After winning a groundbreaking case against real estate agents, this startup wants to replace them with a flat fee

One of those who successfully sued the National Association of Realtors (NAR) to force a change in real estate commissions is the co-founder of a new real estate startup.

It all started in 2017 when Josh Sitzer and his wife put their Kansas City home up for sale. The couple was frustrated by having to pay a 3% commission to a buyer's agent.

“Due to the anti-competitive structure of the industry prior to the lawsuit, I, as a seller, was effectively forced to pay 3% of the sale price of my home to a buyer's agent in order to achieve a successful sale,” he told TechCrunch. “While using an agent is an option for many, I don't believe anyone should be pressured to pay for unwanted services due to unfair industry practices,” he added.

Sitzer shared his frustration with his neighbor, who happened to be a lawyer who knew the subject matter. By 2019, he and other homeowners had filed a class action lawsuit (Moehrl et al. v. National Association of Realtors, et al.) against the NAR. They won a judgment last year that led to a settlement earlier this year that will radically change the way homes are sold.

The National Association of Realtors has agreed to pay $418 million in damages to settle the lawsuits. The association has also agreed to eliminate the “Participation Rule,” which required sell-side agents to make a compensation offer to buy-side agents. As a result of these and other agreed-upon rule changes, the real estate market is expected to change significantly.

“I wouldn't say I had any expectations at the beginning, as it was a multi-year struggle with ups and downs, but I had enough confidence in my position to commit to action,” Sitzer said.

To capitalize on the new situation, Sitzer has teamed up with Bryce Galen and Neal Batra to create a startup called Landian, which aims to help homebuyers take advantage of the rule change brought about by the lawsuit by offering flat-fee real estate agents on call. The name Landian is a portmanteau of the words “land” and “guardian.”

This startup is emerging from obscurity today with a beta offering, as TechCrunch first reported. The site, according to its founders, allows users to import listings from any real estate website and then book a home tour or prepare a listing with a licensed local agent without paying a commission.

Advances in technology have made it easier for home buyers to find properties to view or purchase for years, so many consider the model where the agent receives a 3% commission to be outdated. Some buyers argue that it is unfair to pay an agent such a high commission when they have done most of the work themselves.

Buyers have the option to pay for Landian's offering a la carte: $49 for each home tour and $199 for an offer preparation session. If they want more assistance, they can agree to a flat rate of $1,799 that includes up to five home tours and two offer preparation sessions, with additional services available a la carte. But they don't have to pay for that until closing. So if you don't end up buying a home through Landian and stick to that agreement, you won't owe anything, Galen said.

“With Landian, homebuyers are protected from the new reality of having to pay exorbitant commissions out of pocket that eat up their closing costs,” said Galen, who previously founded fintech company Zero, which was acquired by Avant in 2021. “People don't have to use a buyer's agent in the same way.”

According to Galen, many established companies in the industry, such as Redfin and Zillow, have no incentive to change their pricing model.

“Because Zillows and Redfins and these sort of legacy real estate technology companies have thrived and grown in a world where a buyer's agent gets 3%, they're not leading the change here,” Galen told TechCrunch. “We expect a new wave of startups like Landian to lead the change.”

Batra agrees.

“I expect that after the settlement with the NAR, most brokers will no longer rely exclusively on the traditional model based on speculation and higher fees, but on Landian's flat-rate model,” he said.

The New York-based startup has not raised any external capital yet, relying only on money from friends and family, and is in the process of raising a pre-seed round.