Interview: Open Listings

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Company: Opening Listings
Website: https://www.openlistings.com/
Industry: Real Estate
Product/Service: Online Home-buying
Founded: May 2014
Founders: Judd Schoenholtz (CEO), Alexander Farrill (CTO), Peter Sugihara (CPO),
Experience and Education

Judd:
Columbia University – Computer Science
Worked at a startup- Software Developer
Huge (Design Agency) – Product Design

Alexander:
Columbia University – Computer Science
SlingBox- Senior Software Developer
Newslook- CTO
Run- Chief Data Scientist

Peter:
Columbia University – Computer Science
Kin- Founder
Amazon – Software Development Engineer

Highlights:

  • Product: Self-service home buying platform. Browse for-sale listings, ask support questions, schedule tours, submit offers, sign contracts — all online.
  • Initial Capital: Initially started Open Listings as a side-project and bootstrapped. Transitioned to doing Open Listings full-time and later received investment.
  • Gaining Initial Traction: Listening to your customers is very important. Try to solve their problems to the best of your ability.
  • Overcoming Competition: Customer experience is key. Open Listings is chosen over competitors because it offers better support and lower fees.
  • Hiring:  Hire for traits, not skills. Passion is more important than skill.

 

Table of Contents:

A. What is Open Listings?
B. Hiring

C. Competition
D. Gaining Traction
E. Initial Funding
F. For Further Reading: Making the App

 

A. What is open listings?

  1. What is Open Listings?

Judd: Open Listings helps you buy any home and get a 50% commission refund. We assist with the entire process of shopping for a home – gathering information, answering questions, and provide full support from negotiations to close. One of our agents will help you create an offer, submit it to the seller, negotiate, and guide you go through the closing process. When you complete the purchase, they’ll refund you half of their commission.

It’s a better experience because you can manage the entire process online. We have a team of experts who are  available on-demand — you don’t have to wait for a single agent to get back to you.

We save our buyers a lot of money – over $1 million so far. A real-estate agent earns a 2.5% commission, which is a huge fee. For example, when an agent helps a client buy an $800k home, they receive $20,000 as their commission. Open Listings agents refund clients half of their commission. That’s $10,000 cash back on that $800K home. Buyers use this money to cover most of their closing costs, and our refund makes buying any home much more affordable.

 

2. Why do you have the real estate brokerage in addition to Open Listings?

Judd: Because our agents represent clients with each purchase, we have to be a fully licensed real estate brokerage. This allows us to provide the different services that we offer, to receive and refund commission, and to get the data we have on our website and app. Our business operates like a real estate brokerage — we just use more technology, automation, and teamwork. Unlike other brokerages, we don’t believe in expensive broker commissions.

 

3. How does support work for Open Listings?

Judd: We have a team available to help customers with their house hunt and it’s a totally free service. Once they get into the purchase process, they still have full access to the team, but they also get paired with one of our full-service agents who’ll be be the agent representing them on that purchase.

Our agents focus on the transaction portion of home buying, which means that they don’t spend time trying to market themselves, driving around, advertising, etc. Our software manages client info and generates contracts to save time for our agents and customers. This allows our agents to be hyper-efficient, because they are not doing unnecessary, manual work.

 

4. How do you find the homes that are listed on Open Listings?

Judd: We can help buyers purchase any home in California.

California realtors publish their listings to a local MLS, which is the association and system that manages how homes are marketed and sold locally. In California, something like 95% of homes sold are listed on an MLS.  As a licensed real-estate brokerage, we are a member of 11 MLSs so far and that’s where most of the the homes that are available on our website and app come from.

 

5. How can customers visit properties on Open Listings?

Judd: You can book a showing for any property on our website. An agent on our team or one of our partner agents will meet you there to facilitate the showing (an agent is necessary because you can only gain access to the house with a special key and permission from the seller).

One difference with Open Listings is that you might have different agents show you homes if you take multiple tours. But this also makes scheduling easier for our buyers and it’s also less awkward, knowing that buyers aren’t pressured to use a specific agent.

 

6. Why did you start Open Listings in California?

Judd: It was not as much as strategic decision as much of a logistical one – we’re located here. We are focused on Southern California and the Bay Area, but we are excited to see how we can expand and try our model in different states next year.

However, we’ve been able to build a healthy, sustainable business just in California because California comprises about 15% of the real-estate market in terms of volume of homes sold.

I will say that one of the difficult things about California strategically is that there are some very competitive markets with low inventory. Sellers have a lot of power and houses tend to get multiple offers. We’re excited to move to areas where buyers have more leverage because our value proposition and savings would be even more attractive. Yet, in terms of visibility and finding our target customers, starting in California has been great.

 

B. Hiring

7. What is your strategy/philosophy when hiring? What advice do you have for new entrepreneurs looking to hire?

Judd: Hire for traits not skills: people that want to work hard, learn and grow.

Even though we’ve only hired about 8 people so far, it’s already clear that these earliest hires will have a huge impact on our company and its culture, product, future hires, customers, etc. Treat your early hires like co-founders and make sure they’re someone you want to work with closely for years — because when it goes well you will.

 

8. What is the employment structure of Open Listings?

Judd: Most traditional real-estate agents work as independent contractors, completely on commission.

We have full-time employees that work on building the product and company. We have full-time agents and internal support team members. And we work with independent contractors throughout California. Figuring out the right balance with employment structure is something that we are figuring out as we grow.

 

C. Competition

9. Who is your competition?

Judd: We mostly compete with traditional agents and brokerages, which are used in nearly every transaction and are pretty indistinguishable from one another.

I would say the only similar company that our customers know is Redfin. They have been around for over 10 years and have pioneered the use of commission refunds and salaried agents (i.e full-time employees, not contractors, which is customary). Our refund is twice as large and users enjoy our experience, so we tend to win over customers choosing between these two services.

 

10. Why do you think customers are choosing Open Listings over Redfin?

Judd: Our 50% commission refund is usually at least twice as much as Redfin’s. Also, while their website and apps are pretty good, at the end of the day they are just referring you to a Redfin agent who operates in a pretty traditional manner. I think that the way that we aim to work with people, how quickly we respond to them, and how we give them different tools to manage the process themselves actually improves the buying experience.

 

11. Aren’t marketplace type sites such as homes.com and www.trulia.com competition as well?

Judd: We are fine with customers using whatever search platform they want to find a home. We work harmoniously with any listing platform that you want to use to search. Even if you want to buy your neighbor’s house, we will help you buy your neighbor’s house.

We find that many buyers tend to use multiple platforms to search for homes because it is such an important, all-consuming hunt. When it comes to buying a home, those sites don’t really help you.

Also, these “marketplace” sites are not really marketplaces, but rather syndication platforms. They just provide agent contact forms and lead gen to agents who advertise with them. We very different than the agents that can be found on those sites.

 

12. Many entrepreneurs are terrified of people taking their idea (even to the point that they won’t talk about it). What is your opinion?

Judd: Our mission is to make the home-buying process easier and more affordable. How could I be upset if another company was also trying to do that? It’s a trillion-dollar industry in the US alone and it’s a wide open market. We love when other companies are focused on real estate technology and trying new things.

Open Listings is pretty open on our website and in our marketing so it’s not hard to borrow our ideas, and we see other companies copying us all the time. Ideas are easy; the hard part is delivering an amazing customer experience and building software to deliver that experience. That’s going to be impossible for a company that’s copying someone else.

 

D. Gaining initial traction

13. How did Open Listings gain initial traction? What advice do you have for new entrepreneurs in gaining initial traction?

Judd: Gaining traction is all about talking to customers to understand problems that need solving and then looking at data to see how well you’re solving those problems. Just do that and iterate a ton.

Open Listings started with a simple problem — finding homebuyers the newest listings that matched their search. We found it cumbersome to keep searching on a map over and over again to find the newest listings, but it turns out that feature alone wasn’t enough for us to get traction. It wasn’t until we added better data about each home and evolved the product to solve adjacent problems like making it easy to setup a showing or create an offer on a home that our audience started to grow quickly.

 

E. Initial funding

14. How did you fund Open Listings Initially? A combination of Y Combinator, making the app in house, and each of the co-founders saving up money?

We started by working together remotely on nights and weekends while we all kept our full-time jobs. After about 6 months, we moved to full-time on Open Listings and worked without pay while covering all the company expenses ourselves. We got YC funding in another 6 months and then we raised a seed round right after YC.

We are very fortunate to be living in a time when it doesn’t take much money to launch and operate an online business. We kept track of all of our company expenses from that first year and it was around $6K total including some travel.

 

F. For Further Reading:

Background

15. What was your background?

Judd: I got a degree in computer science and my first job was as a software developer for a startup. We were building software for the financial industry to replace Excel for financial modeling. However, most of my career was spent at the design agency Huge, which is based in New York, but now has 10+ global offices. During my time there, I transitioned into a UX and product design role. I worked there for 10 years, the second half of which I spent in Los Angeles, working on projects and managing the design team out here.

 

16. Since you have a background in computer science, did you and/or your team build Open Listings?

Judd: I did the product design part and my two co-founders, both full-stack engineers, did all the development.

 

17. How big was your team when you started in 2014?

Judd: It was just the three of us co-founders. We all were remote and had full-time jobs. For the first three or four months, it was a nights and weekends project.

 

18. How did you meet your co-founders?

Judd: Alex is one of my best friends. We had both worked at startups as software developers at some point. We always knew that we wanted to start a company together. We started side projects casually, but this was the first thing that we got serious about.

Our other co-founder Peter I had known for years through his older sister. He was working at Amazon and the best software developers I knew of. He is a few years younger and had never gone through the home-buying process, which was great because he wasn’t tainted by the current state.

 

Making the app

19. What was involved in making the app? If I am considering making an app of similar complexity to Open Listings, and I have a background in software engineering, what should I know in regards to time required to make the app, cost, level of skill, software required, education, etc?

The app was designed, built and launched by me and my two co founders in about 3 months. Our backgrounds are in engineering and product design so we had the right experience and team to build the product ourselves.

I don’t know how much it would cost to get an app built by an outside team. I wouldn’t recommend it — so much of building is testing and iterating, and that seems really hard to do If your team engineering and product your first hires.

Developement, Entrepreneur

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