One of the plaintiffs who successfully challenged real estate commissions by taking on the National Association of Realtors (NAR) has co-founded a new company in the real estate sector.
The story begins in 2017 when Josh Sitzer and his wife put their home up for sale in Kansas City. The couple was frustrated by having to pay a 3% commission to a buyer’s agent.
“Due to the anticompetitive structure that existed in the industry before our lawsuit, I, as a seller, was forced to pay 3% of my home’s sale price to a buyer’s agent in order to close the deal,” Sitzer told TechCrunch. “Hiring agents is a valid option for many, but no one should be forced to pay for unnecessary services due to unfair industry practices,” he added.
Sitzer shared his frustration with his neighbor, who happened to be a lawyer familiar with the issue. In 2019, along with other homeowners, he filed a class action lawsuit (Moehrl et al. v. National Association of Realtors, et al.) against the NAR. Last year, they received a verdict that led to a settlement earlier this year, which will drastically change the way properties are sold.
The NAR agreed to pay $418 million in damages to settle the lawsuits, and it also agreed to abolish the “Participation Rule,” which required seller agents to offer compensation to buyer agents. With this and other rule changes, the real estate market is expected to undergo significant transformation.
“I wouldn’t say I had high expectations at first, as it was a multi-year battle full of ups and downs, but I had enough confidence in my position to commit to taking action,” Sitzer said.
To take advantage of this new landscape, Sitzer has partnered with Bryce Galen and Neal Batra to found Landian, a startup aimed at helping homebuyers benefit from the regulatory changes resulting from the lawsuit by offering flat-rate real estate services on demand. The name Landian combines the words “Land” and “Guardian.”
This startup is launching today with a beta offering. According to its founders, the site allows users to import listings from any real estate site and then book home visits or prepare offers with a licensed local agent without having to pay commissions.
Technological advancements in recent years have made it easier for buyers to search for properties, so many now view the model where buyer agents earn a 3% commission as outdated. Some buyers argue that it’s unfair to pay such a high commission when they’ve done most of the preliminary work themselves.
Buyers can opt to pay for Landian’s services individually: $49 for each home visit and $199 for an offer preparation session. If they want more comprehensive support, they can choose a flat fee of $1,799, which includes up to five home visits and two offer preparation sessions, with additional services available on demand. This fee is only paid at closing; if the buyer doesn’t purchase a property through Landian, they owe nothing, Galen explained.
“With Landian, buyers are protected from the new reality of paying exorbitant commissions that increase their closing costs,” said Galen, who previously founded the fintech company Zero, which was acquired by Avant in 2021. “People no longer need to use a buyer’s agent in the same way.”
For Galen, companies like Redfin and Zillow have no incentive to change the current pricing model.
“Since companies like Zillow and Redfin have thrived in an environment where the buyer’s agent gets 3%, they’re not leading the change here,” Galen told TechCrunch. “We expect a new wave of startups like Landian to drive the change.”
Batra shares this vision.
“My bet is that after the NAR settlement, most agents will stop relying solely on the traditional model with high commissions and will adopt Landian’s flat fee model,” he said.
The New York-based startup has not yet raised external capital and has so far operated with funds from friends and family. It is currently in the process of raising a pre-seed round.
By: Nestor Castillo, ForAllTechNews Director