Metro Denver’s track record for listing homes at the correct price is so bad that an Austin-based real estate technology firm called True Footage is using it as the proving ground for GlassHouse, a new digital platform for buying and selling real estate.
A common problem in the real estate industry is that sellers have an overinflated sense of what their homes are worth, said John Liss, the founder and CEO of True Footage, which is launching GlassHouse next week in Denver, the first step in a larger rollout.
“Everybody thinks their house is the nicest one on the block and nobody wants to leave money on the table, so they try to sell for top dollar,” he said.
Agents willing to tell sellers what they want to hear are more likely to get listings than truth-tellers experienced enough to know that overpricing results in wasted time, frustration and a lower sales price down the road.
Denver is one of the worst markets when it comes to unrealistic listing prices, according to a True Footage analysis. Over the past six months, 45% of residential listings in metro Denver started too high, were cut, and then lingered for weeks.
Why is stretching on the listing price a problem? When the listing price was wrong and had to be lowered in metro Denver, a home spent a median of 61 days on the market before eventually selling at a 7.2% discount.
That is 10 times as long as the median of six days when a home’s price properly reflects the market. Correctly priced listings sold at a 0.6% discount, but only 36.3% of listings, just over one in three, were priced correctly in Denver.
So much depends on getting the listing price right, yet agents get the price wrong nearly six out of 10 times in metro Denver. GlassHouse’s answer to the valuation problem is to use an independent appraisal to set the price.
Lenders request an appraisal when a buyer wants to borrow money based on an accepted offer. GlassHouse starts with the premise that consumers should be afforded the same safeguard on the front end that lenders demand on the back end.
“Appraisals, when executed correctly, are the best pricing tool we have,” Liss said. They require the most in-depth analysis, account for the effects of time and feature adjustments and they weigh comparable sales in a rigorous fashion, he adds.
The alternative often involves looking at comparable sales and doing a quick back-of-the-envelope analysis, he said.
As a teenager, Liss was a licensed real estate agent in New York City. Despite his youth, he could see the system was broken, he said. He studied at Harvard and did a thesis on the New York real estate market and its problems with inaccurate square footage estimates, which matters more in costlier markets where space is at a premium.
Liss, 31, worked in private equity before launching True Footage in 2021 to provide a standardized and technology-driven approach to appraisals. The company, which has raised $65 million in venture capital funding, has worked to make the appraisal field, dominated by sole proprietors and small firms, faster, more efficient and less biased.
GlassHouse, using True Footage’s appraisal expertise, wants to provide the market with greater pricing transparency and a more streamlined way to make offers, transforming the negotiating side of real estate as Zillow did for home searches and listing information.
The company will provide interested sellers and their listing agents in Denver a free appraisal, worth around $600. If they accept the price and move forward, the appraisal is attached to the listing so buyers can understand how the value was determined.
Sellers can also list a “premium” or stretch price that would result in an immediate sale if they so desire, letting them address their fears of undercutting themselves.
A GlassHouse home then has a “showcase” week to allow interested parties to see the property without feeling rushed or pressured to put together an offer they think will stick.
Someone willing to pay the premium price can have their offer accepted immediately. But they must agree to an appraisal contingency, meaning they will cover the difference between their offer and what a lender’s appraisal, likely to be lower, comes in at.
If a premium price isn’t listed or no one is willing to pay it, buyers and their agents can make offers on GlassHouse’s platform starting at 6 p.m. on Monday after the showcase week. Once an offer is made at the appraised price or higher, the clock starts ticking. Other offers can come in until 8 p.m. the following day, with the best offer winning.
If no offer comes during the offer week, the home will remain on the platform for 30 days. If no offers at the appraised price come in after a month, the home can continue on the site or be removed and repriced. The home can remain on the multiple listing service the whole time.
GlassHouse is so confident that a home listed on its platform will sell in 30 days at the appraised value or higher, that it will pay sellers $5,000 if that doesn’t happen, Liss said.
“I like the concept they are trying, but I don’t think it will work for the majority of people,” said Tammy Dietz, a Realtor and managing broker at Guide Real Estate in Denver.
Dietz, who has spent two decades in the business, said so many variables go into making a sale come together and not all of them can be quantified and put into a computer model. A listing agent who hustles and has a broad network of contacts can bring in buyers willing to pay a higher price.
Listing agents, when talking to a buyer’s agent, can gain insight into how likely it is that an offer will reach closing, given all the outs buyers are afforded. Determined buyers, even if they offer less money, might represent a better prospect than ones on the fence, she said.
Liss counters that GlassHouse will also bring greater transparency in terms and conditions, which often don’t have an assigned value right now, and not just pricing.
With the help of an agent, a seller might assign $10,000 in value if the buyer waives an inspection, or $5,000 if a closing date can wait until the school year ends in June, or $15,000 if they will pay with cash and don’t have to wait for a mortgage to clear. Once sellers put a value on contingencies, buyers can do the same as they consider what they will offer.
The platform is set up to weigh multiple contingencies along with the price and bring the best offer forward, saving the listing agent the legwork of combing through multiple offers. It should also cut down on back and forth with buyer agents by setting all the terms in one place.
Liss said GlassHouse should help avoid violations of fair housing rules or expressions of bias via its objective method. Bias can sneak in when sellers favor that couple with kids in tow because they remind “us of when they were young” or because they made a delicious plate of cookies or wrote a heartfelt letter.
A more transparent sales process also offers protection to the larger market. When buyers are desperate, they tend to overbid. But they don’t know if their offer of 20% over the list price barely beat out one at 18% above, or if the next closest competitor was only 5% over list price.
Overpaying makes it harder to get a loan approved, and increases the chance a deal will fall apart, adding stress to both sides. Bidding data will be provided to the lender’s appraiser, and closely competitive situations are more likely to result in a loan approval than one where a borrower has gone way out on a limb.
Buyers who grossly overpay when the market is at or near a market peak tend to face a higher risk of default. If too many people overpay by a wide margin, consequences for the larger market can be catastrophic, as the first decade of the 2000s proved.
Another benefit of the platform is that it allows buyers, who are already finding their own homes, to handle negotiations and offers on their own if they so desire.
Settlements reached by the National Association of Realtors and the country’s largest real estate brokerages could shift the cost of buyer representation, long covered by sellers, onto buyers. Time will tell if that happens, but some buyers, especially those already familiar with the process, may want to take more tasks to save on costs.
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Liss said GlassHouse is agnostic about commissions and wants to be a source of help, not competition, for both the industry and consumers. Seller agents will eventually pay a fee to use the platform, although those fees are being waived for a limited time in Denver during the launch.
“We are pro-agent,” Liss emphasized, adding that agents can get more referrals, earn faster commissions and save hours on managing the sales process through the technology being offered.
“I am not saying the approach of GlassHouse does not have merit. I am saying that it is not a panacea,” said Mark Levine, a professor at the Burns School of Real Estate and Construction Management at the Daniels College of Business at the University of Denver.
There is a risk the platform could create “misunderstandings” with buyers, sellers and agents. Those will need to be sorted out and minimized. As a former appraiser and real estate broker, Levine said the concept puts too much weight on appraisals, which remain more an art than science.
“The appraisal is an informed opinion, but it is still an opinion that is not a simple math calculation,” he said.
The success of GlassHouse, in the end, will likely depend on its accuracy in pricing homes and its ability to reduce the friction involved with negotiating the sale and purchase of a home. Liss said he is confident the company has found a winning formula and Denver will be where he proves that.
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