Jessica Buffington began her real estate career at the worst time possible — right before the great recession of 2008. However, working in a fragile housing market in Memphis helped Buffington find her niche in bank-owned and foreclosure homes. But then things changed.
“Then the market started to turn around and there weren’t a lot of foreclosed properties,” says Buffington.
Necessity is the mother of invention, and Buffington came up with an out-of-the-box idea to connect realtors with clients for a flat fee rather than a traditional commission fee.
The startup founder chose the latter. With $500 in her pocket, in 2015 she founded HelloHome, a platform where real estate agents get matched with sellers and buyers for a $3,500 flat fee. Following a stint at Memphis-based Start Co. accelerator and a $25,000 investment, Buffington has grown HelloHome to active listings in 17 states, 88 cities, and has saved home sellers over $5 million in commission fees.
The Memphis-based startup has seen rapid growth due to their simplified commission process. Often realtors charge high commission fees, around 3 percent, to represent the seller and buyer. On a $300,000 house, this could be up to $18,000. For first-time home buyers, who often get overwhelmed by the process, HelloHome provides a platform to save more money up front.
“They pay at closing when their home sells because there’s no upfront fee and it includes a full service agent, it includes all the marketing, getting into multiple listing services,” says Buffington. “We partnered with a company so it has professional photos and then we do one long cut and get their home ready to list.”
HelloHome has in-house agents, a team that has grown from four in February to 25 by the end of April. While the platform puts the customer first, the real estate agents benefit as well from exclusive listings, less costs upfront for marketing and staging, and time savings.
“Depending on the agent, who only work for themselves, they have to go out there and spend money out of their own pocket to try to convert their business. So what we do is we actually convert the listings for them and then match them with a home seller,” says Buffington.
“We cut out 70 percent of the work for the agents so by the time they’re matched with a home seller they are basically introducing themselves, putting their sign in the yard and key box on the door, and working that listing.”
That valuable partnership between the startup and the agent is the foundation of their revenue model. The home sellers pay the flat $3,500 fee with 50 percent going to the listing agent and 50 percent to the company. Huffington is also exploring an unfulfilled model — a finder’s fee-based network of home service professionals.
“At their fingertips during a transaction, they may need a termite person or they may need a real estate attorney. We have a dashboard that helps them connect with them automatically,” says Buffington.
The HelloHome team is gearing up for expansion across the Southeast, including Atlanta, as soon as they close their seed round with their eyes on a Rise of the Rest tour pitch next month.
“The seed round funds are going to get us to the next technology build as well as adding key hires and hiring more agents,” Buffington says, adding that they’re aiming to raise $1.5 million.
“We’re super excited and humbled that we were picked for Rise of the Rest. We’re preparing for our pitch but just being ourselves. Just showing the confidence that we came from — having to fight through the change I’m trying to bring to this industry.”
