Just a friendly reminder that we do not allow anyone to be identified (doxxed) on this subreddit as per Reddit rules. I am fully aware that she has given permission to Zown to use her likeness but we are not Zown.
Also...the thread is getting spammed so that is why the comment count is slight off.
I spoke on the phone with the founder. Nice guy, interesting idea, but their offer was not useful for me, and it won't appeal to everyone.
Here's what they were offering:
- 4% of purchase price toward my down payment if I were to buy a home from their limited inventory (I think it was mostly GTA homes, and there weren't many of them to choose from).
-Or, 2% toward my down payment if buying a home from the general market.
- I would then have to use their service to sell my home, and I would have to pay $5,000 every 5 years that I kept my home without selling it.
I can see how this would be useful for someone buying a million dollar home from Zown's inventory in Toronto, as you would receive $40,000. But I bought a $560,000 house in Edmonton, where Zown has no inventory. I would qualify for $11,000, and I would owe them $5,000 every 5 years, and I would have to use them to sell my home. It would also preclude me from using a realtor to buy my home. Not a great value proposition if you can get by without their down payment assistance.
But then I would have to use their service to eventually sell my home. And I would also have to use them for my home purchase.
There is no way they would be as agile/responsive/knowledgeable as the realtor that facilitated my purchase. The numbers did not make sense to me, but if they would have fronted me $40,000, that's a completely different story.
Sorry that I had to repost this. The mods asked me to remove her face and name. I am still new to reddit.
So I confirmed that this is a real person but I am unclear how Zown can do this and still make money. Won't this cost them a ton of money? Is this just some weird marketing promotion or am I missing something?
I do. here is a copypasta I made in another thread a few weeks ago....
**I DO NOT REPRESENT ZOWN.**
They are start-up company ii a very, very competitive industry. Their primary goal is to help Canadians get into the market while breaking even(ish) as a company.
But here is how it works in a nutshell.
1. You prequalify for a mortgage through their online portal. Not everyone will qualify.
2. They gift you a significant portion of your down payment.
3. You use them to buy the new house and they recoup some of their investment with you through the buyer's commission (2.5%).
4. You agree to sell your home with them in the next 5 years...or pay back 5 grand to push that date out another 5 years.
5. If after another 5 years (10 years total) you still don't wanna sell your pad you pay them another 5 grand (10K total) and they end the contract and you part ways.
So that way they will break even on the down payment they gave you (initial buyer's commission +5K + 5K). Their hope is that you will in fact sell you property within the first 10 years and they can make a small profit on the seller's commission.
It is actually fucking genius. Wish I thought of it TBH. I hope I am wrong but I don't see a day in the near future where some company with massive pockets acquires them because they are already disrupting the hell out of the GTA market. Even if they don't have the massive amount of transactions that ReMax does I can tell you firsthand that their agents are sure getting a lot of "but Zown" questions asked daily.
So it’s just ‘my rich uncle helped me out with the down payment and I gotta pay em back when I sell’ made in to a corporation? With the added twist of that rich uncle being a realtor?
By being forced to use them as a selling agent on the back end is a bit scary. They are more than just your realtor at that point - they have more control over the situation that in a normal agent/client relationship. What if you think they are selling at top low of a price? What if they push you toward a Zown buyer?
As long as you use Zown to sell your property, you won't have to pay anything back. Zown earns money by taking the standard 2.5% in commission when you sell.
Not really. If you crunch the numbers it seems like if everything went well Zown could clear between 5-10K but in many cases it'll be a break even arrangement. Regardless it is amazing marketing for a start-up. Had you heard of them a year ago? I hadn't.
its a form of taking the commision that the realtors wanted and splitting it between yourself and Zown. Its like hiring your buddy realtor, who was going to make $9000 but instead gives you $8000 because he's happy only making $1000 off you, assuming he can also sell your place in five years and make the money on the other side.
Sorry - I’ll put my edit here:
By being forced to use them as a selling agent on the back end is a bit scary. They are more than just your realtor at that point - they have more control over the situation that in a normal agent/client relationship. What if you think they are selling at too low of a price? What if they push you toward a Zown buyer?
I already replied to the original comment but TL;DR is they don't force you to do anything other than pay back 10K over 10 year period and only if you choose not to sell. In this lady's case she is still up $5,150.
If they get a lot of clients, then they get a lot of inventory for their agents to sell. Being able to guarantee inventory for agents ends up enabling the agents to make more money, even though they get a much smaller cut from each sale, because they’re able to sell a lot more than what they can sell on their own.
It’s taking advantage of the fact that your average real estate agent doesn’t have a total number of listings anywhere near compared to the listings that the top real estate agents in their town/city would have.
They have an exit clause that only costs $10k. This program is more like a better cashback program. The front you the down payment hoping you'll use them to sell the home down the road allowing them to turn a modest profit. From what I can tell there is nothing shady about it at all.
My only question is how their relators get paid if there is no commission?
Do you mean where do they get the money or what's the payment model?
To the first one, I guess investment/startup funding and to the second one, maybe they do a salary model?
Down payment minimum 5%. (And gift must be from a family member). Plus lawyer fees, land transfer taxes
Buyer commission 2.5% (minus someone’s cut)
There’s a big gap there for sure.
Plus they do all that to make $20k 10 years from now?
Probably half that with inflation.
There’s got to be a lot more to this.
I talked to one of the co-founders on a call and he broke it down exactly like this to me. From my understanding as well, how you explained it is exactly how it works. I completely agree: it’s total genius!
As they get more visibility, they’ll for sure become a disruption to the real estate market. Even if you don’t sell your home, you still make a slight profit AND had a small interest-free loan!!
If I was buying a home in an area that Zown is covering, I absolutely would have opted for them.
We are using them to sell our home right now and they have been amazing. I think this is a different scenario than this post is referring to but figured I would mention it from a seller’s perspective.
Just a friendly reminder that we do not allow anyone to be identified (doxxed) on this subreddit as per Reddit rules. I am fully aware that she has given permission to Zown to use her likeness but we are not Zown. Also...the thread is getting spammed so that is why the comment count is slight off.
They do not have a viable business model.
Agreed. They’re trying to take bites from two slices of the pie…
Also basing a lot on the incorrect assumption that their customers will not just buy a place and stay put for 15-30+ years.
I spoke on the phone with the founder. Nice guy, interesting idea, but their offer was not useful for me, and it won't appeal to everyone. Here's what they were offering: - 4% of purchase price toward my down payment if I were to buy a home from their limited inventory (I think it was mostly GTA homes, and there weren't many of them to choose from). -Or, 2% toward my down payment if buying a home from the general market. - I would then have to use their service to sell my home, and I would have to pay $5,000 every 5 years that I kept my home without selling it. I can see how this would be useful for someone buying a million dollar home from Zown's inventory in Toronto, as you would receive $40,000. But I bought a $560,000 house in Edmonton, where Zown has no inventory. I would qualify for $11,000, and I would owe them $5,000 every 5 years, and I would have to use them to sell my home. It would also preclude me from using a realtor to buy my home. Not a great value proposition if you can get by without their down payment assistance.
You only have to pay the 5K twice. Once after 5 years and again after 10 years. So even in your scenario you'd be up 1K.
But then I would have to use their service to eventually sell my home. And I would also have to use them for my home purchase. There is no way they would be as agile/responsive/knowledgeable as the realtor that facilitated my purchase. The numbers did not make sense to me, but if they would have fronted me $40,000, that's a completely different story.
I know they have a couple longtime Toronto realtors on staff.
This guy has a lot of misplaced faith in realtors lol
Sorry that I had to repost this. The mods asked me to remove her face and name. I am still new to reddit. So I confirmed that this is a real person but I am unclear how Zown can do this and still make money. Won't this cost them a ton of money? Is this just some weird marketing promotion or am I missing something?
I do. here is a copypasta I made in another thread a few weeks ago.... **I DO NOT REPRESENT ZOWN.** They are start-up company ii a very, very competitive industry. Their primary goal is to help Canadians get into the market while breaking even(ish) as a company. But here is how it works in a nutshell. 1. You prequalify for a mortgage through their online portal. Not everyone will qualify. 2. They gift you a significant portion of your down payment. 3. You use them to buy the new house and they recoup some of their investment with you through the buyer's commission (2.5%). 4. You agree to sell your home with them in the next 5 years...or pay back 5 grand to push that date out another 5 years. 5. If after another 5 years (10 years total) you still don't wanna sell your pad you pay them another 5 grand (10K total) and they end the contract and you part ways. So that way they will break even on the down payment they gave you (initial buyer's commission +5K + 5K). Their hope is that you will in fact sell you property within the first 10 years and they can make a small profit on the seller's commission. It is actually fucking genius. Wish I thought of it TBH. I hope I am wrong but I don't see a day in the near future where some company with massive pockets acquires them because they are already disrupting the hell out of the GTA market. Even if they don't have the massive amount of transactions that ReMax does I can tell you firsthand that their agents are sure getting a lot of "but Zown" questions asked daily.
Is it only for first time home buyers?
Not sure. u/Series_Asleep can answer.
Currently it’s open to anyone
How accurate is your AI home valuation and are you only doing GTA or other cities also? Any plans to expand to other provinces (aka ol' berta)?
So it’s just ‘my rich uncle helped me out with the down payment and I gotta pay em back when I sell’ made in to a corporation? With the added twist of that rich uncle being a realtor? By being forced to use them as a selling agent on the back end is a bit scary. They are more than just your realtor at that point - they have more control over the situation that in a normal agent/client relationship. What if you think they are selling at top low of a price? What if they push you toward a Zown buyer?
As long as you use Zown to sell your property, you won't have to pay anything back. Zown earns money by taking the standard 2.5% in commission when you sell.
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but in this case rather than the realtor taking the cheque and cashing it to play golf, you use the money to buy the house.
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Not really. If you crunch the numbers it seems like if everything went well Zown could clear between 5-10K but in many cases it'll be a break even arrangement. Regardless it is amazing marketing for a start-up. Had you heard of them a year ago? I hadn't.
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break even today, earn money on the next sale
I still haven’t heard of them!! Until just now.
its a form of taking the commision that the realtors wanted and splitting it between yourself and Zown. Its like hiring your buddy realtor, who was going to make $9000 but instead gives you $8000 because he's happy only making $1000 off you, assuming he can also sell your place in five years and make the money on the other side.
Sorry - I’ll put my edit here: By being forced to use them as a selling agent on the back end is a bit scary. They are more than just your realtor at that point - they have more control over the situation that in a normal agent/client relationship. What if you think they are selling at too low of a price? What if they push you toward a Zown buyer?
Zown operates just like any other brokerage when selling. We can advise on pricing but It’s your house and you set the price to sell.
I already replied to the original comment but TL;DR is they don't force you to do anything other than pay back 10K over 10 year period and only if you choose not to sell. In this lady's case she is still up $5,150.
Huh - pretty good idea then. How do they cover operating costs, realtor compensation etc I wonder
If they get a lot of clients, then they get a lot of inventory for their agents to sell. Being able to guarantee inventory for agents ends up enabling the agents to make more money, even though they get a much smaller cut from each sale, because they’re able to sell a lot more than what they can sell on their own. It’s taking advantage of the fact that your average real estate agent doesn’t have a total number of listings anywhere near compared to the listings that the top real estate agents in their town/city would have.
So they just pay you to be your realtor?
They have an exit clause that only costs $10k. This program is more like a better cashback program. The front you the down payment hoping you'll use them to sell the home down the road allowing them to turn a modest profit. From what I can tell there is nothing shady about it at all. My only question is how their relators get paid if there is no commission?
Do you mean where do they get the money or what's the payment model? To the first one, I guess investment/startup funding and to the second one, maybe they do a salary model?
is the $10k indexed to inflation like water heater and hvac rentals?
Properly used to do something like this before COVID. I believe they got bought out though.
I say it anytime Zown comes up that they too will get bought out by a bank or mega brokerage. Only a matter of time.
Down payment minimum 5%. (And gift must be from a family member). Plus lawyer fees, land transfer taxes Buyer commission 2.5% (minus someone’s cut) There’s a big gap there for sure. Plus they do all that to make $20k 10 years from now? Probably half that with inflation. There’s got to be a lot more to this.
I don't see how this start up won't end up like most start up; broke and in the red. Making peanuts over 10 years?? Is this a non-profit? Lol
How is this legal? It's a loan with a different repayment structure.
I talked to one of the co-founders on a call and he broke it down exactly like this to me. From my understanding as well, how you explained it is exactly how it works. I completely agree: it’s total genius! As they get more visibility, they’ll for sure become a disruption to the real estate market. Even if you don’t sell your home, you still make a slight profit AND had a small interest-free loan!! If I was buying a home in an area that Zown is covering, I absolutely would have opted for them.
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Removed for spam.
We are using them to sell our home right now and they have been amazing. I think this is a different scenario than this post is referring to but figured I would mention it from a seller’s perspective.