Rocket houses intends to launch iBuying – and reduce real estate.
The Detroit-based company – and no. 1 US mortgage lender by volume – on Tuesday issued a 1,490 word press release declaring its intention to “combine all aspects of selling and buying homes into one simple, customizable platform.”
These are today the ambitions of a multitude of companies including Zillow and real estate brokerage Compass. But Rocket’s announcement provides some specific ways to break into the real estate market and challenge traditional agents.
Most important is the ability for a home seller to work with an in-house Rocket real estate agent who is located in “downtown Detroit” and will receive a commission of 1.5% of the sale price.
This remote agent would perform many of the functions of a physically present seller, including “advising customers on the best list price, facilitating professional photos, listing the house on the multiple listings service, negotiating offers, and managing all paperwork. “.
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The remote agent option “will be open to the public from the fourth quarter of 2021,” the statement said, with owners “paying a significantly lower commission of just 1.5% for the selling agent, as opposed to the fee traditional 3%, which is a savings of $ 4,500 on a $ 300,000 home.
Average listing agent fees in the United States are closer to 2.5%, according to a RealTrends study. Still, the surrender puts Rocket in the company of Red tuna and smaller outfits such as Rex and Clever, which attempt to reverse the traditional distribution of fees collected by agents.
Unlike these companies, Rocket additionally offers a traditional agent service. The company plans to continue its agent referral program through the “Rocket Homes Verified Partner Agent Network” program.
Rocket also announced on Wednesday an “upcoming iBuyer program, facilitated by third-party partner companies.”
Rocket plans to sell homes through its iBuying platform and then use the company’s website, app and partner agents to make it easier to buy their next home.
Rocket’s new leap in real estate comes after the company reported first quarter net income of $ 1.3 billion. This compares favorably with other companies promising a one-stop-shop platform, such as Zillow, which reported second quarter net profit of $ 9 million, and Redfin, which recorded a loss of $ 28 million. in the last quarter.
A challenge to Rocket’s ambitions may come from the federal government. As Inman News reported, the company spends a few pages of its recent annual report noting that the Consumer Finance Protection Office may change the application of the Real Estate Settlement Procedures Act, or RESPA.
This 48-year-old law partially prohibits kickbacks and referral fees between real estate agents and mortgage lenders.
Rocket is currently defending himself in a federal lawsuit filed by Dmitry Shipkin of HomeOpenly.com who claimed the company was involved in illicit bribery.
“We are fully cooperating with the CFPB in this investigation and are confident in the compliance processes put in place by Rocket Homes,” reads Rocket’s annual report.