What’s better than competing for and winning a National Association of Realtors (NAR) title?
Well, launching your own AI-powered, flat-fee real estate service in a few months, of course.
In the wake of new rules put in place by the Real Estate Commission, which grew out of the Setzer-Burnett class action lawsuit, a new service called Landian has launched.
The word is a game between the land and the trustee and is in line with their mission to “protect home buyers from excessive fees commonly charged by real estate agents.” Fired!
And yes, Josh Setzer is a co-founder of the company, along with Bryce Galen and Neil Batra, Techcrunch.
Why Landian?
According to their mission, they want to reduce what they refer to as “excessive fees” charged by real estate agents.
In the not-so-distant past, it was not uncommon for the seller to pay 6% of the sale price, with 3% going to both the listing agent and the buyer’s agent.
This fee structure was the focus of a lawsuit by the National Association of Realtors, and under it agents can no longer advertise compensation through the multiple listing system. However, it remains the norm for many transactions, with only minor differences in the procedures.
Going one step further, Landian He wants to lower the buyer’s agent fees rather than have the sellers simply include them in the sale price.
The company aims to save homebuyers the equivalent of a year’s mortgage payments through pay-as-you-go fees.
Instead of the usual 2.5% to 3% commission that homebuyers have to pay, the newly launched proptech (still in beta) is charging as little as $199 per listing and $49 per home tour.
They say this would save a buyer of a typically $500,000 home about $15,000, minus their fees.
For example, a home buyer might pay just $643 if they take five guided tours of the home and make two offers. That’s $14,357 less than the typical 3% buyer’s agent commission.
Currently, Landian is available in both the United States and Canada.
How does Landian work?
The process is fairly straightforward.
Once you find a property you like on a website like Zillow or Redfin, or a real estate brokerage site, simply copy and paste the listing URL into Landian via the “Import Listing” tool on their homepage.
From there, the listing will be pulled to ensure it is the correct property, including address, listing price, square footage, number of bedrooms/bathrooms, etc.
It took a few minutes for it to load for me once I pasted the sample listing from Redfin, but it actually worked.
Once the upload is complete, you’ll see two buttons at the top of the page, including “Schedule Tour” and “Make Offer.”
If you choose one, you will be asked to register with Landian. I registered to see how this works.
After I did that, I was taken to the tour page where I could choose the time and date of the tour. It is worth noting that you have to pay $49 upfront for the tour and they require a credit card to do this.
They said this “shows the Landian agent that you are a real buyer.” By the way, you will be paired with a real estate agent for the tour.
The Landian agent you meet may also suggest you sign up for the Landian Exclusive package, which includes up to 5 tours and 2 shows for $1,799.
The fee is paid at closing, and if you sign up, they will refund your $49 tour fee. However, this puts you in an exclusive buyer representation agreement for 90 days.
The cost can be much higher than for on-demand services. For example, five tours and two shows cost just $643.
Of course, this may mean that you are paired with a new agent every time. But since the process is fairly simple and streamlined, this may not matter much.
Once you have completed the tour, you can also submit an offer from the Landian website by clicking the “Submit Offer” button. You and your agent will draft a written offer and submit it to the seller.
Ultimately, this is a model you can implement yourself with some guidance from an agent. You can also enlist other help you may need along the way, such as a lawyer who specializes in closing the deal.
Landian says it will “refer you to a transaction attorney” to handle the closing of the deal, including signing the final documents. Note that these fees are not included in Landian’s fees.
Why use Landian instead of a traditional real estate agent?
Money. That’s pretty much the argument. As we mentioned, a buyer’s agent can cost up to 3% of the home’s purchase price.
For a $500,000 home, that would be $15,000. While the seller used to pay this fee, many sellers have chosen not to provide anything to buyer’s agents due to the changes in the Real Estate Commission.
As a result, buyers now have to either pay this commission out of their own pocket, or request a waiver from the seller to cover the fee.
The problem with seller concessions is that they usually increase the selling price by the same amount. So now the house may have to sell for $515,000 (and get it appraised, too!).
This means that the homebuyer will effectively pay for this representation as long as he owns the home, through a higher loan amount and/or purchase price.
Alternatively, they can pay as little as $199 for a showing and $49 for a tour, plus any settlement/service fees they need.
In fact, you may be able to pay as little as $99 for an AI-powered pitch, which uses technology to craft and send your pitch.
So it all comes down to saving. Just make sure you look at the big picture. If your agent does poorly in negotiating, you may end up paying more, even with the big commission off.
Good agents will tell you that they can get you a good deal that will absorb their fees in the process. Whether this is true is another story.
The seller may like your offer because it will not require him to pay anything to the buyer’s agent out of his own pocket.
Does this exclude real estate agents?
Currently, no. Landian still relies on human real estate agents to take you on tours and make showings.
Therefore, the agent can make money by doing tours and writing pitches, rather than doing these things for free up front and possibly getting nowhere with the client.
They can also convince buyers to sign up for that exclusive package, which gives them exclusive buyer representation for 90 days for a slightly higher fee.
Working with them will also make compliance with the new rules easier, given all the moving parts and uncertainty ahead, Landian says.
The bigger question is whether this could escalate further and exclude more agents, or simply drive some out of the industry if the low fees are not worth the work.
It remains to be seen, but it is clear that change is coming to the real estate industry one way or another.
Although this wouldn’t be the first time a low-cost company has tried to enter the challenging real estate space.
Prior to creating this site, I worked as an account manager for a wholesale mortgage lender in Los Angeles. My experience working in the early 2000s inspired me to start writing about mortgages 18 years ago to help potential (and current) home buyers better navigate the home loan process. Follow me on Twitter for the latest news.
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