Embarking on a transformative journey to reshape the dynamics of home buying, Prevu, a New York-based real estate startup, has successfully raised $6 million in a recent Series A funding round led by Sequoia Capital. Pioneering a paradigm shift in the real estate agent model, Prevu employs agents as salaried professionals with healthcare benefits and retirement plans, challenging the traditional commission-based approach.
The real estate landscape has witnessed disruptions over the years, with technology-driven companies attempting to redefine the buyer-agent relationship. Prevu takes a distinctive stance by not only modernizing the customer experience but also introducing a unique offering—a rebate to buyers using its platform.
The traditional 6% commission model for real estate agents is under scrutiny, especially with buyers increasingly conducting extensive research online before engaging an agent. Prevu acknowledges this shift and positions its agents as advisors in a transaction, emphasizing a collaborative approach akin to wealth management.
Co-founded by CEO Sam Obletz and CTO Tap Stephenson, Prevu seeks to go beyond the transactional nature of home buying, infusing elements of value, savings, and social experience. The platform’s success is evident, having facilitated over 1,200 home purchases totaling over $1.5 billion in real estate value since its digital home-buying platform launched back in June 2017.
A key differentiator for Prevu is its cash-back rebate program, offering an average savings of $23,000 per home purchase. In an environment marked by high-interest rates and a shortage of homes, the allure of cash back during a home purchase is particularly appealing to many buyers.
Prevu’s customer-centric approach enables home buyers to search for homes, schedule tours, draft offers, and collaborate with dedicated agents through its digital platform. The platform has achieved a unique blend of utility and experience, with approximately 50% of users entering the platform prepared to make direct offers on homes.
The recent Series A funding round, which attracted participation from new investors such as Citi, Alpaca Ventures, Winklevoss Capital, RiverPark Ventures, Metropolis Ventures, Simplex Ventures, and Liebenthal Ventures, signifies a significant milestone for Prevu. Existing backers Alpaca VC, TYH Ventures, and Blue Ivy Ventures, who were part of the $2 million seed round in 2019, also participated.
Prevu’s geographical footprint has expanded to 12 major metropolitan markets, reflecting its growth trajectory since the seed round. The startup currently operates in major cities, including New York City, Boston, Philadelphia, San Francisco Bay Area, Seattle, and Austin, among others.
The platform generates revenue through a commission on each real estate transaction, amounting to 1% to 1.5% of the transaction value, net of customer rebates. As a testament to its success, Prevu has seen annual revenue grow nearly tenfold since the seed round.
With the new capital infusion, Prevu aims to accelerate its growth, particularly in markets such as Texas and Florida, while also expanding its service offerings. The company’s strategic acquisition of mortgage technology from the now-defunct proptech Reali positions it to enhance its suite of services and provide a holistic solution for home buyers.
Prevu’s commitment to innovation extends to its proprietary technology, which not only enhances the consumer experience but also streamlines collaboration between consumers and agents. The platform’s efficiency is reflected in its lean team of 25 employees, predominantly comprising agents who, on average, complete 40 deals per year.
As the real estate industry undergoes dynamic changes, Prevu’s vision is to be a nationwide brand, making home buying more attainable and empowering buyers with control and access to enhanced digital tools. The startup’s Series A success marks a significant step toward realizing this vision and redefining the landscape of home buying.