Compare Landed and Aalto
For Buyers
For Buyers
Answer: Landed is a referral fee network that enables broker-to-broker collusion with use of blanket referral agreements while Aalto is a listing real estate agent that offers savings to home sellers
Buying and Selling with Landed
WARNING: Unlawful Kickbacks, Broker-to-Broker Collusion, False Marketing, Wire Fraud, Price Fixing.
Landed) is a broker-to-broker collusion scheme, where "partner agents" unlawfully agree to pay massive kickbacks to receive your information and engage in market allocation, consumer allocation, false advertising, unlawful kickbacks, wire fraud, and price-fixing practices in violation of, inter alia, 18 U.S.C. § 1346, 18 U.S.C. § 1343, 15 U.S.C. § 1, 15 U.S.C. § 45, 12 U.S.C. § 2607, 12 C.F.R. § 1024.14. As a consumer, you will always significantly overpay for Realtor commissions subject to hidden kickbacks and pay-to-play steering promoted in this scheme.
United States federal antitrust laws prohibit consumer allocation and blanket referral agreements between real estate companies.
Be smart; do not allow your information to be "sold as a lead" to a double-dealing Realtor in exchange for massive commission kickbacks paid from your future home sale, or your future home purchase.
Landed is a referral fee network designed to collect fees by matching consumers with local real estate agents willing to participate. Landed operates as a licensed real estate brokerage in California under BRE License #01988003, but it does not produce any services that are typically offered by real estate agents and does not represent consumers when buying or selling real estate in any State.
Landed targets financially constrained consumer groups (teachers for now, but it soon plans to expand services to other professionals such as registered nurses, etc.) with a 10% down payment assistance option to co-invest when buying a home in expensive cities like San Francisco, Denver, Los Angeles, and Seattle.
The origination price of using the program, however, is hidden in referral fees that the company receives from each transaction when consumers work with agents referred by Landed.
Instead of working with Laded referred agents, consumers can pay an origination fee equal to what the agent referral fee would have been: 0.75% of the total cost of the home.
For example, if a consumer were to purchase a $1 million home, the origination fee equal to $7,500 would have to be paid in order to secure $100,000 down payment assistance. If the required down payment assistance amount is less, the fee would still remain the same. For example, if a consumer only wants to secure $50,000 in assistance, the origination fee still equals to $7,500 because this fee is based on the overall home value.
Landed also uses a select group of mortgage lenders who are specifically approved by the program. It is unclear what incentives are provided to Landed by these providers, or if consumers are able to use their own mortgage lender.
Landed Pricing
Landed revenue comes from either an estimated 30% broker referral fees, or origination fees set at 0.75% of purchased home value.
Chan Zuckerberg Initiative (CZI) provides cash funds to run the program. The 25% of the appreciation (or loss) in the price of the home upon sale is returned to Chan Zuckerberg Initiative and re-invested back into a down payment support fund.
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- This Service Does Not Represent Buyers
Landed Editor's Review:
On paper Landed seems to have a great idea – to help essential professionals (starting with educators) build financial security near the communities they serve. Digging deeper into the actual model turns out to be much less effective - Landed is a California licensed real estate broker that collects an estimated 30% referral fee from all real estate agents that participate. This fee makes it hardly a free service for anyone since referral fees are inevitably passed down to consumers. More importantly, Landed drives consumers toward agents who systematically price their services to accommodate such fees, this process is known as kickbacks.
Landed assistance program itself may be beneficial, but the costs of origination are certainly real. Landed uses excessive referral fees as a way to hide origination fees. Why? Simply because having to pay $7,500 to secure $100,000 down payment assistance (that comes with many strings attached, as well as a lien) seems a lot less attractive, especially when this fee remains the same, regardless of the assistance amount actually required.
By charging this fee as a form of commission kickbacks, the company hopes that most consumers won’t realize that this fee even exists – it is just a referral fee, who cares? In this review, we will show you how this fee very much exists and why it matters. Consumers can save tens of thousands by avoiding non-competitive real estate commissions, even if the buyer (teacher) decides to opt-in into Landed assistance program and pay the origination fee out-of-pocket.
Buyer’s refunds are available in all areas Landed currently offers an assistance program. The only way to take advantage of these savings is by negotiating with highly competitive real estate professionals without any referral fee agreements in place.
Buyer’s agents never work for free, instead, they can financially compete for consumers by offering refunds in 40 States. This is a legal incentive that helps to lower the cost of owning a home and is a growing trend in the industry.
Real estate agents only sign-up with Landed referral network because the price of the referral fee can be easily incorporated into their client’s agreement with excessive commissions. Landed either requires the use of their network, or it requires an origination fee to be paid, there is no third option.
As a licensed real estate agent that doesn’t perform any real estate services or takes any responsibility for the transaction, it is not entirely clear how Landed is able to operate under the Business and Professions Code and RESPA.
Nonetheless, funds from Chan Zuckerberg Initiative fund is a real incentive that consumers are able to utilize in exchange for a 25% share of the investment gain or loss with Landed (if Landed contributes less than 10% down, the future appreciation/depreciation sharing also changes proportionally. For every 1% Landed contributes, Landed shares in 2.5% of the appreciation (or depreciation, if any.)
We used a random home valued at around $1 Million to generate these results (as of April 2019.) Among various savings offers from local agents, we found two highly reputable agents (including a VC-backed flat fee agent that aims to deliver savings to consumers.)
Among these results, one agent offers 65% rebate that yields a buyer’s refund amount estimated at $19,500 and another offers $9,950 flat representation fee that yields buyer’s refund amount estimated at $20,050.
For the purpose of this discussion, these competitive saving, in the form of a refund, are about $20,000 (assuming 3% buyer’s agent commission split offered by the seller’s agent.) Home buyers do not pay any taxes on the amount, the refund is always tax-free, similar to any other service refund.
Now, the buyer can take this refund check of $20,000 pay the Landed origination fee out-of-pocket set at $7,500 and still walk away with $12,500 in cash savings. Why? These savings agents are highly competitive and advertise their rates subject to 0% referral fees.
Using Landed referral network, in this case, means leaving $12,500 on the table. Instead, a teacher can easily engage a great competitive agent, receive $20,000 amount as a refund, and only pay origination fee out-of-pocket set at $7,500.
In this review, we separate issue to secure down payment assistance with an ability to negotiate a competitive refund with your agent subject to 0% referral fees. We bring this origination fee to full transparency so that there no illusion on how Landed service actually operates and why it steers consumers toward their referral network.
You, the teacher, have to take into account the fact that you pay all homeownership expenses, county taxes, maintenance, insurance, interest and closing costs (you pay the costs of ownership, but you don’t make any monthly payments to Landed.) As such, home appreciation you gain comes at a very high price, while the origination fee is something that you pay upfront, either out-of-pocket or with excessive commissions.
Is $7,500 origination fee a worthy expense to secure down payment assistance? You have to decide this.
This simple test aims to point out that $20,000 in buyers refund is available to buyers in this situation when working with the right local agents. When using Landed referral fee network agents, the refund amount is likely to be zero.
Moreover, non-competitive fees offered by Landed referred agents will become incorporated into a mortgage payment, and instead of the consumer getting a tax-free refund, these fees further incur mortgage interest for the duration of the mortgage.
Landed receives the second lowest score because this service is clearly biased toward high-priced real estate agents, as it aims to brush off the true costs of origination fees set at 0.75% of purchased home value, typically hidden in referral fee agreements.
Landed was presented the following questions prior to the review getting published, but Landed has not responded with any comments.
- Whenever the consumer approaches Landed, with their own buyer’s agent, what is the origination fee amount they would be required to pay in order to use the service?
- Are consumers able to negotiate a buyer’s refund in California with agents who are part of Landed referral network?
- What is the referral fee percentage or amount Landed charges real estate agents in the network?
- What happens in cases where the consumer is looking to buy FSBO listed home, where there is no listing agent and no buyer’s agent commission is offered by the seller?
Landed must be well aware of these issues, but continues to operate on pay-to-play methodology in order to collect origination and referral fees that needlessly make home buying and selling more expensive, while claiming that it makes homeownership more affordable.
Teachers should certainly not ignore Landed as an option, but with a full understanding that there may better terms available to them elsewhere for buyer’s representation, and that this program comes with high fees attached.
Where does Landed operate?
Selling with Aalto
Aalto is a California savings tech-enabled broker (California DRE 02062727) that offers consumers listing savings for select areas around San Francisco Bay Area. Aalto claims that it does not list homes on the MLS (and, subsequently, these homes are not shown on MLS aggregators, such as Zillow, Trulia, etc. or on the competing brokers’ websites such as Redfin.) During our research, however, we found that at least several listings are listed by Aalto agents on the MLS, making it unclear why the brokerage lists some homes on MLS and not others, or how the brokerage complies with local MLS rules.
Listing homes off-MLS has potential disadvantages to home sellers. Buyers are systematically searching open MLS listings for new homes, which is the whole reason why MLS exists. Selling a home off-MLS (also known as pocket listings) is a conflicting practice because, naturally, it excludes a large number of potential buyers from looking at sellers’ homes.
If a property is not listed on the MLS, the listing agent or brokerage is more likely to represent the buyer, a situation that is often defined by state law as “dual agency” representation. Dual agency must typically be disclosed, and it’s up to buyers and sellers whether they want to engage in a dual agency transaction. Some sellers don’t mind getting less money if they can sell a home privately, but statistically speaking, there are little to no advantages to listing homes off-MLS.
Aalto Pricing
Aalto offers savings to sellers (1% listing fee). Aalto does not advertise buyer’s refunds and does not offer consumers buyer representation services. Instead, Aalto claims to connect potential home buyers to “partner agents,” likely receiving 25% to 35% as a kickback from the Buyer Agent Commissions (BAC.) Aalto likely keeps the entire Buyer’s Agent Commission when it represents home buyers, but sellers can determine what buy-side commission they offer (normally 2.5%). In the event Aalto acts as a dual agent, the total fee it likely receives is 3.5% (1% listing fee plus 2.5% BAC)
Listing Services
- Off-MLS Listing
- Pocket Listing
- Accept and Deliver All Offers and Counteroffers
- Hold Open Houses
- Professional Photography
- Yard Signage Installation
- Spare Key Lock-box Installation
- Schedule Inspection Services
- Schedule Private Showings
- Closing Duties
Buyer's Agent Services
- This Service Does Not Represent Buyers
Aalto Editor's Review:
Aalto is a tech-enabled listing real estate agent that represents consumers in select areas of Northern California and offers sizeable savings (1% listing rate against 3% listing commission, excluding BAC) to sellers. Aalto's service includes posting home on their website as an off-MLS listing, professional photos, and 3D images in addition to some typical services offered by a traditional real estate agent. It is unclear if and how many open houses Aalto agents typically hold.
Overall, Aalto offers a questionable off-MLS proposition to sellers, and the company does not openly advertise any savings and tangible services to buyers (other than a blanket buyer agent referral.)
Aalto argues that pocket listings are perfectly legal and serve the needs of many sellers in today's residential markets, against opponents who raise open market, fiduciary duty, and fair housing concerns.
Pocket listings (also known as "quiet" or "off-market" listings) involve the practice of withholding residential listing data from multiple listing service (MLS) systems. Instead, the property is marketed by Aalto brokerage using its website, to existing clients, and new prospects that happen to look there. The practice typically proliferates when market conditions include low inventories, low mortgage rates, and rising home prices. In hot market conditions, home sellers may receive enough buyer offers to outweigh the effects of the limited exposure of their homes on the open market.
Opponents of the practice argue that sellers may be disserved by pocket listings since MLS systems provide the widest possible market exposure and thus produce the highest possible selling prices. They also assert that pocket listings harm the effectiveness of the MLS cooperative brokerage system, skew MLS listings-based data that support accurate property valuations, and beg the question of whether agents may be utilizing narrowed marketing methods to collect the full available brokerage commission instead of soliciting purchase offers through cooperating brokers.
Proponents of the practice say that there are many reasons why sellers may not want to engage in the traditional practice of listing their properties on an MLS. For example, pocket listings are sometimes used to market high-end luxury homes whose owners have no interest in allowing showings to the general public and want the property marketed to those who have realistic means of purchasing it.
Other sellers may have privacy or security concerns about listing properties on widely broadcast MLSs or publishing interior photos of the property. Pocket listing proponents also argue that the MLS, which publishes the number of days a property has been on the market, can disadvantage owners who experience failed transactions due to complications that have nothing to do with the fair market price of the property.
Both supporters and critics generally agree that pocket listings are not illegal, per se. Real estate licensing laws, which vary among jurisdictions, may dictate the specific form of written listing agreement that must be used by licensees, the point at which it must be executed and/or require that certain brokerage relationships and other types of disclosures be included in the agreement. But the manner in which the property is to be marketed, and for what amount and form of brokerage commission, are matters that are generally left to be negotiated by the listing licensee and the seller.
A pocket listing policy subjects Aalto to accusations that they put their own interest in collecting a commission for both "sides" of a transaction ahead of the seller's interests in obtaining the highest possible sale price. Aalto keeps the entire Buyer’s Agent Commission when it acts as a dual agent, but sellers are able to determine what buy-side commission they offer (normally 2.5%). In effect, whenever a buyer is unrepresented, Aalto's total commission is likely 3.5% and not 1% as advertised. According to Aalto, "You are advised that a dual agency relationship may arise if an Aalto Advisor represents both you and a buyer of a property. If a dual agency relationship arises, the terms of such dual representation will be subject to a separate written agreement between you and your Aalto Advisor."
Other critics question whether sellers are being provided with disclosures that fully explain the potential disadvantages of narrowed marketing efforts. Regardless of those issues, it is fairly clear that real estate brokerage relationships, disclosures, advertising, conflicts of interest, and other licensing law strictures may raise serious issues with off-MLS practices.
Aalto further claims to operate a "marketplace" for homeowners. "Aalto's homeowner marketplace connects sellers to qualified buyers, saving you time, stress, and money." Aalto is not a marketplace, but a listing real estate agent with a website. Unlike MLS aggregators, Aalto does not display listings from other brokerages, and, therefore, lacks the networks effects required to deliver a full marketplace experience. Aalto is one of the millions of real estate agents in the United States.
Aalto's proposition is different from a typical listing agent by the mere fact that the listing addresses are hidden. "It is free to get started on Aalto" further makes for a very odd proposition, where it is free to get a listing started with any real estate broker.
"Prior to opening a home for showings through Aalto, sharing your property’s address through Aalto, or receiving the contact information of interested Buyers, a Seller must enter into a written agreement for real estate brokerage services between such Seller and Aalto," in another word, listing a home on Aalto is not free. Real estate brokers never work for free, and sellers' information will be shown only after they sign a listing agreement.
"Sellers start with Aalto earlier than traditional real estate, widening the time frame for homes to be on the market. That means more homes, sooner" is another odd proposition without any basis to substantiate the claim. Buyers browsing homes on Aalto have highly limited information about these properties, numbered at a fraction, of a fraction, of a fraction, of all homes available on the MLS.
"The Partner Agent Program is covered by the Partner Agent Terms of Service. Aalto is not responsible for the work performed or the services provided by any individual in connection with the Partner Agent Program." As a consumer, you will always overpay for broker commissions subject to hidden kickbacks and pay-to-play steering promoted in Aalto referral scheme to an unknown number of buyer agents. United States federal antitrust laws prohibit consumer allocation and blanket referral agreements between real estate companies. Homebuyers should avoid their information being "sold as a lead" between brokers in exchange for hidden commission kickbacks paid from the future home purchase administered by the Aalto Partner Agent Program.
We find no solid evidence that Aalto offers home sellers any advantages to sell homes for higher amounts, in fact, the opposite is much more likely. By withholding listings from the MLS, home sellers are likely missing out on the vast majority of tangible offers from the bulk of the home buyers and their respective buyer agents.
At the same time, some home sellers may decide for themselves that the off-MLS approach is worth the added risk and limited exposure for individual reasons. Aalto does save home sellers equity by offering a 1% listing rate against a 3% listing rate (this rate does not include 2.5% BAC typically offered at 2.5% to the buyer agent.)
Homebuyers should avoid Aalto Partner Agent Program due to hidden kickbacks and consumer allocation between licensed brokers. A homebuyer can easily negotiate a buyer refund on the open market with a licensed real estate broker in California - a fact that Aalto brokerage is silent on. Buyer refunds can save homebuyers tens of thousands in tax-free cash because the refund comes from the estimated 2.5% BAC proceeds received by the buyer agent.
Geodoma editorial staff remains overall neutral on the subject with a 3 out of 5-star rating for Aalto: we can neither recommend Aalto nor suggest that sellers refrain from using the brokerage to list their homes off-MLS.
As always, we encourage our users to post helpful and independent reviews about this business with any sentiment. With a controversial proposition such as Aalto, consumer feedback becomes incredibly valuable information to other consumers. Geodoma encourages users to post helpful, relevant, and reliable consumer reviews, but users are ultimately responsible for the quality of the content.