In 2021, 6.9 million homes were bought and sold in the U.S., according to Statista. Real estate transactions are highly administrative and technology makes them more efficient. The PropTech industry—real estate technology—is expected to grow from $18.2 billion in 2022 to $86.5 billion in 2032, according to Future Market Insights. Consumers want better home buying-and-selling experiences and more affordable fees.
Based on Lindsay McLean’s personal experience selling her Tribeca condo in 2013 and her professional experience as a software engineer and real estate developer, she knew there had to be a better way. In 2015, she teamed with Jennifer Stein, a real estate lawyer and broker, to build HomeLister, an online home selling platform.
Surviving a legal challenge before launching toughened them to future obstacles, such as the pandemic. Having supportive values-aligned investors also helps them weather challenges.
As a software developer, McLean burnt out on the tech industry during the dot-com bubble. Having attended the University of Pennsylvania for her undergraduate degree, she returned to earn an MBA in real estate development from the Wharton School of the University of Pennsylvania. After graduation, she started a real estate development company, but business froze during the financial crisis of 2007 to 2009. In 2013, McLean sold the company.
In 2013 she also sold her condo in Tribeca, NY. She used a broker because she had never been on the brokerage side of real estate. However, she did a lot of work researching what she should price the apartment at, ensuring the apartment showed well, and coordinating schedules with agents. The condo sold in four days. Since the buyer didn’t use a broker, McLean’s agent received the full 6% commission, usually split between the buyer’s and seller’s agents. “That’s insane,” exclaimed McLean.
Born out of McLean’s frustration with paying six figures to her real estate agent for doing eight hours of work, and in preparation for the next time she either bought or sold a home, she started searching for a service that showed residential listings and helped with the paperwork. “I was shocked to learn that there wasn’t a good solution,” grumbled McLean.
“Real estate works differently everywhere,” said McLean. “It’s very complex.” With her background in building complicated e-commerce systems and real estate development, she thought a platform that automated administrative tasks and provided expert help with pricing could be developed.
While McLean was doing investigative work on the business idea, she was also working as a consultant. On one assignment, she met Jennifer Stein. They hit it off. Stein’s experience as an attorney and real estate broker focused on interstate compliance complemented McLean’s. “There are very few people who understand real estate in 42 states,” she said. “Jennifer did.”
In 2015, the pair started working together on HomeLister. McLean is cofounder and CEO, and Stein is cofounder and general counsel. The unique expertise of both founders made them a very credible founding team and they were able to raise seed capital from investors in the real estate industry.
In 2016, as the pair were preparing to launch HomeLister, they were sued by a NY real estate company. While they fought the suit, the team took the company dark.
Having the right lawyers from the get-go would probably have nipped the suit in the bud, but hindsight is 20/20. Unfortunately, the original legal team took a conciliatory approach and didn’t push back against the real estate firm suing HomeLister. When an adversary is unreasonable, it’s best to have lawyers who can push back hard.
As the suit proceeded, the duo switched lawyers to ones who were more aggressive and had trial experience. It took almost two years before the lawsuit was dropped.
Importantly, their investors not only stood by them and provided advice, but some also helped fund legal fees. Prior to accepting capital from investors, McLean did due diligence on them. Vetting included speaking with portfolio companies that had been through difficult times to find out if the investor stuck by their startups.
HomeLister launched in 2018. The market was ripe for a service that was easy to use, had low flat fees that you only paid when you sold your home, and included help from experts. Sales took off until stay-at-home orders were issued as Covid-19 started spreading widely. People had health concerns and were uncertain about the economy, and the real estate market froze.
After surviving the lawsuit, McLean and Stein knew they could get through the pandemic. As it turned out, the real estate industry rebounded quickly. Because everyone went online to do everything from purchasing food to healthcare, adoption of HomeLister’s online model surged.
How have you overcome the challenges you encountered?