Through AI to basically change the game here. Our mission is to accelerate real estate industry's transition to the digital era, so I want to spend a little bit of time talking about the NAR lawsuit settlement because it's really a catalyst for our business model, and I'm not sure how many of you are aware of it or to what level of detail, but the settlement really recently took effect on August 17th of this year, so just a couple of months ago, and basically, the traditional real estate commission has always been the seller paying upwards of 6% standard to the seller's realtor in order to sell their home as part of the real estate transaction. The seller's realtor would then offer a portion of their commission to the buyer's realtor, right?
So let's say 6% to the seller's realtor, the seller would split it 50/50, so 3% to the buyer realtor, 3% to the seller realtor. The lawsuit essentially was the seller saying, "Hey, I don't mind paying my portion, my commission to my realtor for their portion of the work, but why do I also have to pay for the buyer's realtor?" So this was over a $600 million lawsuit settlement, right? So you have NAR in the center there, but you also have Anywhere Real Estate, Keller Williams, and RE/MAX. And basically, it's disrupted the whole commission portion of this business.
So just to put some numbers into perspective, the pre-settlement cost from a buyer and seller, so the buyer and the seller would pay, or basically would get 3% commissions that would go to the buyer and seller agent, and then there would be about 1.2%-2.5% in closing cost. The estimated settlement effects on transactions that we're seeing now is the sell-side commission will be 1.5%-2.25%, the buy-side commission will be 1.5%-2.5%, but that's now going to be paid by the buyer. So the buyer used to only have to pay closing costs. Now they would not only have to pay closing costs, but they have to pay their portion of their commission to their realtor.
To put it in perspective, right, if a buyer wants to buy a $400,000 home, they're going to have to take a $500,000 home to make it easy. They're going to have to go upwards for 3%, right? $15,000 that would have been used to go towards the purchase of that home, or to furnish the home, or renovate the home, whatever, now would have to go to the realtor in the form of a commission. That puts people in a really tough spot when they're buying a home. Now, granted, that commission is negotiable. You can negotiate it down if you want. I'm just using this as an example. But the bottom line is that somebody's going to be accountable for paying the buy-side realtor now if they want to be represented. We've studied other industries when we went ahead and came up with this solution.
I'll use securities trading as an example, but then you could kind of take it for some of the others. Securities trading used to be commission-based as well, right? It was like 1.5% of the transaction. Then somebody came in, I think it was Charles Schwab, right? They came in with a flat fee trading. Then E-Trade came in, but then Robinhood came in, right? Same thing with travel. You'd pay a commission. Same thing on advertising. What we've studied and what we've learned in other industries is commission-based fees, eventually you're going to get overrun. Somebody's going to come in and disrupt it. This is our business model. Not only are they disrupting it, Robinhood is basically zero fees right now. That's a complete disruptor.
Just to give you a little bit of an idea of the U.S. housing market, total transactions about 3.5 million, total home transactions volume $1.44 trillion, and then that 6% commission paid in 2023 alone, again, $100 billion. The top 10 states that we're showing here represent over 50% of these numbers here, so there's a lot of concentration as well, so for a company like ours to scale, there's definitely a path there for us, so I'll tell you a little bit about our commission-free home buying platform, so we've removed the traditional commission structures, and we're leveraging an AI agent to create a seamless home buying experience, and it is literally an A to Z transaction, so from browsing the home all the way through closing, the transaction will be conducted on a reAlpha platform, and it's facilitated by an AI buy-side agent.
So we enable home buyers to purchase homes through an AI-driven experience. It's available 24/7. It's consistent. One of the things that we've also learned is buy-side agents, they're inconsistent. You have some of them that are very experienced. Some of them are not so experienced at all. Same thing with reliability. Same thing with bias also. The FHFA also has basically studies showing that there's conscious and unconscious bias when it comes to that. Our AI doesn't care, right? It gives you the best answers 24/7. It's completely commission-free, but we also have support from in-house licensed agents. So we want to know that we're not on total autopilot, right? We're not saying AI is going to drive the whole thing. We have licensed agents that are operating behind the scenes. They do quality checks.
They're also there when a home buyer, when they sign our broker agreement, they get assigned a human agent. If they want to talk to somebody, somebody's available, but AI does a lot of the heavy lifting for them. Our AI agent is called Claire. We are a NASDAQ-listed company under the ticker AIRE. It stands for AI for Real Estate. The Claire was kind of our take on a commissionless, so commissionless AI for Real Estate. That's how we came up with the name. A couple of things of our Real Estate Super App. Obviously, it's about browsing or understanding your budget, finding your dream home. If you think about Zillow, right, as a comparison, this is kind of where the transition happens, right?
You understand your budget, you find your dream home, and before you're getting ready to make an offer, they connect you to an agent. You continue to stay on our platform. You can book a tour through our platform. You can make an offer through our platform. You get pre-approved for your mortgage through our platform. You do title, closing, the whole thing. Our AI actually, even through inspections, you order the inspection. When the inspection report comes back, the AI will read the inspection report and break it down for you to basically say, "Home buyer, these are the three items that you need to negotiate with the seller. These are big items. Home buyer, these five things are minor items. Here's a local electrician in the area that could fix it for you." So it even gives that level of granularity.
Here's a couple of screenshots from our Real Estate Super App. We had trademarked it. If you are an Apple user, it's on the App Store, so it's just reAlpha, and you can download the app, and we're currently only operating in Florida as a licensed broker, so you would only be able to see homes in Florida right now, but we're here today to explain who we are, what we're looking to do to scale this, so smart home recommendations, 24x7 AI agent. We have comprehensive property insights, so you could ask it anything about either the area that you're looking in or specifically about that particular property. We have a document vault. We do pre-approvals, as I had mentioned. You can make offers, integrated title, and closing, so again, feel free to go to the App Store, download the app.
We don't have it on Android yet, but if you go to reAlpha.com, you could get the same experience from the website. I'll turn it over to Rakesh, our CFO, to talk about the revenue model and the team and also our acquisition strategy.
Thank you, Mike. Good evening, everyone. So I'd like to start by referring to an interesting talk that Diane gave us on Monday evening. I'm not talking about the hypnotherapy that she is a hypnotherapist. I'm not talking about that. I don't know hypnotherapy. And I'm also not talking about the three plane crashes that she had in the same day, so not that. So what I'm referring to is an interesting metric that she gave where she was saying every person has about 40,000 thoughts in a day. And why am I referring that? So as Mike was saying, we have a zero-commission platform. And whenever I say this or we say this to anybody, I can see that like 4,000 thoughts running in their mind. If it's a zero-commission platform, what this? Why that? Why this? So let me explain to you. We are truly a zero-commission platform.
We don't charge any commission. So do we not make any money? Yes, we do make money. It's not a business otherwise. So how we make money is through mortgage brokerage, home insurance services, and title search. So basically, Mike was covering the kind of cost split up where like 6% is the commission. There's closing cost between 1.5%-3 %. So where we make money is in the closing cost. And how do we make money out of that? We have a vertical integration built where we acquire all the pieces of the puzzle. So by owning all the pieces of the puzzle, the revenues that they make and the income that they generate is going to be our main revenue. And we use the zero-commission platforms or zero-commission as a loss leader to get them into the system and make them have the transaction.
To give you an example, why we do this is for high scalable growth. What we believe is speed to market. This is one such example. Be My Neighbor is a mortgage broker we acquired last month. With that acquisition, we got access to 27 states in the country for mortgage brokerage. Likewise, we have Hyperfast Title, a title insurance company which has three-state license. This is the model that we are looking for and looking to execute on. As I was saying, our acquisitions would be an accretive acquisition-led growth strategy. It can be accretive on revenue side, on strategy, on the different pieces of the puzzle. In a home buying journey, there are about 10 different phases that we can classify. Among those phases, we already have four that have been completed, two which we have built.
That's the front-end search and form contract and offers. We have acquired Hyperfast, which is a title company, and then Mortgage Broker, which was Be My Neighbor. There are other pieces where we are working on. Some we build, some we acquire. Mostly, we acquire. Our first target is to acquire feasible solutions that are already available there. If not, we will probably partner or build the solution. Some of our powering companies that are powering our solution is Naamche, which is an AI development studio which we acquired in May. AiChat, which we acquired in July, is an AI conversational suite. They cover over 200 languages. So that's an acquisition that we made. We have Hyperfast, which is the title company, and Be My Neighbor, our recent acquisition.
One of the most important factors for any business model or for any business is the leadership team and the board that is going to guide, that is going to drive the company. And on that, we have Mr. Giri Devanur, CEO of reAlpha. He's the visionary of the company. He has had three successful exits, and he's taken two companies on NASDAQ, and reAlpha is the second one. And I have Mike Logozzo here with me. I'm very proud to work with him. He's our president and COO. He's been with BMW Financial Services, which was a $32 billion portfolio and having almost 1.2 million customers. And he's the guy who would help us scale the business. He knows how to scale. It's a very large portfolio. And there's me, Rakesh Prasad, CFO, interim CFO. I'm a chartered accountant or a CPA equivalent.
I've worked with EY on some large projects, and I've been handling the company's financial reporting, compliance, and all the fun stuff, and handling everything with our securities counsel here. Then we have Jorge Alcocer, who's our Chief Product Officer, and he's the real estate guy. He's been with institutional real estate companies like Invitation Homes, leading a $1 billion portfolio. These are some of our leadership team on our acquisition. So when we acquire companies, it's not that, yeah, we acquire and we start, yeah, we call everything reAlpha, rebrand everything. We don't do like that. So when we acquire, we want to grow together. We want the companies that we acquire also to grow together. We are very proud of working with the leadership team on these acquisitions. Coming to our board, they've been very helpful in guiding the company on various aspects.
We have Bala Swaminathan, who is a chartered accountant or CPA equivalent. He's our audit committee chair. And we have Brian Koehl, who's an investment banker. And we have Dimitrios, who's a lawyer, and Giri Devanur, our visionary entrepreneur. And Manas is also another real estate coach and real estate expert who's on our board. So with this, I would like to say this leadership team is what and all the employees, all our subsidiaries is what is going to help us drive our vision or reach our vision of becoming a leader in real estate technology. Thank you very much, and I appreciate all your time listening, and happy to answer any questions.
Just out of curiosity, how do you deal with what I think might be like a straight-up RESPA violation, right? As you have acquired, hired the mortgage lender, and now you have your AI platform, it seems that you're skirting it real tight on that, right?
In what way?
In the market scenario, you want both the brokerage and the loan brokerage, and your AI is going to go publish loans through your acquired.
So we have a RESPA attorney. Okay? And one of the things that the RESPA attorney said is you offer your products and services, but they have the ability to not use them if they choose. But you could offer them, and you could default your platform to them, and you don't even need to give them a drop-down menu of 50 other choices. They could use your platform, or they could fill in the blanks, essentially. Yeah. Yes.
If they're not required to use the title search or lender or insurance companies, how do you fully make your money?
So we build a pretty comprehensive FP&A model with the sensitivity analysis as to, all right, if 35% of the people take our mortgage and 18% of the people take our title, what does our revenue look like? And I could assure you, even at very conservative numbers, it looks pretty darn good. And to be quite honest with you, what we're saying is if we're offering commission-free service and we're making it easy and seamless and we default, a lot of people, I think, are going to take us up on it. Yeah, there's going to be savvy people who are going to try to shop around interest rates, but we're a mortgage brokerage as well, right? So we're going after, and we could, it's not like we're servicing the loan ourselves.
We're a brokerage, and we could find great deals for people in their unique situations if they're a veteran or a first-time home buyer or whatever. We have access to the same types of rates.
So across all three of those, your users not necessarily going to pay a premium because they can pay outside of insurance for their insurance services?
No, sir, so to take it one step further, this NAR settlement that recently took effect, we weren't sure how fast the changes were going to take effect. And the fact of the matter is, over the last two months, it's not like a light switch, right, where the settlement changes took effect and all of a sudden 100% of the buyers have to pay. We're finding that there are sellers out there that are still willing to pay the buyer commission. They just have to check a box and say, "I'm willing to pay." The beauty of this is, since we are the buyer agent, we will take their commission and we give it back to the buyer. So the buyer actually will make money on the deal. Actually, what we've done, because we own the mortgage brokerage, we bought down their interest. Their interest was at 6%.
We took the 2% from the seller that they were offering to the buyer because we were the buyer. We bought their mortgage down from 6% to 4%. That person was able to afford the home that they wanted. They were going to have to afford a home that they could just settle on or settle on a home that they could afford. We bought their mortgage down two points. And these are the types of customer testimonials that we're going to put on our website. So we'll tell you how great we are all day. But when we have people like that with those stories, those are the ones that'll, I think, really move the needle for us. What other questions?
I wish I heard the presentation from the start. I just came in late.
okay.
So that maybe we covered it in the presentation already. So the industry is changing, and it seems like commissions are negotiable anyhow. So how much more are you saving them given that people are doing these deals out there? It's not fixed any longer. Unless I'm missing something.
I mean, honestly, coming into our.
6%, and then you have people going down to 4%, and you have online people, and Redfin , and all this, and it just seems like it's going down, down, down.
I think, I mean, quite honestly, right, when we built this model thinking that we were going to be a commission-free platform, we thought that buyers coming in would only benefit from not having to pay the commission to us. When we're seeing that there's still this backdoor stuff going on where sellers are still offering to pay the buyer, it enhanced our model even further. We're taking that commission and buying down their mortgage interest rate now, so it's actually made our model stronger.
Can you give me some real numbers, like an example of a happy customer?
One of the examples that I'd mentioned to you, that there was a customer that was coming in that wanted to buy a home, but the interest rate coming in was at 6%. So they could, based on their mortgage rate, they could only afford a home of, like, say, $400,000. But they didn't like the home, right? But that's all they could afford. When they found out that we were able to take the 2% that the seller was willing to pay the buyer agent, we took that. We went to our mortgage broker. We bought down the interest rate to 4%. They could buy that $500,000 home now for the same price mortgage payment. So that's the type of success stories that we're going to start to promote for reAlpha.
How rapidly are you looking to expand to the additional states?
So we'll be obviously targeting the 10 that we had showed because that represents more than half. 10 states could have more than half of the volume. A lot of it will be based on the capital that we could raise because it obviously takes capital to grow and whether or not we can do it organically, or there's also some inorganic ways to get there as well. So sorry, we couldn't give you a hard answer, but we have different options, and the options are going to be based on the amount of capital and then the inorganic acquisition opportunities that we have in front of us to consider. Any other questions?