A frustrating home buying and selling experience has evolved into online brokerage Zown Canada, which its founder says was created to return more money to buyers for their down payments and lower the threshold for acquiring a residence.

CEO Rishard Rameez, who founded Zown (pronounced “zone”) in 2021, set out to simplify the process of buying and selling a home and cut commission fees through the use of technology. The startup runs with a leaner team than the industry average, cutting out large sales teams through the help of artificial intelligence (AI).

Those savings are passed on to Zown's buyers, Rameez told RENX Homes, who receive between 1.5 to two per cent of the purchase price of the home back in cash to help them acquire the property.

The model is intended to be an improvement over the situation Rameez faced. After coming to Canada in 2018 to do his PhD in nanotechnology at the University of Waterloo, he took an interest in entrepreneurship, pausing his studies to found startups HiRide and Facedrive Health.

Rameez "hated" home selling experience

In 2021 he moved to Toronto and bought a home, but financial and professional strains led him to sell it after seven months.

“I hated my experience of both buying and selling,” Rameez said, as his down payment and sale proceeds were whittled away by commissions, fees and taxes.

Venting on the personal finance board of Reddit, he recounted his displeasure about the $70,000 he paid to agents.

“I’m seriously giving it a thought to build an app to replace realtors or at least the listing agents and automate most of the process.” he wrote. Hundreds of sympathetic posts motivated him to quit his job to follow up on the idea.

Flash forward to today.

Zown is a company of over 20 employees, connected to a real estate agent network of over 300, and has transacted on over 200 homes in Ontario, Rameez said.

To further its offerings, it is integrating a leasehold ownership model with Cedar Innovations Inc. and developing an app to incentivize saving with a gamified process.

Buying, selling in the Zown

Zown's platform is for anyone earning enough income to qualify for mortgage.

To ensure a user qualifies for a mortgage, Zown’s software will analyze their income, savings, debt and credit score. Rather than go through a mortgage broker, the technology can rapidly inform users whether they meet Zown's requirements and the size of the loan they could qualify for, Rameez said.

If approved, an AI-powered algorithm will match the prospective homebuyer to a property (or properties) based on their preferences, similar to a dating app. Zown will then get the user in touch with a real estate agent who lives within five to 10 kilometres of the property for showings.

“So now, not only have you got matched with the perfect property, but you are also getting matched with a realtor who has that local expertise that you need in order to make a decision,” Rameez said.

Zown will negotiate interest rates for monthly mortgage payments with financial institutions and lending partners, and manage the closing process. If a sale closes, Zown provides 1.5 to two per cent of the home's price back to the buyer to be applied toward the down payment.

The seller pays a flat fee of $8,000 to list their home on Zown, as opposed to a percentage-based fee. If the seller ends up buying a property with Zown within one year from selling date, the $8,000 is returned.

Zown’s users tend to be first-time buyers who are comfortable with technology and making a solid income but who have not been able to save enough for a home, Rameez explained. Most of its users have shown a preference for townhomes over condos and want to transition from renting to owning.

Ontario is the company's main market, with 70 per cent of its users in the province located in the Greater Toronto Area. Rameez’s ambition is to cover all of Canada, and he is preparing to launch Zown in Vancouver within the next two to three months. The CEO is exploring expansion to the U.S. market and already services California.

Latest tech developments

Zown partnered with Cedar to offer leasehold ownership, and will be releasing another app in the spring to incentivize saving money toward a home.

Canadians, Rameez said, "have been incentivized to spend money and get rewarded based on the spend. We want to change that.”

Users will be encouraged to grow their savings by being financially rewarded for saving money. The app will help its users set goals and track progress toward meeting a budget.

Under the leasehold model, Cedar buys and owns the land while the homeowner purchases the residence, paying the mortgage on the home and the land rental fee to Cedar. This reduces monthly costs on mortgage debt and interest, while also lowering the income requirement compared to a traditional mortgage, according to Zown.

As a company driven by AI for its homebuying process and marketing, Rameez said he is seeing increasing familiarity with the upstart technology, including real estate industry applications. “You won’t be able to keep up with the future businesses that are coming in your space” by not adopting AI, he said.

Yet he does not foresee AI as a replacement for flesh and blood. The technology is most effective when harnessed by an expert, not as a substitute for humans, he argues.

“You shouldn’t rely on it as, ‘OK, I’m going to take away my creative thinking and let AI take care of it,’ ” he stated. The capabilities of AI should be used “to enhance your creativity rather than to replace it.”