Compare Aalto and OJO Home
For Sellers
For Buyers
For Buyers
Answer: Aalto is a listing real estate agent that offers savings to home sellers while OJO Home is a referral fee network that enables broker-to-broker collusion with use of blanket referral agreements
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.
Where does Aalto operate?
Buying and Selling with OJO Home
WARNING: Unlawful Kickbacks, Broker-to-Broker Collusion, False Marketing, Wire Fraud, Price Fixing.
OJO Home) 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.
OJO Home is a referral fee network designed to collect referral fees by matching consumers with local real estate agents willing to pay it. OJO Home operates under a variety of broker licenses, mainly two issued by the Texas Real Estate Commission as OJO Home Inc. 9007689 and OJO Home LLC 9008342, 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. In exchange for matching consumers with an OJO Home Partner Agent, OJO Home is compensated by the Partner Agent with an undisclosed percentage of their commission. As of June 2020, OJO Home further operates a real estate online brokerage Movoto. When users are ready to talk to an in-person agent, OJO refers clients to a Movoto agent, or Partner brokerage.
OJO Home Pricing
OJO Home revenue comes from undisclosed referral fees. Referral fees set by such networks range anywhere between 25%-40% of the entire agent’s commission.
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- This Service Does Not Represent Buyers
OJO Home Editor's Review:
For consumers, OJO Home promises real estate assistance as a lead nurturing platform and a transaction manager. The platform is supposedly able to learn a buyer's preferences via machine learning and match them with homes that fit their needs. By gathering consumers' home preferences and budgets, OJO communicates conversationally through mobile text as a personal advisor throughout the home-buying process.
For real estate professionals, OJO Home promises a scalable, high-touch experience that reflects well on a brokerage and helps increase closings by scrubbing leads as they come in and nurturing buyers with unique insights powered by machine learning. Once a homebuyer is prepared, a home concierge initiates a live transfer to the Partner Agent. OJO representatives give Partner Agents all the background information on the homebuyer to make the transition as warm as possible. This handoff helps ensure both consumers and agents alike receive the most seamless, hassle-free experience. OJO claims to help real estate professionals to create stronger, better-informed connections with buyers and sellers and keeps them engaged until they're ready to get down to business.
For Partner Agents, there is no upfront cost to join OJO to receive leads and referrals. The referral fee is paid on each lead that results in a close.
In other words, OJO Home is a middle-man that scrubs consumer's information and passes it along to a broker who is willing to pay for it with a cut of their commission. All options offered to consumers by OJO Home suffer from pay-to-play bias. If a broker is unwilling to give a portion of their commission to OJO Home, the company has no interest in recommending them. The following is a set of statements taken from OJO's Terms of Service that all, effectively, show that OJO takes no responsibility for their recommendations.
"OJO will process lead inquiries from a variety of sources including but not limited to: your brokerage's website, your brand's website, and leads you have acquired from the major national search portals (e.g. Zillow, Homes.com, Realtor.com, Trulia, etc.)."
"We ingest your leads from your various sources (website, Realtor.com, etc.) in real time and will call leads in as quickly as 10 seconds. We do the legwork to get a customer on the phone and facilitate the live transfer to the first-available agent once a buyer is ready to be connected."
"By using the OJO services, you agree to receive phone calls and text messages from us and our partners. By using the OJO services, you expressly authorize OJO, its affiliated companies and its partners (described below) and each such entity's employees, contractors and software (collectively, "Service Provider") to communicate with you by phone and text at the wireless phone number provided or any other number that you may provide in the future. You understand that message and data rates may apply based upon the terms of your wireless service provider contract. You also agree that methods of contact may include use of auto-generated text messages or an automated telephone dialing system, even if you've registered that number on a Do-Not-Call registry, and that my consent to text messages and phone calls is not a condition to using any Service Provider's services. If you do not consent to receive these texts or calls, do not use the OJO service or provide your information to us."
"We do not endorse or recommend the products or services of any service provider and are not an agent or advisor to you or any service provider. We do not validate or investigate the licensing, certification or other requirements and qualifications of service providers. It is your responsibility to investigate any service providers before you engage them. You acknowledge and agree that these service providers are solely responsible for any services that they may provide to you and that we are not liable for any losses, costs, damages or claims in connection with, arising from, or related to, your use of a service provider's products or services."
"OJO is not a real estate agent or lending institution or other service provider. Instead, we, through the OJO services, may help to connect you with service providers that might meet your needs based on information provided by you. OJO does not, and will not, make any credit decision with any service provider referred to you. OJO does not issue mortgages or any other financial products."
"By accepting a referral to one of our Referral Partners, you grant us permission to share your User Data with the Referral Partner so that they may offer their products or services to you."
"When you accept a referral to one of our Referral Partners, you acknowledge that you are purchasing any products or services offered by the Referral Partner directly from them and that OJO is not a party to any agreement between you and the Referral Partner with respect to those products and services; and OJO is not responsible for that Referral Partner's products or services, the content therein, or any claims that you or any other party may have relating to that Referral Partner's products and services."
"By using the OJO services, you hereby release us of any and all losses, costs, damages or claims in connection with, arising from or related to your use of a service provider's products or services, including any fees charged by a service provider."
Clearly, OJO is a biased platform designed to funnel consumers toward brokers who pay them a kickback at the close of consumers' transactions. Consumers using OJO Home have zero control over what agents the company shares their information with. Instead of being "scrubbed" and "sold as leads" consumers looking for a competitive and fair representation can consider negotiating directly with real estate agents, or with help from unbiased consumer-focused online services that do not collect referral fees.
Conflicts of Interest
According to OJO Home, "When a consumer is ready to connect with an agent, up to five qualified agents are contacted via text message. The first agent to respond wins the opportunity. Upon responding to the consumer notification, the agent will receive a phone call for a warm transfer within one minute. This phone call must be answered promptly or the consumer introduction will go to another agent."
OJO Home doesn't care which agent, specifically, picks up the phone first, but it does care that the match is made only to someone in their referral network.
"After the introductory call with the consumer, agents will receive a text message with a link to update their profile in the Agent Dashboard. Agents will then receive bi-weekly reminders to update their buyer and seller profiles as they move further down the path toward closing on a new home."
This process is established to keep OJO Home informed about what stage of the transaction process the consumer is in. OJO Home needs to understand when the broker will close the deal and when it will receive a referral fee from the sale or purchase of the home. This means that OJO Home receives intimate details about consumers' transactions from Partner Agents.
According to one OJO Home Partner Agent, Sharon S. from Atlanta, GA, "Signing up was really easy. I also love that I can choose what kinds of leads I want and they show up on my phone. I'm talking to new clients within a few minutes. It's pretty neat."
Of course, this is a neat consumer brokering scheme, where agents pick "what leads they want" and consumers are steered only toward agents who choose to cut in OJO Home with a major share of their commission. In this scenario, consumers' needs are "ingested" and "warmed-up" for the agent.
Antitrust Implications
In reality, OJO Home is a broker-to-broker collusion scheme that scrubs consumer's information and passes it along to a colluding broker who is willing to pay for it with a cut of their commission. All Partner Agents agree to pay OJO Home a pre-arranged referral fee, on all closed transactions, through their employing broker. A referral agreement between OJO Home and a Partner Agent for a random transaction that may or may not happen sometime in the future is executed in advance.
OJO Home engages in consumer and market allocation schemes with Partner Agents brokerages, because it is a broker itself. Instead of representing consumers to help buy and sell homes, this "paper" brokerage actively disengages from its licensed activities so that every Partner Agent knows that OJO brokerage will not compete with them. OJO Home does not act in a real estate brokerage capacity, instead, their real estate license is used to collect a blanket referral fee from the largest number of brokers possible.
Sherman Act effectively requires all active real estate brokers to proactively compete for consumers. An agreement or an understanding between brokers not to compete for a mutual profit is a "per se" violation of antitrust regulations in the United States.
The amount of a referral fee between brokers must be negotiated with respect to an individual transaction. It is a per se violation of the Sherman Act for real estate brokers to agree on a "standard" referral fee that will be paid for producing a client. Real estate professionals are not allowed to enter into blanket referral agreements between one another because such agreements always restrict free trade.
Brokers are not allowed to organize their operations into any collusion schemes and networks, and instead, all brokers must compete for consumers on a fair playing field. Legitimate agents who choose to not engage in the OJO referral scheme are harmed as well because consumers are steered away in a highly competitive real estate market.
To comply in good faith with RESPA (12 U.S.C. 2607) Section 8 exception for cooperative brokerage and referral arrangements, legitimate real estate agents must render referral agreements in a particular instance for a particular transaction.
Actions of OJO Home "paper" brokerage directly increase the costs of owning homes in the United States due to added blanket referral fees, consumer allocation practices, and reverse completion between brokers. Partner Agents in the scheme have no incentive to compete for consumers with lower fees, instead, they have an incentive to compete for OJO Home' attention. In this scheme, both colluding parties benefit from offering consumers higher commissions. OJO Home promotes Partner Agents as somehow "superior" to those outside of the network, thus limiting free-market competitive forces and steering consumers in self-interest toward a network of very few agents who chose to agree to participate in the scheme.
As a licensed brokerage, OJO Home owes absolutely no duty of care to consumers and takes no responsibility for the transaction, despite receiving a direct financial benefit from the home sale or purchase completed by a third-party referred brokerage.