A startup that aims to cut out traditional residential real estate brokers has raised $45 million in its latest funding round.
REX, or Real Estate Exchange, announced the Series C funding round Tuesday, bringing its total funding to $75 million since it launched in 2015. The Los Angeles-based startup provides a platform, RexHomes, where customers can buy and sell residential property at a flat 2 percent brokerage fee, compared with broker fees on traditional multiple listing service (MLS) platforms, that can range from 4 to 6 percent.
The service cuts out brokers, and instead uses artificial intelligence and machine learning to market properties to buyers. Last year, the company listed properties collectively valued at $1 billion in Colorado, Texas, California, New Jersey and New York. In New York City, REX’s website shows nine exclusive listings, ranging from a $449,000 house in the Bronx to a $1.6 million multifamily property in Flushing.
The company’s latest funding round represents yet another threat to traditional brokerages, which for decades have reigned supreme. Their hold on the market has been threatened by paper-thin margins and rapid changes in technology and consumer behavior.
Jack Ryan, the company’s co-founder and CEO, said his firm’s service competes “with all the brokerages that depend on the MLS model that uses protectionist practices to maintain outrageously high fees.”
The new funding will be used to expand the firm’s platform nationwide; this month it will become available in Sacramento, California, and Portland, Oregon.
REX is backed by multiple private investors, including Gordon Segal, the founder of Crate and Barrel; Amit Singhal, the former senior vice president of search at Google; Jack Greenberg, the former CEO of McDonalds; and Dick Schulze, the founder of Best Buy.