How Startups Use AI and Auctions to Cut Real Estate Fees

Traditional real estate commissions average 5-6% of a home's sale price, often costing sellers tens of thousands of dollars. Beycome alone claims to have saved users $212 million in fees on over 18,000 transactions since 2020. This surge of startups like Galleon, Listwise, and Redy leverages technology and new legal rulings to disrupt commission structures. But the real leverage isn't just cost-cutting—it’s about reshaping how sellers control agent incentives and transaction workflows.

In 2024, the National Association of Realtors settled class-action lawsuits over allegedly inflated agent commissions, forcing rule changes that allow sellers to customize payment terms for listing and buyer agents. These legal shifts give tech startups a foothold to challenge entrenched systems that have long protected high commissions. Yet traditional players still maintain leverage by preserving commission splits despite the new rules.

The true leverage mechanism is open bidding and AI-powered automation that unlocks transparency and competition among agents while decentralizing seller control. This repositions the primary constraint from agent dominance to platform-enabled seller agency. As a result, platforms like Listwise let sellers invite bids from agents with customized experience and fee packages, turning agents into competing vendors rather than gatekeepers.

Real estate startups are transforming commissions from fixed tolls into dynamic bids—shifting leverage from agents to sellers and platforms.

Why This Isn’t Just Cost-Cutting

The common narrative frames these startups as just cheaper alternatives to costly real estate agents. That misses the fundamental shift: it’s constraint repositioning. Instead of battling agents for lower fees, these startups reset who controls the commission negotiation and transaction process.

Beycome saves fees by acting as a broker who credits buyers 1% of commissions, effectively redistributing costs. Listwise creates a bidding system, aligning agent incentives with seller preferences on experience and commission. Redy flips the model by having agents compete with cash bonuses to win listings. These approaches dismantle the traditional exclusive agent control—similar to strategic constraint repositioning seen in recent tech platform shifts like Meta rethinking content moderation roles or OpenAI focusing on AI infrastructure over sheer headcount.

How Open Markets and AI Reduce Bottlenecks

Galleon strips brokers from listings entirely, creating a Craigslist-like marketplace where sellers list homes for free and buyers browse off-market properties directly. This removes API-dependent central control, dropping typical $30,000+ commissions for sellers.

Homa, launched by a former Zillow product lead, uses AI to assist buyers with pricing, offer drafting, and disclosures—tasks traditionally requiring expensive agent labor late in the process. Its flat fee of $1,995 to buyers, waived if no agents participate, reveals that AI can internalize costly legwork once controlled by agents.

Meanwhile, Ridley is developing AI agents to automate listing descriptions, photography booking, and legal advice for sale-by-owner sellers, charging a modest one-time fee. This AI-driven automation relaxes the agent bottleneck by enabling sellers to self-serve high-value tasks.

What This Means for Market Dynamics Going Forward

The legal ruling that loosened fixed commission requirements removed a systemic leverage bottleneck controlled by real estate brokerages. But entrenched players have filled this gap with new commission workarounds. The startups that succeed will be those that fully automate and systematize commission negotiation, leverage AI for transaction transparency, and build network effects around seller-controlled marketplaces.

Investors and operators must watch how these platforms evolve from niche FSBO tools into scaled marketplaces that balance agent incentives without traditional commission lock-ins. This is a rare legal and technological lever that not only cuts costs but reshapes the fundamental power structure of residential real estate.

“Dynamic commissions backed by AI and auctions flip agent leverage to sellers, unlocking billions in unrealized savings.”

Related Tools & Resources

In a market where startups are reshaping real estate commissions with AI and auctions, managing customer and agent relationships effectively is critical. Tools like Capsule CRM enable sellers and small real estate ventures to track communications, manage pipeline activity, and maintain control over their interactions—complementing the new models of seller-driven leverage described in this article. Learn more about Capsule CRM →

Full Transparency: Some links in this article are affiliate partnerships. If you find value in the tools we recommend and decide to try them, we may earn a commission at no extra cost to you. We only recommend tools that align with the strategic thinking we share here. Think of it as supporting independent business analysis while discovering leverage in your own operations.

Frequently Asked Questions

How do startups use AI to reduce real estate agent commissions?

Startups use AI to automate traditionally costly tasks like pricing assistance, offer drafting, disclosures, and listing descriptions. For example, the startup Homa charges buyers a flat fee of $1,995 to replace expensive agent labor, and Ridley offers AI agents that help sellers automate legal and marketing tasks for a modest one-time fee.

What impact do bidding and auctions have on real estate commissions?

Bidding and auctions create open competition among agents, allowing sellers to invite customized bids based on experience and fees. This shifts leverage from fixed commissions controlled by agents to a dynamic marketplace where agents compete to offer the best terms, thereby reducing typical commission costs.

How much money have startups like Beycome saved sellers in fees?

Beycome claims to have saved users $212 million in fees across more than 18,000 transactions since 2020 by redistributing commissions and offering alternative fee structures to traditional models.

What legal changes have influenced real estate commission structures?

In 2024, the National Association of Realtors settled lawsuits over inflated agent commissions, leading to rule changes that let sellers customize payments for listing and buyer agents. These changes enable startups to offer alternative commission models challenging traditional agent fee splits.

How do startups remove the traditional agent bottleneck in selling homes?

Startups remove bottlenecks by creating platforms that decentralize control, such as Galleon's Craigslist-like marketplace where sellers list homes for free and buyers browse off-market listings directly. AI tools also automate tasks agents normally perform, enabling sellers to self-serve high-value functions.

What role does technology play in reshaping real estate transaction workflows?

Technology enables transparency, open agent bidding, AI automation, and direct marketplaces that shift control to sellers and platforms. This transforms real estate commissions from fixed tolls into competitive bids, increasing efficiency and reducing costs.

How do startups align agent incentives with seller preferences?

Startups like Listwise use bidding systems that let sellers specify preferences for agent experience and commission rates, turning agents into competing vendors whose incentives match sellers' goals instead of fixed commission splits.

What should investors watch for in evolving real estate marketplaces?

Investors should watch how platforms automate commission negotiation fully, leverage AI for transaction transparency, and build network effects around seller-controlled marketplaces that balance agent incentives without traditional commission lock-ins.