About 8 years ago a new real estate company came on the scene here in Utah called Homie. This past weekend they announced they laid off their remaining agents they had and essentially they are out of business. I want to break down why they failed cause they left us a huge gift in the lessons of what not to do in business.
They made a huge splash when they first entered the market. However, this was their first mistake. They immediately started trashing realtors and essentially putting the entire industry against them from day one. They didn’t understand the tight knit realtor community and the mutual respect between agents. There was always an unwritten rule not to trash each other publicly. They not only broke that rule, they shattered it and then threw it in our faces.
Which brings us to the next mistake, not realizing they themselves would need to join the board of realtors. Every realtor at Homie was treated as they should be based on how Homie entered the market, they were members of a club nobody wanted them to be a part of. Working with them was a nightmare and we all did our best to avoid them. It meant double the work and helping someone you didn’t like.
This might seem small but it wasn’t. The model Homie used to pay agents was the next issue. It only attracted the worst agents because the pay was so low that any agent that was successful at all would laugh at their compensation. So the next mistake was the comp model to their agents.
Because they had worse agents, they have worse service. This wasn’t so clear right away. I will admit in 2018-April 2022 you really didn’t need an agent that was “that much” better. The market was so hot it was taking care of itself. I knew all along that as soon as the market turned Homie would be out of business. Reason being, it’s really expensive to run a great real estate company. They simply weren’t bringing in enough money based off what they charged to sustain a bad market.
Many other companies tried a very similar model in 2006-2009, you just never heard of them because they didn’t rent out half the billboards on I-15. They all went under the second the market turned. Why?? Because it actually does matter who you hire to market and sell your home.
I’m not saying the real estate industry isn’t changing and with the new lawsuit settled by NAR, who knows what hat the future will tell. But the lessons here were obvious and very clear….
1. Don’t make enemies where you could have had friends
2. Know the licensing laws before launching a business to get around them
3. Pay your sales people well otherwise you end up with the bottom of the barrel
4. Service matters in a service industry. People will pay for quality and even if you discount, they expect good quality. You can’t outrun negative reviews that keep stacking up
5. It’s a lesson as old as the Bible but when things are going great, stack cash cause those dry seasons are coming.
I was never afraid of Homie, I always saw them as a discount competitor and I lost less than a handful of deals to them over the years. I never cheer for others to fail, Homie being gone won’t change my life at all. I think the biggest difference will just mean we finally get more clever billboards on our freeway again.