Along with the rest of the country, Dan Harpaz has watched as real estate prices have made unfathomable leaps — up 17.8% so far this year. Unable to imagine an end to housing inflation, the entrepreneur from Ramat Hasharon began seeking a way to somehow turn those rising prices into something that could do some good.
That led to a partnership with Kevin Ziv-El, an investor with a background in tech, wealth management and real estate, who was also looking at the sector and thinking about how it could be re-balanced.
The result — just launched — is Social Nadlan, a platform for buyers and sellers of properties in Israel which funnels a portion of the brokerage fees that accompany real estate transactions into charities.
The idea takes its inspiration from actor Paul Newman, specifically the Newman’s Own food brand, which donates 100% of its profits — $750 million to date — from its sales of dressings, sauces and other products to charities that benefit children.
Harpaz wanted to identify a way that he could create a stream of financing for some of Israel’s 15,000 certified non-profits without people feeling that he was taking extra money out of their pockets.
Real estate agents make money off fees they get for introducing buyers to sellers and vice-versa. The commission is typically something between 1.5% to 2%, with a minimum fixed fee on cheaper properties. For a single NIS 2 million ($586,000) transaction, that amounts to NIS 30,000-NIS 40,000 ($8,800-$11,700).
“So I had a ‘what if’ moment,” Harpaz told The Times of Israel, “and I thought how would it be if part of that commission could be donated to charity instead of simply being agency profits.”
Social Nadlan acts as a platform for both buyers and sellers, showcasing homes for sale from various real estate agencies willing to work with it and reaching out to potential buyers, both in Israel and overseas, to attempt to match them up. Every time a transaction occurs via Social Nadlan, a percentage of the commission goes to the platform instead of the agent.
This may seem like a particularly unattractive deal for real estate agents, but agents rarely get the whole commission on deals, instead splitting them with various other agencies they may partner with to widen their reach and get a deal done. The only difference in this case is that the partnering agency is giving its share away.
Social Nadlan guarantees that a minimum of 50% of the brokerage fees it receives go to a charity chosen by whoever is paying, keeping only enough to cover operating costs.
Although the platform is just starting out, it is already showcasing several hundred properties in Jerusalem, Tel Aviv, Herzliya, Netanya, Modi’in and elsewhere. It offers agents additional exposure, and for buyers, allows them to select from agents who have been pre-vetted by the platform.
“I think many buyers, particularly from Anglo backgrounds where a very different system operates, really resent paying real estate agents a commission,” Harpaz said. “They feel slightly better about it knowing that some of that money is going to a good cause.”
The platform deals only with charities that have been screened to ensure that they are properly managed and supervised, and also works with JGive, which automatically creates connections to other pre-vetted charities.
The operation is just getting started and so far volumes are (relatively) small. But it has begun to expand and is also looking to partner with large developers, allowing them to sell new projects directly through the platform.
Harpaz admits that the market at the moment is a challenging one. There’s limited supply and what sells does so quickly often by word of mouth, cutting out real estate agents and their commissions altogether.
But he also sees this as an opportunity for struggling real estate agents who are happy to think outside the box in terms of marketing and partnering, figuring a reduced commission — and helping a good cause — is better than no commission at all.