HomeLight is a real estate referral company based in San Francisco, CA that utilizes the Internet as a marketing medium with the use of real estate technology. Although HomeLight is itself a real estate broker, it does not provide services typical of a broker. Instead, HomeLight works with a network of participating real estate brokers in various markets to which they refer customers. The company aims to connect people selling their homes with local real estate agents. HomeLight has listed over $3 billion in homes since its foundation in 2012. The company was founded with an initial investment by Google Ventures and Group 11. HomeLight has raised over $200 million in funding since its establishment. The company analyzes over two million real estate agents with its algorithm based on specialty and qualifications.
History
HomeLight was founded in 2012 by Drew Uher, the company's CEO, after he and his wife had difficulty researching agents based on needs or qualifications. The business, which was originally aimed at buyers, focuses on sellers. In February 2015, the company received $3 million in funding led by Bullpen Ventures, with participation from Montage Ventures, Crosslink Capital, Krillion Ventures, 500 Startups, and Western Technology Investment. In 2016, HomeLight received $11 million in funding from Zeev Ventures, and Group 11. By 2017, the company had raised a total of $15.5 million from investors. In August 2017, HomeLight raised $40 million in Series B funding in a round led by Menlo Ventures with participation from Citi Ventures, as well as previous investors Zeev Ventures, Group 11, Crosslink Capital, and Innovation Endeavors. In January 2018, HomeLight announced a partnership with Yelp to add data from HomeLight's algorithm to Yelp's Home Services listings. In July 2019 HomeLight acquired Eave, a digital mortgage startup. In November 2019 HomeLight secured a total of $160 million from Zeev Ventures, Group 11, Menlo Ventures, Crosslink Capital, Stereo Capital, and others.
Overview
HomeLight's algorithm ranks agents according to data including sales and agent records from over 100 sources and approximately 30 million transactions nationwide. The algorithm ranks agents by price range, neighborhood, property type and experience level. HomeLight says their algorithm ranks agents regardless of agreement status and the agent pays a service fee only after the transaction is complete. Matched results provided by HomeLight only include real estate agents who have agreed to pay the referral fee to HomeLight after the transaction is complete. While HomeLight ranks real estate agents independently of their referral status, it does not match real estate consumers with agents who have not signed their referral fee agreement.
Referral Fees Criticism
HomeLight is paid from the agent's final commission in the form of a 25% referral fee. All agents agree to pay HomeLight a referral fee, on all closed transactions, through their employing broker. A referral fee is triggered when a transaction closes within two years of the date of the referral. The referral fee will be calculated from the agent's side of the gross commission. Gross commission is calculated once it's received by the agent's broker prior to any split of commission with the agent or any other brokers on the agent's side of the transaction. If an agent represents both the buyer and seller on the same transaction, and one party is a HomeLight Referral, referral fee will be the standard fee of ½ of the total gross commission of the transaction. If an agent represents both a buyer and seller on the same transaction where both parties are HomeLight referrals, the referral fee will be the standard fee of the total gross commission. If an agent represents a client referred by HomeLight in multiple transactions within two years of the date of the referral, the standard referral fee will apply to these additional transactions. No fee shall apply to the transactions after the two-year period. After the signing of a contract for a transaction resulting from a referral, the agent will promptly notify HomeLight via email or via the HomeLight website, and indicate that expected closing date. The Agent will instruct the escrow officer to pay the resulting referral fee directly from escrow. When consumers select an agent on HomeLight, they're essentially referring that agent, and that agent will pay a referral fee back to HomeLight. Referral fees generally result in what antitrust experts label as "reverse competition"—competition not for the consumer attention, but for the attention of middle-man who steers the consumer toward its network of brokers and away from competitors. Such steering may result in lower quality of service or higher commissions, fees, and price levels. Some real estate agents advocate that referral fee brokers make consumers a commodity that the referral broker is selling to another agent.
