We recently made an investment in Trelora, a Denver-based company attempting to change the way that residential real estate is bought and sold in the United States.
So how is Trelora going to change an industry that has been more resistant to change than the Catholic Church? Through a business model combining fixed transaction fees, non-commissioned agents, and a proprietary software platform that allows sellers, buyers and agents to connect directly and maintain complete end-to-end control over the transaction process.
In other words, with Trelora, a customer can now get a full service broker to help them buy or sell their house, know exactly where they are in the process, and never pay transaction fees in excess of $3,000. Sounds pretty cool, huh?
There are a several reasons why I’m excited about this company. The first is the industry they are tackling. This is a bit weird for me to say, because the truth is, the first time I heard about this opportunity, I passed based on two words: “real estate.” I had talked to so many companies attempting to change the real estate industry strictly through the use of an app, that I had become jaded. But there is a reason that so many people have tried — because everyone knows it is broken. Today, over 98% of buyers report finding their home online, and over 90% report being dissatisfied with their broker. Yet, the average home sale in Denver generates broker commissions in excess of $20,000. It doesn’t take a venture capitalist to realize that the industry is ripe for change.
Another thing I love about this company is the team. The founder and CEO, Joshua Hunt, an incredibly successful broker in his own right, started this company for one reason: to change the industry forever. Everyone on the team is committed to this goal. When I was considering an investment, I sat in on a weekly all-hands meeting. The first thing I noticed: everyone showed up (I don’t think many real estate companies can say the same). The second thing I noticed: they spent the entire meeting talking about how to make the transaction process better for their customers. The third thing I noticed: the brokers and the software engineers were talking to each other (as my daughters would say, “I know, right?”). It is going to take this type of alignment and communication to change this industry.
Finally, I love the resistance from the real estate industry itself. Several years ago, I invested in a company called Victors & Spoils that was attempting to disrupt the advertising industry by crowdsourcing creative work. I announced the investment in a blog post pointing out the ridiculous inefficiencies of an industry that puts clients on huge annual retainers and then uses full time employees to do the project work. I woke up the next morning to nearly 700 comments on the blog — most angry, and most from New York. That’s when I knew I had made a good decision. You see, those that scream the loudest to defend the status quo are usually those with the least ground to stand on.
Trelora has already faced intense resistance from those in the real estate world. Brokers, feeling the ground shifting under their feet, have refused to show Trelora listings. When Trelora began disclosing broker fees on every transaction in the market, REcolorado threatened fines and restricted access to MLS data. Nevertheless, Trelora will account for over 1% of all listings in the Denver market in 2015.
It is rare to find an industry so ripe for change. It is rare to find a team so passionate about their vision. And it is always good to be on the side of transparency.
This one should be fun. I’m excited to be a part of it.