idea #018: Social Brokerage
Updated: May 25, 2019
Hybrid Real Estate brokerage for social impact.
What if I told you, you could sell your home, pay less in fees, and at the same time help build affordable housing for those who need it most? Oh yeah, and you get a decent tax write off on top.
That's the idea.
By operating a socially focused brokerage, you will be able to pay a fair commission to your agents while offering a lower net fee to clients.
Something like 1.0% to the agent, and .5% into the charitable fund and .5% to the brokerage. The trick will be matching the same from the buy side. Regardless, you can land on an operating model that is sustainable, and one that gives the seller a savings of at least 1% on fees, and up to an equivalent 1% charitable contribution that will help anyone realizing a gain.
One option would be to develop a platform to better match buyers/sellers so you could represent both sides of the deal, perhaps as an intermediary. We'll dive into that idea in more detail later on, as I think there's a much more disruptive idea in that concept.
Overall, there is certainly an opportunity to forge partnerships with municipalities and negotiate discounts with title companies, lenders, and all other parties in the chain to maximize value to clients and to the community.
Looking at it from a strategic perspective:
1. A new generation of home buyers/sellers is emerging, and if real estate is anything like other industries, this generation will want to support companies that are socially focused.
2. Real Estate brokers are a commodity, so right now differentiation and scale are very difficult. It's all relationships and not much else. This business model would offer a new, interesting alternative that would be difficult to replicate.
End of the day, Realtors/Brokers are now a tax. The original value offered has been eroded by modern technology, but fees have not proportionally changed. Anyone can use Zillow or Realtor.com to find their future home or use to determine an offer/sale price, and anyone can find a mortgage with lenders like Better. These were valuable services historically provided by Realtors, probably the most valuable part of the process, so if we are self-performing these tasks now, why are we still paying the same premium as we did 30 years ago?
Ok off the soapbox, but you get the point. When we pay taxes to the government, part of that goes to fund programs that promote public welfare. This is an idea to do the same in a more efficient way across a high-volume industry.
Some ROM numbers if we imagine scaling this across the US:
Average Sales Price: $375,000.00
Yearly Sales Volume: 750,000.00
Total Capital Exchanged per year: $281,250,000,000.00
Assume 5% Market Capture: $14,062,500,000.00
Assume .5% To Charitable Fund: $70,312,500.000
Estimated Cost to Build a modular SFH: $75,000.00
Projected Net New Affordable Homes Donated Per Year: 937.5