A startup real estate broker that puts a twist on commissions just raised $2 million in seed funding led by an early Compass investor
- Prevu, a digital real estate broker launched in New York City in 2017, has raised $2 million in a seed round led by Corigin Ventures, which was also an early investor in $6.4 billion Compass.
- Prevu is exclusively for home buyers, and offers rebates on the 3% commission typically collected by a buyer's agent.
- Prevu says it can offer that rebate because it brings as much of the home-buying process online as possible, and only involves agents when necessary.
- The company said that its average agent makes 36 deals a year. According to the National Association of Realtors, the median residential agent makes 12 deals a year.
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Prevu, an online real estate broker that began operations in New York City in 2017, just raised $2 million in a seed round led by Corigin Ventures, which was also an early investor in $6.4 billion brokerage Compass.
Thomas Kutzman, co-founder of Prevu, sees the company as part of the next wave of real estate brokers.
"The traditional industry is pulling people offline as soon as they can, instead of pulling them online in a more elegant way," Kutzman told Business Insider.
Prevu is exclusively for home buyers, and says it offers up to a 66% rebate on the 3% commission typically collected by a buyer's agent.
The startup says it can pay theses rebates because much of the buying process is handled online, and actual human agents are only called on when necessary.
As of now, the company is only operating in New York City, though it plans to use the seed round to expand. This seed round, which came 4 years after the company's original launch in 2015, will also be used to develop new tools for home buyers. Corigin Ventures, which is leading the seed funding, has also invested in Latch, Transfix, and ClassPass.
Buyers connect with agents through the website, instead of agents searching for clients on their own. The co-founders estimated that finding leads can take up to 70% of an agent's time. Prevu's agents are fully employed by the company.
A potential buyer begins by browsing homes on Prevu's website and setting up their custom search terms. While browsing, a customer will see the size of their potential rebate. Prevu will then notify customers whenever a new house that fits their criteria hits the market or has an upcoming open house, but agents do not initiate.
"If you're early in your search and just want to see what's available, no one is pressuring you," said Kutzman.
If a buyer want an agent's advice earlier in the process they can ask for it, but they don't need to connect with agents until they actually begin to visit properties.
"The goal here, in this day and age, is that consumers should be able to buy a home online," said Prevu co-founder Chase Marsh.
The company's model seeks to change how home buyers interact with an agent, but Prevu doesn't intend to replace the agent entirely.
"We think the role of the agent is changing to more of a consultant and adviser," said Marsh.
Prevu's agents focus their energy on the high-touch, difficult tasks near the close of a sale: advising a client on the nuances that data may not be able to catch, negotiating deals, and guiding clients through the emotional world of homebuying.
The rebate means agents make less per transaction, but the company said that their average agent makes 36 deals a year. According to the National Association of Realtors, the median residential agent makes 12 deals a year.
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