If you have information on Homie and would like to talk to a reporter, email Sofia Jeremias at sjeremias@sltrib.com.
What is going on with Homie?
The Utah real estate business came on the scene in 2015, aiming to disrupt the real estate industry and how people traditionally buy homes. However, a series of layoffs have led the company from having 600 employees to likely around 40, according to anonymous sources who talked to The Tribune.
Why is Homie laying off its employees?
There are a couple of factors. Homie built its business off of first-time home buyers and sellers, offering an attractive flat fee instead of a traditional 3% buyer agent commission. The company claimed that this saved sellers “over $10,000 per transaction.” In 2021, Homie co-founder said first-time buyers and sellers were 30-35% of Homie’s customers. The strategy seemed to be working in 2020, when the company said they did over 500 transactions in June alone and had a market share of over 5% in Utah.
However, the rising interest rates and competition from cash-rich investors has slowed down first time homebuying, affecting how much business Homie was bringing in. In 2022, Homie announced it laid off 28% of its staff. Sources also told The Tribune that more recently, some agents switched from salaried to contract workers.
Was Homie’s business model really that radical?
Homie is what’s called a “proptech” or a property technology company that uses digital platforms or automation as part of its business strategy. However, real estate brokers and academics have been fierce critics of proptech businesses and their viability in less robust markets.
Mike DelPrete, a real estate tech strategist and scholar-in-residence at the University of Colorado Boulder, claims that Homie’s business model isn’t that different from any other real estate brokerage that’s been around for a long time. Homie agents are still helping the homebuying process, but are just charging a flat rate fee rather than a percentage of the home sale price. And that savings doesn’t necessarily attract customers, who tend not to be so price conscious when it comes to real estate.
DelPrete said there have been very few actual innovations in the real estate industry. These include electronic signatures and Zillow’s “zestimate” that allows anyone to see the value of a home and online listings.
What does the future hold for Homie?
Sara Edelman, the vice president of marketing for Homie, told The Tribune that the company “has secured capital from its existing investors, confirming its ongoing dedication to helping customers save money in this difficult real estate market.”
To read the full story on Homie, click here.
If you have information on Homie and would like to talk to a reporter, email Sofia Jeremias at sjeremias@sltrib.com.
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