Listing Service For Home Owners SQFT Hopes to Double Reach in 2015
Most people are willing to sacrifice a few thousand dollars in realtor fees to avoid the hassle of trying to sell their home solo.
Those who aren’t—about 9 percent of U.S. sellers—now have a new method of selling themselves: an app called SQFT that allows them to price their home, post a listing for it on the major online real estate sites, and negotiate its sale from a single point, according to CEO and co-founder James Simpson. Meanwhile, the eponymous Boulder, CO-based company that developed the app connects users with local brokers to help with more difficult aspects of the process, such as closing contracts, for a fraction of the typical brokerage fee.
After launching the app this year and expanding its coverage from Boulder to Texas, California, and seven other states, SQFT is looking to raise financing to grow further, Simpson says. A former real estate agent himself, Simpson plans to seek $2 million to $3 million in a new financing round this year to support the company as it attempts to double the number of states its service reaches and further develop its technology and marketing.
“We’re kind of a hybrid between a true for-sale by owner seller and a brokerage services,” Simpson said in a telephone interview. “We’re a very short step up from a for-sale-by owner to take.”
By a “step up,” Simpson is referring to agreeing to pay some fees rather than none. Brokers typically charge about 6 percent of the home’s sale price for their service. Listing a home through the SQFT app is free, but the company charges users who sell their home a fee equal to 1 percent of the sale price, of which it keeps half. The other half goes to local real estate brokers who partner with SQFT to help close the sale—basically by processing the paperwork after the buyer and seller agree to terms.
If the buyer uses a broker in the deal, the seller may also have to pay another fee of 1 percent to 2 percent, Simpson said. Because the seller isn’t paying the same fees, it means that a lot of traditional services that brokerages provide, like pricing the home, showing it, and negotiating with a potential buyer, are left up to the seller.
SQFT isn’t meant to compete with sites such as Zillow, Truila, and Realtor.com, which tend to focus on drawing in buyers rather than attracting sellers, Simpson says. Rather, SQFT offers users a one-stop tool to get their home listed on those those services and 450 other online real estate marketplaces, including the MLS, which compiles listings of real estate for sale from member brokers. SQFT also provides a buyer background check, and a referral to a local broker who oversees the closing, Simpson says.
Simpson founded SQFT in 2014 after spending most of his career selling real estate in Beverly Hills. The company raised $400,000 initial seed funding from friends and family, and then another $1 million from Boulder firms Techstar Ventures and Galvanize. It did not participate in either incubator program, however.
The company has helped sell about 25 houses since its founding, and has another 30 currently listed, Simpson says. It has an iOS app already and plans to release an Android app in the next few months, he said.