Nicole Fishman Benoliel, founder of New York based technology start-up NestApple. Technology and the internet have greatly weakened the role of full-service real estate agents.”
Nicole says. “Today buyers can search online; they can specify criteria, budget, amenities and personalize the process. Consumers are educated, tech savvy and understand the liquidity and efficiency of the market. It became difficult to understand why fees remained unchanged since the 1980s; we saw a business opportunity and decided to disrupt this market.”
Over the last three years there has been an explosion of tech-focused firms looking to gain a foothold in NYC’s competitive real estate market. Their aim: reduce broker fees for sales and rentals; whether by offering rebates to house hunters or by focusing on peer-to-peer networks to eliminate the need for a broker altogether for rentals, sublets or lease breaks. “For a sale, even though the services of buyers’ agents is pitched as being free, you as a buyer are paying for it in the form of higher sale prices.
Just because sellers have to pay the broker fee does not mean they don’t markup sale prices to account for this cost,” insists Nicole.
In 2017, NestApple was launched, licensed to work in New York and recently in Connecticut. When NestApple agents represent a buyer, instead of pocketing its half of the 5 or 6% commission from Seller, the firm turns the model on its head and guarantees a 2% tax free cash back rebate of the sales price to the buyer.
In addition, they make a donation of 10% of the remaining commission to a charity of the buyer’s choice. If none is identified, they contribute to the South Bronx Educational Foundation. Since January 2019, NestApple is also listing apartments for sale for a mere 1% (instead of the common 6%) and for rent for a flat fee.
Buyer rebates are not common in the city.. but they are not new either.
In fact, commission rebates are legal in 40 states according to the Department Of Justice, and they were endorsed by New York attorney general as a way to spur industry competition, Fishman pointed out. NestApple recognizes that many of the services that New York real estate brokers provide can be, and often are, done by the clients themselves. For instance, one can easily go to streeteasy or Trulia/Zillow to find the property that they want to see. NestApple guides their prospective clients with know-how, paperwork completion and filing, setting up appointments, board package and most importantly negotiating the best possible price. This division of labor between themselves and the client entitles the client to some of the returns.
NestApple is a full service real estate brokerage firm
NestApple agents send leads from their database of listings to match a client’s profile and once a property is identified they will run a pricing analysis by pulling comps, define a negotiation strategy, place an offer, and make introductions to real estate attorneys, mortgage bankers, contractors, and inspectors.
Comparing the startup to Uber and WeWork, Nicole says, “I want NestApple to be the largest brokerage company in the tristate area,” noting that their business model enables each agent to be much more efficient than an agent working in a traditional brokerage firm.