It sounds like a homebuyer’s dream: guaranteed discounted prices on the property they want to call home.
A select group of New Jersey brokerages — including EXIT Realty East Coast and Engel & Völkers Critelli Properties — will be the first to work with a new buyer-friendly app launching in June that claims to do just that.
Buyerprice.com will give buyers a discounted price on a property of interest and guarantee they will pay no more than that named price.
How the guarantee works
Starting June 20, buyers in New Jersey can register for free on buyerprice.com (currently in beta), and when they search for homes on any property listing platform — such as Zillow, realtor.com or a broker’s site — the guaranteed maximum “BuyerPrice” will appear alongside the seller’s asking price.
Buyerprice.com negotiators, agents selected by BuyerPrice brokers, can then negotiate the lowest possible price, which will often be below the guaranteed BuyerPrice, according to the company.
Using the slogan, “Pay the BuyerPrice or we pay the difference,” if the buyer uses a buyerprice.com negotiator and pays more than the discounted price, then buyerprice.com will cover the difference, up to the full asking price.
Tim Hammond, CEO of buyerprice.com, offered an example of how a buyerprice.com transaction would work.
“In the case of a home advertised with a listing price on Zillow of $400,000 that’s been on the market for three months, our algorithm sets a BuyerPrice of $388,800 as the guaranteed maximum we advise our buyers to pay.
“If we negotiate a price of $385,000, we would save the buyer $15,000. Because we’ve been successful in achieving the discount we have promised, then we get a success fee related to how much we save the buyer.
“If we negotiate even less than the BuyerPrice we set, we earn 20 percent of that additional saving. If we don’t make a saving, then we pay the buyer the difference between the $388,800 and the asking price of $400,000 — and we make nothing at all.
“This is what aligns us completely to the buyer’s interests. Above all, it means we are working for the buyer to drive the price down, and we only get paid if we are successful,” he said.
The parameters and exceptions
The company will work with selected local agents to help set the discounted figure, and its model will not operate in hot markets with low inventory and multiple bids.
“There is a lack of stock, but it is clearly not a seller’s market for two thirds of the stock,” said Hammond. “It’s these properties we will be offering to consumers: ‘We are going to guarantee a lower price than the asking price.'”
“BuyerPrice.com combines its unique algorithm with expert negotiators who only earn when homebuyers pay less, so they are fully aligned with the buyer’s best interests,” added Hammond.
Hammond launched HomeDashboard in the U.K. early this year to consumers with founder Jonathan Harris, an app to help homebuyers better manage the buying process. HomeDashboard gives price guides to consumers, but not guarantee.
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“Buyerprice.com is a barometer for the buyer that fluctuates in real time on the user’s app and our website, and takes into account market conditions and sentiment, absorption rate and time on market, and of course, local expert broker knowledge,” said Hammond.
“We’ve removed every barrier in order to become the first place American homebuyers go before purchasing a property. Our guarantee and fundamental pricing shift are both unique and compelling, and there is no reason a buyer wouldn’t come to us first,” added Harris, HomeDashboard founder and buyerprice.com COO.
U.S. buyer agents have no incentive to negotiate prices down
Although the U.S. has buyer’s agents — which are a rarity in the UK — the industry payment structure here does not incentivize buyer’s agents to negotiate aggressively on behalf of their clients, said Hammond. The higher the price their buyer pays for a home, the bigger their commission.
“Buyer’s agents might say they help buyers, which of course they do, but there is no financial incentive for them to save their clients money,” said Hammond. “So that’s key in what we’ve set out to change.”
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“Being the consumer champion, that’s something we can own. We are aligned to the buyer’s best interests, and we will guarantee that.”
Splitting commission with agents and brokers
BuyerPrice.com will split the buy-side commission, if successful, with its participating brokerages.
“We do all the marketing and the recruitment of the buyers, who are our clients, and then the brokerage does the negotiation — so it’s very much a partnership where equal splits of the commission are earned, rather than it being just a lead referral fee,” said Hammond.
Richard Rawlings — an experienced British trainer in real estate deal negotiating with companies including Savills in the UK — will head the U.S. operation, based in New York.
“This only works if you are a well trained negotiator,” said the buyerprice.com president. “When it comes to negotiating, we will provide our agents with extra stats — we will drill down a lot deeper,” he said.
He anticipates the app appealing in the first instance to tech-forward first-time and second-time homebuyers in their 30s and 40s. It might well appeal to investors who are very focused on price, too.
“They are less emotional and like to look at the numbers,” he said.
The buyerprice.com founders and local brokers agree that the model can only work in an average market, not a hot one where bids are coming in well over asking and there are multiple offers.
“You will never see us in the San Francisco Bay Area,” said Mindham.
“Our model is to work with a lead broker in every state so that we can roll out quickly,” added Hammond.
What do the brokers say?
When they first heard about BuyerPrice.com, brokers in New Jersey were negative, but they asked all the right questions, said Mindham.
“The reason we chose New Jersey was they are not the easiest to convince,” he said. “We figured if we could crack it here, we could crack it anywhere.”
Mindham tells brokers that buyerprice.com only wants their best agents, their best negotiators, and that it will look at how many deals they have done.
Bob Shirvanian, broker/owner of EXIT East Coast Realty, with 40 years in the business, is a leading broker working with buyerprice.com in New Jersey. He is optimistic.
“I think that the buyers in a regular market (like ours) are always looking to get the best price, and they don’t think they are getting it. They think they are over-paying and are not being represented properly,” he said.
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What is in it for brokers like Shirvanian? Though his market has plenty of buyers, he wants them to work with his brokerage, and he sees buyerprice.com helping with this.
“We have got a lot of buyer leads, too, but generally they are not that loyal,” he said.
“With this, they will need to go with buyerprice.com to get the discount, which will make them more loyal. I think buyers are going to want to check this out if they have a guaranteed price that is below the asking price. I think we will have a great response.
“What we are going to do is put together the best agents who already know how to sell,” he added.
Shirvanian likes the combination of the buyerprice.com algorithm combined with brokers’ input when pricing a property. “With brokers being involved in the local market, this is more of a realistic pricing than what the bigger outfits do,” he said.
As far as he’s concerned, there is not a big down side. “Buyerprice.com is going to take the hit if you can’t get the right price,” he said.
Roxanne Coleman, manager/broker of Crossroads Realty, Manasquan, New Jersey, said a number of agents in her office would be involved in the venture.
“We don’t need to. It’s a choice,” she said. “We are getting buyer leads, but there are certain pockets here in New Jersey that are a little bit slower.
“It does not cost a buyer anything — why not do this? It does not cost them a dime.”
“It’s a win, win, win. Everybody benefits, the buyer, the seller can benefit because the buyer is qualified and the buyer’s agent too.”
Hammond stressed the BuyerPrice.com buyers will have Fannie Mae Desktop Underwriter Mortgage Pre-Approval.
“It essentially ensures that our buyer is as strong as possible and ready to buy, which helps us negotiate the very best lowest price, and if there are other bids, then it makes our buyer the most favored choice for the seller — as they are ready to go, ” he said.
The consumer campaign for buyerprice.com
Getting the word out to home buyers will be key to the app’s success. Mindham will be spearheading the marketing campaign to raise consumer awareness, initially in the three New Jersey counties.
“We’ve developed a powerfully targeted digital and print marketing campaign to create awareness of this unique money-saving technology and we’re expecting significant local interest from buyers over the summer before taking this national,” he said.
“We’ll advertise on the portals, on Google, Facebook and Twitter and all the content sites and blogs related to buying your home, in New Jersey first,” added Hammond. “We’ve also built in some really innovative technology into our platform, which listens to social media ‘chatter’ and then discovers and engages with people who may be thinking of moving, ” added Hammond.
With his consumer tech background, the entrepreneur is helping devise some growth campaigns.
“We are going to make a lot of noise and buzz about “checking the buyer price” and then sharing the good news with everyone you know. We also have the hashtag #DoTheDance as buying your home at a discount is something to celebrate — and we think it’ll be fun for our customers to do a little dance when they save money.”
What’s after New Jersey?
After New Jersey, Hammond said the company would expand to the West Coast, the Northeast, New England and the Mid-Atlantic.
“They will be high volume, medium-priced markets,” he said.
The U.K. HomeDashboard business will be funding the U.S. operation — at least initially.
“We don’t actually need huge traffic to generate a lot of revenue,” said Hammond. “Our model will generate cash of several thousand dollars per buyer, which we will plough back into marketing. So it can grow embryonically.”
Hammond is not ruling out a funding round to help finance a rapid rollout.
“I’ve raised money from VCs [venture capitalists] before and given them a good return on their investment, but of course would prefer strategic investors and smart VCs who understand what we are trying to do to create a consumer champion service.”
How will this kind of product it be affected by an election year?
“If Donald Trump becomes President, the market will be so unsettled,” said Mindham.
Added Hammond: “And uncertainty will help buyers negotiate.”
