Justo Using Disruptive Technology to Shake Up Real Estate Biz
In the increasingly pricey Greater Toronto Area housing market, every dollar counts for both the buyer and the seller. With land values and speculation driving home prices ever higher, brokerage commission fees are often overlooked as a factor in how much a purchaser pays or a seller receives for their home. The typical commission paid to agents of both buyers and sellers averages at 2.5%, typically totalling 5% of the home's selling price, and adding thousands of dollars to the cost for both parties.
Disruptive technologies like Uber and Airbnb are already shaking up the transportation and hospitality industries by innovating to make lower-cost alternatives available to their markets, and this is the same approach being taken by Justo Inc., a new Toronto brokerage that utilizes technology to streamline the transaction process while cutting commission costs in half.
Where a traditional brokerage would keep the entire commission, Justo splits the commission with the buyer, each taking an even 1.25% of the purchase price. With the halved fees, a home priced at $600,000 could save a seller up to $10,500, with the purchaser saving as much as $9,000. Homes priced at $1M could save sellers up to $16,500 and buyers up to $14,000.
Justo accomplishes this by generating leads, allowing agents to operate on a volume basis and manage the reduced commission by making more deals than most realtors. Since launching earlier in the fall, the company has been offering everything one would expect from a brokerage, including staging, professional photography, 3D virtual tours, floor plans, and property marketing, with the benefit of major cost savings.
Justo CEO Daphne De Groot states that the standard brokerage model hasn't kept up with the growing influence of technology in the real estate business. “With the housing boom over the past 15 years, today, agents are making multiple times the commissions for half of the work. There is still a lot of expertise provided by agents, but we felt there was a need for some adjustment to the current norms. We just don’t believe it should cost someone the equivalent of a year’s salary to sell their home,” reads a statement issued by De Groot.
The total sum of commission fees paid over the last couple of years registers in the billions, giving disruptive innovations like Justo the ability to have a far-reaching impact in the real estate business. “Based on data from the past two years, we calculate that if Justo handled every real estate deal in the GTA, we would save buyers and sellers over $2 Billion in fees and commissions,” stated Vicki Schmidt, Justo Broker of Record. “We believe we’re providing an option that’s desperately needed in Toronto’s current overzealous market.”