Prevu is seeking to carve out a new niche in online sales of residential real estate by focusing on the needs of the buyer and rethinking the role of the agent.
“We see a real opportunity to create a better buying experience where everybody can buy a home online,” said Thomas Kutzman, co-founder of Prevu, in an interview with CO—.
More than six million new and existing homes were sold in the U.S. last year, according to the National Association of Realtors, and 50% of people who purchased a home in 2018 found it online.
Many of the internet-based platforms for buying homes online leave room for improvement, however, Kutzman said. He and co-founder Chase Marsh launched Prevu after the two were frustrated with the high fees and lack of control in the process of buying real estate in New York City. The platform has since expanded to suburban Connecticut, and its plans call for further expansion to new markets.
Differentiating from other key real estate key players like Zillow, Redfin
Although other digital platforms for buying and selling real estate, such as Redfin and Zillow, have generated strong followings, Kutzman said Prevu seeks to distinguish itself by focusing on making the process easier for buyers through technology and by offering rebates of up to 2% of the sale price to buyers. Buyers have garnered an average rebate of $23,000 using Prevu’s digital “Smart Buyer” platform, Kutzman said.
Prevu repays buyers two-thirds of the commission it receives for acting as its customers’ real estate broker — commonly 3% of the sale price — and it discloses the amount of the commission rebate before making an offer.
We've found that most buyers in this day and age prefer to do a lot of the early stages on their own, but they do need that expert in the last mile.
Chase Marsh, co-founder, Prevu
Customers
Prevu's customer-centric model aims to take the 'pushiness' out of dealing with a traditional real estate agent — and comfort back into the process. Read on for more ways your business can retain customers.
Unlike other digital platforms that Kutzman and Marsh said seek to connect buyers with offline real estate agents as quickly as possible, Prevu instead allows buyers to explore properties on their own and connect with Prevu’s in-house team of salaried agents during the “last mile” of the purchasing process. The platform’s intuitive and user-friendly interface allows it to save costs and minimizes the use of agents in the early stages.
“The phrase that we like to use to describe how Prevu works is, ‘We're a friend in the early mile, and an expert in the last,’” said Marsh. “We've found that most buyers in this day and age prefer to do a lot of the early stages on their own, but they do need that expert in the last mile.”
Prevu views its professional agents more as “advisors” than as traditional agents. They average 36 deals per year, compared to only a handful of deals that traditional agents close per year. While Prevu’s agents earn a small percentage of the transactions as compensation, their pay is more heavily weighted toward salaries, Marsh explained.
“Most people hate the idea of a pushy agent,” he said. “Our agents are more there for customer service and expert advice, rather than being overly aggressive and forcing people to buy something that they may not otherwise want to buy.”
Prevu’s system for lead generation allows agents to focus on service without having to look for clients, Kutzman explained. Traditional agents spend up to 70% of their time on new client acquisition, with only 30% dedicated to customer service, he said.
In September, Prevu received $2 million in funding from Corigin Ventures, a seed-stage venture capital firm with expertise in the real estate technology and consumer industries as well as a history of backing startups seeking to disrupt traditional residential brokerage business models. Prior investments have included Compass, Transfix, Latch, ClassPass and Wheels Up. Kairos Ventures and Basecamp Fund also contributed to the seed round.
Ryan Freedman, general partner at Corigin, joined Prevu’s board of directors upon completion of the investment.
“We’ve had our eyes on this space ever since we invested in Compass in 2012,” he said. “The traditional homebuying process is ripe for change, as buyers are empowered now more than ever to take control into their own hands, especially when it comes to search and exploration.”
Kutzman said the new round of funding will help the company expand its engineering, enter new markets and accelerate its marketing spending to educate potential customers about Prevu’s unique business model.
“Most homebuyers don't find out how much their buyer's agent makes until the closing table,” he said. “We want to bring an extra level of transparency to that, and let them understand how much they're saving, and how much we're receiving for representing them. That's going to be a big focus for us —educating consumers and bringing that transparency to them.”
Prevu’s investments in engineering will seek to automate more of the experience for consumers. The company leverages data garnered from its deals to inform its investments in the customer experience, and Kutzman said the company plans to invest both in engineers and data scientists as it embarks on the next phase of its growth.
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