One of the people who successfully sued the National Association of Realtors (NAR) to change real estate commissions has co-founded a new real estate startup.
It all began in 2017 when Josh Sitzer and his wife listed their home for sale in Kansas City. The couple was frustrated by the fact they had to pay a 3% commission to a buyer’s agent.
“Due to the anti-competitive structure of the industry before the lawsuit, I as the seller, was effectively coerced into paying 3% of my home’s selling price to a buyer’s agent in order to achieve a successful sale,” he told TechCrunch. “While hiring agents is a choice for many, I don’t believe anyone should be bullied into paying for undesired services due to unfair industry practices,” he added.
Sitzer shared his frustration with his neighbor, who happened to be a lawyer familiar with the subject matter. By 2019, he and other homeowners had filed a class-action lawsuit (Moehrl et al. v. National Association of Realtors, et al.) against the NAR. They received a verdict last year that resulted in a settlement earlier this year which will radically change how home real estate is sold.
The National Association of Realtors agreed to pay $418 million in damages to settle lawsuits. The association also agreed to abolish the “Participation Rule” that required sell-side agents to make an offer of compensation to buyer brokers. Between that and other rule changes agreed to, the real estate market is expected to be considerably transformed.
“I wouldn’t say I had expectations in the beginning, as it was a multi-year battle of ups and downs, but I had enough confidence in my position to commit to taking action,” Sitzer said.
To take advantage of the new landscape, Sitzer has teamed up with Bryce Galen and Neal Batra to found a startup called Landian , which aims to help homebuyers benefit from the rule change that resulted from the lawsuit by offering flat-fee real estate agents on demand. The name Landian blends the words “Land” and “Guardian.”
That startup is emerging from stealth today, with an offering in beta, TechCrunch is the first to report. The site, according to its founders, allows users to import listings from any real estate site and then book a home tour or prepare an offer with a licensed local agent, without owing a commission.
Advances in technology years ago make it easier for homebuyers to find properties they are interested in looking at or buying so the model of buyers’ agents getting a 3% commission is considered antiquated by many. Some buyers have argued that it’s unfair to pay such a large commission to an agent when they did most of the legwork themselves.
Buyers have the option to pay à la carte for Landian’s offering: $49 for each home tour and $199 for an offer prep session. If they want more hand-holding, they can agree to cough up a flat fee of $1,799, which includes up to five home tours and two offer prep sessions, with additional services available on an à la carte basis. But they only have to pay that upon closing. So if you don’t end up buying a house through Landian and you commit to that agreement, you don’t owe anything, Galen said.
“With Landian, homebuyers are protected from the new reality of paying exorbitant commissions out of pocket that eat into their closing costs,” said Galen, who previously founded the fintech company Zero, which was acquired by Avant in 2021. People don’t need to use a buyer’s agent in the same way.”
A lot of industry incumbents such as Redfin and Zillow are not incentivized to change the pricing model, in Galen’s view.
“Because the Zillows and Redfins and this sort of old guard real estate tech companies have thrived and grown in a world where a buyer agent gets 3%, they’re not leading the change here,” Galen told TechCrunch. “It’s a new wave of startups like Landian that we expect will lead change.”
Batra agrees.
“My bet is that, following the NAR settlement, most agents will convert from relying solely on the traditional model based on speculation and higher fees to incorporating the Landian flat-fee model,” he said.
The New York-based startup has not yet raised external capital, so far just operating with friends and family money. It is in the process of raising a pre-seed round.