Many of us have a love/hate relationship with change. Brace yourself. Among the latest disruptors attempting to flip the residential real estate industry on its head is Hyyve, a soon-to-be-launched Toronto-based platform where Realtors bid on residential listings, competing with other agents in what’s essentially a bidding war to get clients.
Yes, you read that right. Agents pay upfront for the right to list a property.
Sellers keep the cash, regardless of the outcome
What’s more, homeowners get to keep the cash the winning agent bid, even if the property doesn’t sell.
Although bidding for listings won’t be everyone’s cup of tea, “It gives you a direct line to sellers who want to go to market,” points out Toronto boutique brokerage agent Dorian Rodrigues, who recently signed up. “It’s another way to generate business…and will inspire agents to put more resources towards the listing.”
The platform, the first of its kind in Canada, is currently taking agent registrations and is expected to launch in time for the spring market. If all goes well, the plan is to expand across the country.
Not a brokerage, but a bold industry disruptor
Not to be confused with a brokerage, this is a system designed to disrupt the way sellers choose a Realtor, with an added incentive for them in the form of bid cash from the agent in advance of a sale. For agents, it’s a different twist on lead generation. The expectation is that this seller-friendly approach may appeal most to tech-savvy, cash-pinched younger sellers in their 30s and 40s, who may not have strong established connections with a Realtor.
Agents must pay a monthly subscription fee to place bids on Hyyve (reportedly a few hundred dollars per month on average).
Weighing the pros and cons
Potential pros and cons are being weighed up by industry experts. Re/Max Canada president Christopher Alexander thinks that the Hyyve platform is likely to be a complement to the industry, providing more choice for sellers. But he adds that the risk that some homeowners on the platform might “prioritize agents based solely on price” rather than on expertise could be problematic.
Patrick Armstrong, who co-founded Hyyve along with fellow entrepreneur Kirstin Thomas, agrees that’s a valid concern. But the platform is designed “to encourage sellers to consider overall value rather than just price,” he insists.
“Listings are inherently valuable and are something that should be monetized and controlled by the home seller,” Armstrong maintains.
He adds, “We don’t typically label ourselves as industry disrupters.”
Almost everyone else does though.
With Hyyve, Armstrong asserts, agents gain access to a wider client base and high conversion listings, while “sellers benefit from upfront cash, better agent competition and increased transparency.”
Transparency is what attracted registrant Leo Naiman, co-owner of a Toronto flat-fee brokerage. “Too many details are unclear in a regular deal,” in his view. “I’m all for any move towards more transparency in the industry.”
A draw for sellers and Realtors?
Here’s how the platform works. Sellers upload their property details free of charge. Then agents can submit detailed bids that give a comprehensive description of their credentials, sales plan, and the services they’ll provide—marketing, staging, perks, terms, etc.—along with the commission and bid amount they’re offering to secure the listing. (Agents can’t see each other’s bids.)
Homeowners choose the best bid for their purposes based on this information. The expectation is that sellers won’t necessarily just go for the agent offering the highest bid and lowest commission, but instead will focus on who’s most likely to move the listing. But that decision is entirely up to the homeowner. Armstrong points out though, that “agents who overbid and under-perform will quickly lose credibility.”
He’s aware that the open bidding process means Realtors “may face stiff competition, especially from well-established agents or large teams with greater resources.” But he believes the Hyyve app can also be a boon for newer agents, allowing them to “stand out by offering creative bids, detailed sales plans and additional services that differentiate them.”
Hyyve takes a cut
Once a bid is accepted and certain conditions have been met to ensure that it’s legit, Hyyve takes its full commission of 30 per cent from the winning bid amount. The rest goes to the homeowner. For instance, Armstrong explains, if an agent’s successful bid is $1,000, Hyyve—which doesn’t touch the agent’s commission—takes $300. The remaining $700 goes to the homeowner upfront.
Hyyve’s job is then done and the listing falls into the regular system.
Sellers potentially stand to make much more than this. Armstrong says that in countries where similar marketplaces exist, research shows that listings can earn up to 0.65 per cent of the expected sale price. That’s $6,500 on a million-dollar home.
On the platform’s website, it’s noted that agents in these competitive bidding situations often reduce their commission and offer additional services. That’s encouraging news for sellers, not so much for agents.
It’s true that homeowners can keep the bid cash even if the property doesn’t sell, although there are stipulations to protect the agent from seller non-compliance. Armstrong explains that if the homeowner breaches the listing agreement by such actions as failing to facilitate showings, not cooperating or trying to fire the agent without cause, “they forfeit the bid cash” and the agent is refunded.
Safeguarding against misuse
As for the potential issue of a client repeatedly listing the same home with Hyyve just to collect bid amounts, the platform does its best to prevent this by such measures as monitoring listing patterns and having clients meet strict eligibility criteria, says Armstrong.
“If a seller repeatedly lists without genuine intent to sell, they can be barred from the platform.”
Cloud-brokerage Realtor, podcaster and REM columnist, Daniel Foch believes that Hyyve is a “game changer,” giving agents a centralized place to compete while providing clients with a consumer-first approach.
He recently became a member of Hyyve’s advisory panel. His reasons?
“I want to be part of anything disruptive in real estate.”