Imagine the thrill of purchasing your new home combined with the shock of receiving a check in the mail. If it sounds too good to be true, then you should check out proptech startup Padx, a consumer-centric real estate platform. This LA startup pays showing agents a flat fee for each home tour and receive collects a buy-side commission (2.5% of the sales price of the home) on each successful sale. Half this fee is then rebated to the buyer. The company is one of the first real estate platforms that considers the needs of the consumer rather than just optimizing the work of the brokers.
La TechWatch interviewed cofounder Evan Harney about the building a proptech startup in the robust LA market and its future plans.
Tell us about the product or service that Padx offers.
Padx is an online real estate brokerage that enables buyers to search for homes, schedule on-demand tours, and write offers on homes. At closing, buyers are rewarded with a 50% commission refund.
How is Padx different?
The vast majority of real estate technology companies are focused on providing products and services that create efficiencies and opportunities for real estate agents. Although Padx offers new opportunities for real estate agents, the company was founded with the intent to empower buyers. It is this consumer-centric focus, including custom home searches, on-demand tours, and a 50% commission refund, which differentiates Padx from other real estate technology solutions.
Why will this business succeed when there have been many past and present attempts at online residential brokerages?
Timing is critical to the success of leading-edge technology companies. Currently, consumers are making big online purchases, including cars and mortgages. Consumers are demanding the service that Padx provides and the market is poised for the Padx business model. Moreover, certain pioneers in the proptech space have paved the road with proof of concept and success.
What market is Padx attacking and how big is it?
Padx competes in the US residential real estate brokerage market. This is a massive market that is highly fragmented. When measured by commission-based fees data indicates this market is in excess of $72B, assuming an average commission of 5%.
What is the business model?
Padx provides value to home buyers with its web and mobile tools, along with its proprietary home buying process supported by real estate professionals. Showing agents are paid a fee per showing for home tours, while highly skilled full-time real estate agents oversee the transaction from the initial offer to the close of escrow.
In exchange for this service, Padx collects a buy-side commission (typically 2.5% of the sales price of the home) and refunds the buyer 50% of that commission (typically 1.25% of the sales price of the home).
Tell us a little about your background and what inspired the business?
My career has been focused on the active practice of real estate, consisting of brokerage and investing. Since I have been practicing real estate, technology has significantly evolved, but the home buying process has largely remained the same. After owning and operating a traditional real estate brokerage in Beverly Hills. I knew there had to be a better way to buy and sell real estate for consumers. I met my cofounder, Joshua Hinkson, and we set out on a path to develop a better home buying experience. Out of that quest, we met our other two cofounders, Mark Heninger and Eli Scheele and Padx was formed.
Tell us what building your company in LA has been like?
I couldn’t imagine a better place to start a company like Padx than Los Angeles. LA is a dynamic and forward-thinking real estate market. There is incredible tech talent in our city and opportunities for capital to support the growth of all stages of a company. We have felt supported by and connected to the community of Los Angeles since the company was founded.
What are the milestones that you plan to achieve within six months?
Our primary objective over the next six months is to finalize the mobile-app, release it in app-stores, and grow our user count of home buyers and real estate agents. Operationally, we intend to expand into markets outside of Southern California in the next 6 months then expand outside of California.
If you could be put in touch with one person in the LA Tech tech community who would it be and why?
I’d like to meet with Evan Spiegel, SNAP CEO. We are exploring opportunities to enhance our customer experience by adding a social component to Padx. I would be interested to pick his brain on the value that social media can offer to the home buying experience.
What does being “Made in LA” mean to you and your company?
Made in LA is a phrase that represents the roots of Padx. The idea was born, founded, and built in Los Angeles. As we grow outside of Southern California and throughout the US we will maintain our connection and foundation in Los Angeles.
What else can be done to promote early-stage entrepreneurship in Los Angeles?
More shared workspaces and accelerators. For startups, it is very important that the founders are getting together regularly. Shared workspaces can offer the opportunity to move from an isolated garage to an innovative space where founders are surrounded by other innovative entrepreneurs. Accelerators provide resources and knowledge that assist with the early stages of raising capital and reaching a place where the company is sustainable.
More shared workspaces and accelerators. For startups, it is very important that the founders are getting together regularly. Shared workspaces can offer the opportunity to move from an isolated garage to an innovative space where founders are surrounded by other innovative entrepreneurs. Accelerators provide resources and knowledge that assist with the early stages of raising capital and reaching a place where the company is sustainable.
What is your favorite restaurant in LA?
I love Kreation. There are two locations that I frequent. One on Abbot Kinney and the other off Montana in Santa Monica.
