Real estate tech firms target Montecito, Santa Barbara
The tri-county real estate tech scene is surging.
A number of web-based brokerage firms are flooding the region, targeting the affluent neighborhoods of Montecito and Santa Barbara. They aim to disrupt the established order of the real estate market through features such as streamlined online platforms, lower commission rates and live video walkthroughs.
Open Listings is the most recent addition to the Santa Barbara market, offering 50 percent commission savings by working online without a traditional agent. The Los Angeles-based startup features real-time aggregated listings, market reports and partner discounts. With every home sale, it donates to the nonprofit New Story that builds homes for those in need.
The median home price in Santa Barbara is more than $1 million, which would translate to about a $15,000 commission refund, said co-founder and CEO Judd Schoenholtz.
“(Santa Barbara) is adjacent to our existing Los Angeles coverage and thus an easy expansion that we can launch with existing staff and agent partners,” Schoenholtz told the Business Times via email. He founded the company with Alexander Farrill and Peter Sugihara, who all have backgrounds in design and tech. “We’ve seen a high volume of signups and searches in Santa Barbara since our launch, so we expect there to be strong demand, especially from members of the local tech community.”
Open Listings was born out of the Y Combinator accelerator in Mountain View. The company received $1 million in seed funding in October.
The Open Listings team also launched a site to find undervalued listings such as fixer-uppers and distressed properties called Shitty Listings.
Redfin also recently announced its expansion to Santa Barbara. Redfin charges sellers a 1.5 percent listing fee, instead of the typical 2.5 percent, while still providing full-time agents. Its salaried agents are paid bonuses based on customer satisfaction rather than price-based commissions. Redfin features 3-D virtual tours on all Redfin listings and an automated home value tool. Its live video walkthrough service is in beta testing.
The company has raised more than $165 million in venture funding, including backing from T. Rowe Price Associates, Wellington Management and Brothers Brooks. Redfin was founded in 2004 by David Eraker, Michael Dougherty and David Selinger but they have since left. Glenn Kelman, Redfin’s president and CEO, has been at the helm since 2005.
Prior to Redfin, Compass burst on the scene. New York-based Compass uses in-house software that aims to cut down on brokers’ administrative work and streamline listing updates. The startup recently opened a 4,400 square-foot office at 1283 Coast Village Circle in Montecito that will eventually house a staff of 50 to 100 people.
Compass was co-founded in 2013 by Ori Allon, the former engineering director of Twitter’s New York office. It has raised $125 million in investor capital.
It doubled its number of agents over the past year and has more than $1.4 billion in luxury real estate listings. To fuel its frenetic growth, it has lured top brokers and managers to the chagrin, and sometimes litigation, of its rivals. The most recent lawsuit stems from Coldwell Banker, alleging its former manager stole confidential information when he left Coldwell to work for Compass.
Coldwell Banker is attempting to keep Compass from hiring more of its employees and get various documents back.
Santa Barbara County Superior Court Judge Thomas Anderle ruled at a hearing on Feb. 2 over a preliminary injunction that the information that Coldwell Banker classifies as a trade secret is readily ascertainable. California also has strong statutory laws supporting employee mobility, Anderle said.
The court will reconvene on April 29 over the lawsuit.
Venturing a bit from the real estate realm, an online homebuilding service also recently expanded to Santa Barbara and San Luis Obispo counties. Alair Homes began in Canada in 2006, offering builders the ability to outsource administrative functions and scale up through franchising. Alair handles website work, software, marketing outreach, accounting and other services through a pay-as-you-go model.
The tri-county market will reveal if there is room for both the new order and the traditional brokerages.
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