Why Real Estate Tech Is So Attractive For Founders

To put a number on it:

6% transaction fees you're talking about are probably in home sales. About 800B a year transacts in the US in home sales (existing home sales data: http://www.realtor.org/sites/default/files/reports/2013/emba...). In practice, that 6% number often is a bit lower for the brokers. Also, FWIW, on top of broker fees, you'll be paying attorneys, government taxes, etc.

In Chicago, to transact in and out of a house, you should expect to pay between 10 and 11% (so if you buy a house for 100k and sell it for 110k, you will break even if you're lucky).

Personally, having moved twice so far in the crazy, corrupt rental market of Manhattan, I've been dying for someone to solve this problem. For those who aren't familiar with renting an apartment in NYC, the turnover is so fast and vacancy so low, that you can only start looking for apartments the month before you want to move.

In addition, the landscape is filled with predatory brokers that add no value to the process. In some cases landlords hire them because they don't want to deal with the process themselves, and in some cases the brokers will re-list apartments they find on Craigslist or other websites to make it seem like they have an exclusive listing, then try to get you to pay their fee if you rent the apartment. In almost all cases, the renter winds up having to pay the broker fee of one month rent to as high as 15% of the annual rent. Finding a no-fee rental is extremely rare. I would love to have a transparent system that was easy enough to use for landlords/management companies that resulted in two things:

1) Owners don't feel the need to retain brokers to deal with prospective tenants, passing the ridiculously high bill onto them. 2) The market for these no-value-adding middleman brokers that re-list no-fee apartments and other brokers' listings dries up.

I believe that the only case that a renter should have to pay a broker fee is if the renter him/herself retains the broker to show them apartments because they don't want to do the work.

/rant

FWIW, I recommend www.rentshare.com for this.

I use them to pay and receive rent (I'm a landlord and I rent my residence).

Additionally, whenever landlords who use Rocket Lease (my rental application company) inquire about rent payment online, I typically recommend Rent Share.

They'll even accept electronic payment from the tenant and mail a paper check to the landlord on your behalf, so if you want to have it autodrafted for your rent, you don't even require landlord opt in.

Buying and selling real estate is up there with the most miserable experiences I have dealt with as an adult. I think there is definitely a lot of room to make a lot of change, improve people's lives significantly, and make a lot of money. But I think it will be much harder than you realize. 1. Regulations: this is a HIGHLY regulated industry. Anything that is regulated doesn't have any motivation to improve, because the regulations artificially keep their margins high. 2. Entrenched parties: Improving the technology behind real estate transactions will but lots of people out of work. Lots of people who will likely find it difficult to match their current salaries in other industries. These people will fight against your technology like Luddites. I wish you all the best and please for the love of God make this work!!!

Edit: spelling

Padmapper is really awesome. I think one of the reasons it were so successful was that it gave an alternate (better) UI for apartment search.

People are visual and they know maps, but seeing lists is harder to parse.

The fact that nobody else at that time had put apartment search on a map is a great example of how low the bar is for excellence in this space (no offense, @padmapper).