Bōde Canada - Disrupting an Outdated Real Estate Commission Business Model

Bōde is disrupting the real estate transaction business model by bringing the commission rate of over 3% to 1% with its digital and data platform.

Bōde Canada - Democratizing Real Estate Data and Intelligence

Information asymmetry is an economic term describing the information imbalance between a buyer and a seller. Industries that intend to solve and profit from this problem include credit rating agencies and equity research, both of which help investors understand the investment valuation and risks of an investment product. The issue, however, becomes when the fees associated with these types of services become problems on their own.

The Calgary Realtor fee is typically 7% on the first $100,000, and 3% on the remaining balance on the value of a property. For simple arithmetic, a $500,000 property works out to be $7,000 of commission for the first $100,000 and $12,000 for the remaining $400,000, both of which add up to $19,000 in commission, split between the buying and selling agents. The $19,000 represents 3.8% of the $500,000 transaction. This amount is usually built into the sales price and is paid indirectly by the buyer and the seller. These fees have grown in absolute terms as home values have grown in Canada by over 400% over the past 30 years, and this structure has stayed the same as in the pre-digital era justified by “protecting” the buyer and seller in a transaction through advisory.  

Well, this logic of needing the presence of a human involved in a transaction sounds a bit flawed looking at the case of online stock trading, where large sums of money are equitably transacted with no human presence. Disrupter WealthSimple with its frictionless onboarding process, technologically driven platform, helpful information support and zero trading fees was able to amass over $8 billion of assets under management recently. So there is very little reason to pay huge fees still to a human intermediary to transact in 2022! Calgary-based Bōde is looking to challenge the current Realtor commission norm by drastically cutting the traditional agent commissions rate from over 3% to 1%.

Founded in 2019, Bōde is disrupting the Canadian residential real estate industry. Since its inception, it has enabled over $200 million in transaction value in more than 400 transactions, Bōde is helping buyers and sellers save thousands of dollars in Realtor commission, as well as time saved from having to meet with a Realtor for every step of a transaction. The idea for Bōde came when now VP of Sales Jeff Jackson was the realtor that helped Robert Price (CEO) and Lindsay Skabar (CMO) buy a home. Price and his team applied their experience in telecom, fintech, gaming and real estate to completely reimagine how homes are bought and sold with thoughtful application of technology.

Bōde Canada - Buyer Process

Bōde Canada - Seller Process

After analyzing the steps of a real estate transaction, they realized that there was work involved on the part of the Realtor that could be easily automated. The first important aspect they addressed was home pricing. While real estate transaction data is available if you have a Realtor license, they realized that it was not open to the public readily, and the industry has no incentives to provide it. Therefore, they democratized this data to the public to empower confident decision-making when buying or selling a home.  

Second, they realized that the steps involved in booking a showing could be enhanced with technology. Their approach was an embedded tool allowing buyers to book showings directly from a predetermined seller schedule at their convenience. 

Referrals and industry connections are a significant component that a Realtor will add to a transaction. So Bōde developed a "Pro Marketplace" where users can interact with home stagers, real estate lawyers, house inspectors and mortgage brokers for all their needed services. With this system, buyers and sellers have all the professionals they need in a single place, professionally curated and conveniently available with a click of a button. 

Arguably the most significant value-add of Realtor's is their understanding of the local real estate market from their past experiences. Alan Kelly, (Bōde's Chief Revenue Officer) combined his economics and advanced data background with Jeff Jackson's real estate experience to come up with the industry's first Comparables Tool. This tool uses a proprietary algorithm to predict the valuation of a house based on relevant information such as address, square footage, amenities, and year of construction. 

Using the earlier Uber example, one might be tempted to compare existing Realtors to the disgruntled taxi drivers being replaced. Still, Bōde's goal is ultimately to empower agents with the same technology available to consumers today. By applying Bōde's technology, agents will do less of the work that isn't of value to consumers. But instead focus more of their time and effort on high-value consultancy work that requires a degree of human touch, such as negotiation, which is still essential in a transaction.  

When asked about the rising interest rate trend and the associated slow down in home sales, Kelly responded that it does not matter what interest rate or home sale environment we are in. Buyers and sellers benefit from Bōde's business model of home value maximization and commission savings regardless of economic conditions. In addition to saving money, one of Bōde's other impacts is its environmental footprint from an entirely digital process. A typical real estate transaction contains significant paperwork from the many parties involved, which can add up to almost 120 pages per transaction, which Bōde has entirely digitized (other than where government regulations require "wet signatures"). Bōde also plants 100 trees following each home sale, offsetting customers' carbon footprint finding their new home.  

With a proven successful business model operating in Alberta, and BC, Bōde is looking to expand to the rest of Canada in the near future. In the US, where Realtor fees are even higher than those in Canada, Bōde sees ample opportunity for further international expansion.


The technology history book is filled with case studies of seemingly ludicrous ideas when first proposed that became the norm not long after. As mentioned previously, the likes of Uber and WealthSimple come to mind. Maybe in the not-so-distant future, we can look back at this bold real estate disruptor and determine that what they are doing now is not so crazy after all.

The Bōde Team

 

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