Here at Gaebler Ventures, we love it when an entrepreneur takes on an industry and turns it on its head.
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This is never an easy task. Industries don't like radical change. They move quickly to squash it.
I learned this back in the dot com bubble days when I tried to reinvent the cosmetics industry. We tried to create a one-stop-shop for both prestige and mass beauty products.
We made a lot of progress but eventually the key players in the industry (e.g. Estee Lauder) would not play ball...and, long story short, despite making a ton of progress and delighting many customers, we ran out of fuel before we got to liftoff.
But we still love it when other entrepreneurs risk everything to take on big players.
Take Joe Fox over at Iggys House for example.
Joe just filed to go public and his business model is all about turning the staid real estate market upside down.
He's offering free MLS listings to home sellers.
That's pretty radical.
If you want to sell your house on your own -- for sale by owner, as they say, or FSBO for short -- you can put up a sign on your lawn and hope for the best.
Who drives by your house and sees that stupid sign? Hardly anybody.
Pretty quickly, you probably give up.
Get an Iggys House sign from Joe Fox, and you get more than just a dumb FSBO sign.
You get a free listing at IggysHouse.com, which is great, but more importantly you get the keys to the real estate castle.
For no money at all, completely free of charge, Joe Fox gets you a free MLS listing.
Previously, you had to work with a real estate agent to get that, which meant you coughed up 6% of your sale price.
For what? Most real estate agents snap a few pictures of your house, put their sign up, list you in the MLS and then sit back on the couch waiting for your house to sell so they can collect a big, fat check.
In the old days, maybe it was fair value for effort. If your house sells for $200,000, they'd get $12,000.
A rip off? Yes, but not a complete and total ripoff.
Fast forward to the recent real estate bubble and that same house is selling for $850,000. Now that couch potato real estate agent is going to get $51,000 when you sell. That's outrageous.
It's no surprise that the appraisers and the real estate agents have promoted the run up in prices. Higher prices means high commissions. Duh.
Who wants to pay 6% commissions? Fewer and fewer people. That's why there has been a massive runup in FSBO home listings.
The problem -- until Joe Fox came along -- was that FSBO sellers cannot list in the MLS (multiple listing service).
The thing is, er, more than 70% of all homes are sold through the MLS. So, selling homes FSBO has been tough.
In a very clever entrepreneurial move, Joe Fox decided to give those MLS listings to FSBO sellers for free.
That has to have the realtors peeing in their pants. Joe Fox added $1 billion in free MLS listings to the MLS within 150 days and, as people catch on that they can get free MLS listings at IggysHouse.com, that rate is just accelerating. It's phenomenal growth that is unheard of -- never has happened in the history of the real estate industry!
And, every one of those people who get free MLS listings is likely to avoid paying a 6% commission fee. What's 6% of $1 billion? That's $60 million that consumers get to keep.
I know what you are thinking? How is Joe Fox gonna make any money?
It's like that old joke -- we'll give the product away for free and we'll make it up on volume. Fortunately, Joe's much smarter than that.
Joe has another business called BuySide Realty. They act as a buyer's agent for a soon-to-be homebuyer. It's pretty common for somebody who is buying a home to use a buyer's agent but a lot of people don't know that the buyer's agent often walks away with half the commission -- typically, 3%. So they show you a home and you like it and buy it for $850,000 -- well, they just made a quick and easy $25,500.
Joe Fox has his people serve as your buyers agent, once you've identified a property you like, and when he gets that $25,500, he gives 75% of it right back to you, Mr. Home Buyer. That's more "found money" for the consumer.
So Joe helps out sellers with free MLS listings and more -- but eventually every seller is a buyer. As word of Iggys House grows (and it's spreading like wildfire as we speak), word of BuySide Realty is growing too. Plus, Joe Fox is getting into mortgages and improving that process.
What's not to like? We love it when somebody looks at something and says "This is completely broken, I'm gonna fix it."
That's what Joe's doing to the real estate industry. He did it before with the stock market, breaking down walls in that industry back in the 90s when he launched one of the first online brokerages.
So, if you are out there thinking about changing the world, let Joe Fox give you a little inspiration.
Get off your couch, and go change the world.