Most people selling a house today are using the same method their parents and their grandparents used. Hire a real-estate agent, post a listing, host a number of showings of the property and hope for the best.
The Southfield-based startup created a new software platform that helps homeowners sell their houses in a system that utilizes 21st Century technology. SellerNation's system focuses on bringing an auction-like atmosphere to the sale that generates multiple offers in a short window of time, maximizing the price from what the local real-estate market allows for at the time.
"This is truly a revolutionary way of doing things," says Ron Jasgur, principal and co-founder of SellerNation. "It's changing the game but still playing by the same rules."
Woodward Asset Capitalizes
SellerNation's roots reach down into the early years of its principal's career. Jasgur got his start in real-estate and like most agents he spent 20 years hustling to make home sales happen. Part of what set him apart from his peers was his ability to see what was on the horizon, specifically the foreclosure crisis.
Jasgur formed
Woodward Asset Capital in 2007 to start handling the avalanche of distressed property inventory. The Southfield-based investment firm bought foreclosed properties in bulk from banks at a discount and brought them back to market. It didn't take long for Jasgur to see that the real-estate system wasn't ready to handle what was coming at it.
When the Great Recession hit full force a year later, the numbers of foreclosures spiked and real-estate agents struggled to keep up with the inventory. Prices plunged, homes languished on the market, and foreclosures quickly became synonymous with blight. Jasgur saw a broad range of reasons why this happened, ranging from real-estate agents overwhelmed with inventory to dishonest brokers who purposely left foreclosures on the market (and banks in the dark about pending offers) so they could collect weekly maintenance fees.
Buyers submitting offers would sometimes wait days, or even weeks, for an answer. Banks would become frustrated with properties rotting on the market despite steep discounts. The bottom line is the real-estate system just wasn't set up to deal with that sort of foreclosure volume.
"Everybody likes to say the big, bad banks are responsible," Jasgur says. "The truth is the big, bad banks were losing thousands of dollars. This wasn't a money-making proposition for them. We created software that solved it.
The software was
OfferSubmission and it came to market in 2009. The platform streamlines the foreclosure sales process, cutting out a lot of the human element that gums up the works. Its secret sauce puts offers submitted by buyers agents in front of decision-makers at banks. Often offers would be submitted and accepted within a few hours. Even when offers were turned down, the buyer would be grateful because they would have an answer quickly.
"Great things happen by bridging the gap between the street (buyers) and the seller," Jasgur says. The automation that comes from the software bridged that gap. "That's what we did," Jasgur says. "We automated the offer process, the negotiation. Everything else is there."
And it added up to some big numbers. OfferSubmission garnered $528 million in offers and $382 million in sales in 2011. In 2012 it did $477 million in offers, which generated $328 million in sales volume. Then it did $410 million in offers and $307 million in sales in 2013. All of those sales came from big banks like PNC and a number of regional banks and credit unions.
Creation of SellerNation
Woodward Asset Capital's offices in Southfield are pretty nondescript, taking up a few thousand square feet off Northwestern Highway not far from Inkster Road. The inside has splashes on new economy flavor, like the wall-size photo of downtown Detroit lit up at night, but otherwise the place gives off the typical real-estate brokerage vibe. Jasgur and his staff are mainly middle-aged men dressed in the stereotypical Oakland County business casual uniform: button-down shirt, no tie, a suit coat and blue jeans.
Put simply, Woodward Asset Capital isn't your typical software firm and SellerNation isn't your run-of-the-mill startup. Jasgur and his partners found a local software developer to put together the prototype version of OfferSubmission, which they used to sell their concept to banks. They then got the techies to build out OfferSubmission and, later,
VerifiedShortSale, a software platform for short sales.
"It's sort of like launching a startup doing something I did for 20 years," Jasgur says. "It's everything I know but it's different than what anybody else is doing."
While employing OfferSubmission, Jasgur's team realized that they could garner enough quality offers to maximize the sale price within a 10-day window. They then tweaked the system to focus on selling the property within that window by saying offers would only be accepted in that time. That led to the generation of multiple offers, creating a sense of urgency that got buyers to act faster.
"We're using the best parts of the auction," Jasgur says. "The sense of urgency. The standardized presentation. Generating several offers."
They then realized that the challenges plaguing the foreclosure market weren't unique to it. When the market started to shift significantly toward the seller's favor in the last year, Jasgur and his partners came up with the idea for SellerNation to take advantage of the mainstream real-estate market.
"All of the problems we talked about in foreclosure real-estate, these things happen in normal markets all the time," Jasgur says.
Woodward Asset Capital bought Homesource Realtors last month with the idea of turning the discount brokerage into a market-rate firm utilizing SellerNation's software. It recently wrapped up its pilot phase where it sold six homes on the normal market, including the Southfield home for
Your People's founder Lynne Golodner, who is also handling public relations for SellerNation. You can read a blog post about her experience
here. She was impressed.
"They (the pilot program houses) all sold for more than we thought," Jasgur says, adding they all went for above listing price and many went for cash, including Golodner's house.
SellerNation is planning to roll out its software platform in Metro Detroit this spring and summer. He hopes that proving the concept in one of the U.S.'s toughest real-estate markets will help accelerate its adoption nationwide. Jasgur is confident it will happen because SellerNation focuses on the seller's perspective (most similar systems focus on the buyer's end) and generates a bevy of offers from homebuyers to back it up.
"We let the market dictate what the property is worth," Jasgur says. "I love to argue with an appraiser that a house is worth more."
- Jon Zemke is the News Editor of Metromode and its sister publications, Concentrate and Model D, and the Managing Editor of SEMichiganStartup.com. He is also a real-estate investor who turns distressed properties into community assets in his corner of Detroit.