Item 1. Business
Item 1. Business.
Overview
Linkhome is an artificial intelligence-driven
property technology company. By using HomeGPT, a Linkhome-developed real estate artificial intelligence model, combined with financial
innovation and in conjunction with our dedicated team of agents, we have made significant and cost-effective improvements to the business
model of buying and selling homes. Through our subsidiaries, we operate an artificial intelligence real estate platform with the goal
of providing customers with end-to-end real estate solutions and services, initially comprising real estate brokerage services, Cash Offer,
and other services like property rental management and home renovation. Our mission is to redefine the real estate experience to be efficient
and affordable for all consumers through artificial intelligence. Our vision is to help everyone own their home and achieve the dream
of homeownership.
Since the formation of our
subsidiary, Linkhome Realty, in 2021 and the commencement of our operational endeavors, our platform has facilitated an aggregate gross
total value of more than $185,000,000 of agent brokerage transactions as of December 31, 2024. Our platform, which is presently only active
in California, supports a growing network of users looking to list and search for properties online, seeking information on property transactions
and other value-added services, through the comprehensive property-related solutions and services available on our platform. Over the
past three years, customers have shown their desire for our artificial intelligence, financial innovation and real estate solutions.
In 2024, our total transaction volume for the real estate agency amounted to $48,566,719, compared to $15,438,435 in 2023. As of March
23, 2025, our platform, which aggregates listings from the California Regional Multiple Listing Service (the “CRMLS”), boasted
more than 25,139 active listings for residential properties available for sale or rent. Users obtain home-buying information from our
platform and consult with our AI tool, HomeGPT, for interactive home-buying advice. We have found that our users are more likely to buy
and sell properties using the Company and select us for their real estate service needs.
More importantly, we believe
that we have just scratched the surface in the potential development of artificial intelligence as used in real estate and we believe
artificial intelligence will transform the real estate market. Over the coming years, we plan on vigorously developing the artificial
intelligence real estate model HomeGPT, increasing our market share, launching our platform in dozens of cities, and expanding our products
and services in order to leverage artificial intelligence so that it becomes a one-stop shop for buyers and sellers of residential real
estate. Our goal is to build the largest, most trusted platform for residential real estate and empower millions of Americans with the
freedom to more easily purchase homes.
We have developed our artificial
intelligence and integrated it with fintech to expand beyond the traditional real estate search and transaction process through our Cash
Offer product. Cash Offer integrates fintech to help users buy and sell properties more efficiently, by analyzing market trends, property
valuations and buyer preferences, our AI tools can help users find matching properties more quickly and provide purchase recommendations.
We think our Cash Offer product can help users make an offer of their ideal properties more efficiently, significantly enhancing the success
rate of home purchases. Cash Offer is a tool that was developed to help address our customers’ needs. In the Southern California
market that we serve, there is often intense competition, buyers are in the painful process of competing for homes, and we have developed
Cash Offer to offer a solution by providing full cash payments, helping to make offers more attractive and stand out among numerous competitors.
Linkhome accomplishes this by purchasing the target property for cash, assuming ownership of the property, and then selling the property
to the customer after the customer has secured the necessary financing from their lender. In 2023, when we rolled out the Cash Offer tool,
we completed one transaction, with Haiyan Ma, a related party who is a beneficial owner of 12.41% of our voting securities, that represented
77% of our annual revenue for that year. As of the date of this Annual Report, the Company has only entered Cash Offer transactions with
a few select clients. Upon completion of our IPO (as defined below), we believe the Company will have sufficient capital on hand to expand
this service. We believe that the combination of artificial intelligence with fintech could be a catalyst for the growth of our Company
and could serve to transform the real estate industry.
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Initial Public Offering
In our Fiscal Year, we commenced
activities to conduct our initial public offering to issue 1,250,000 shares of our Common Stock on a firm basis at $4 per share (the
“IPO”). On November 12, 2024, the Securities and Exchange Commission (the “SEC”) declared our Registration Statement
on Form S-1 effective, we did not price or close the IPO. Upon the close of the IPO, we have granted the underwriter an option for a
period of 45 days to purchase up to an additional 187,500 shares of our Common Stock solely to cover over-allotments, if any,
less underwriting discounts and commissions.
Industry Background and Market Opportunities
The real estate sector, both
for home buying and rental properties, accounts for nearly 18% of the gross domestic product in the United States as reported by National
Association of Realtors (“NAR”), making it the country’s largest industry. Housing is the largest consumer expense in
the U.S., surpassing transportation, food, insurance and medical expense, and it is a significant source of wealth for many Americans.
According to data from the
NAR, in 2023, there were more than 4.09 million homes sold in the United States, with transactions totaling over $1.5 trillion. These
transactions generated approximately $98.6 billion in commission revenue for real estate brokers. 65.9% of Americans live in their own
homes, while 34.1% of Americans live in rental properties. This 34.1% represents a large market to target for real estate purchase and
sale transactions. 90% of buyers and sellers choose to work with a professional broker or brokerage company, indicating high user stickiness.
Artificial Intelligence Technological Revolution &
Opportunities
Residential real estate is
a massive offline market characterized by low efficiency, high labor consumption and time-intensive processes. We believe the real estate
sector is set to transition online and begin leveraging artificial intelligence. Consumers are shifting their spending online and demanding
experiences powered by AI to enhance efficiency, certainty and speed. We believe consumers are increasingly becoming accustomed to the
high efficiency of AI-generated services and now expect to receive similar experiences in the realm of real estate.
AI has become a key force driving
the development of modern technology. AI demonstrates immense potential in solving complex problems and is leading a new industrial revolution.
Based on work by the McKinsey Global Institute, as reported in Our Insights — Real estate can use generative AI to turn the industry’s
data into treasure in seven steps , we believe that generative AI could generate $110 billion to $180 billion or more in
value for the real estate industry, making AI technology one of the most exciting innovations of our era. It is not only changing our
way of life but also reshaping how various industries operate.
The Problem
We must also recognize that
real estate is not accessible to everyone. Housing issues, especially in urban areas, have become a global challenge.
Structural Inefficiencies.
In the modern information era,
we believe that potential homebuyers in the United States are overwhelmed with an abundance of property data, including listings,
market trends, and historical sales information. However, this data is often scattered across different platforms and formats, making
it difficult to navigate and analyze effectively. Additionally, we are of the opinion that there is a lack of uniformity in real estate
brokerage services, meaning the quality and type of service can vary greatly from one broker to another. This inconsistency complicates
the process for buyers who can benefit from comprehensive, personalized advice and data-driven insights to make informed decisions. Accordingly,
we believe that the industry urgently requires sophisticated data analysis capabilities and personalized customer services that can filter
and present information in a clear, actionable manner tailored to individual buyer needs.
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Home Buying & Selling Difficulties.
The conventional process of
purchasing a home involves numerous challenges that can make the experience frustrating and often unsuccessful. Key among these is the
competitive nature of bidding, where multiple buyers may vie for the same property, driving up prices and creating a high-pressure situation.
Additionally, the home-buying process is often hampered by lengthy loan processing times. Delays in securing financing can result in buyers
missing out on purchasing their desired properties, as sellers may opt for buyers with quicker, more reliable financing options. This
uncertainty and time sensitivity can add significant stress and disappointment to the home-buying experience.
Poor Experiences.
The journey to home ownership
involves multiple stages, including dealing with brokers, securing loans, property appraisals, purchasing home insurance, undertaking
renovations, and organizing the move. Currently, each of these stages is typically handled by different service providers who operate
in isolation from each other. This fragmentation means there is no centralized process or communication, leading to inefficiencies, misunderstandings,
and a disjointed overall experience. We believe that the lack of a comprehensive, integrated solution makes it difficult for buyers to
navigate the process smoothly and can lead to increased costs, delays, and a lower-quality home-buying experience. Buyers are often left
to manage and coordinate these separate components on their own, which can be overwhelming, especially for first-time buyers or those
with limited time and resources.
Our Solution
Linkhome developed the real
estate AI technology platform HomeGPT. For home buyers, Linkhome has built an on-demand, seamless, and artificial intelligence-driven
home-buying experience. Unlike the traditional process mediated by real estate agents, Linkhome buyers can chat with our AI chatbot, HomeGPT,
at their convenience using our app or website to answer home-buying questions, search for homes, learn about the home-buying process,
book visits or virtual tours, calculate mortgage requirements, and so on. We have also introduced AI-driven real estate solutions for
our agents, such as home price prediction, bidding recommendations, investment advice, and on-demand assistance in generating contracts
and processing documents for future real estate needs.
For sellers, our agents can
use HomeGPT to leverage our sophisticated AI algorithms to offer precise pricing advice, aiding home buyers in informed decision-making
for pricing, marketing, and negotiations. Additionally, our generative AI technology enhances seller experiences by automatically crafting
detailed property descriptions and introduction videos with minimal user input. For vacant properties, HomeGPT can simulate furnished
interiors, which can significantly elevate the property’s appeal. By making targeted promotion and presentation, HomeGPT can help
to ensure that listings reach the right buyers, leading to most of Linkhome’s sellers successfully closing deals within 45 days,
thereby selling their homes more effectively and at reduced costs.
The goal of these technologies
is to support our clients and enhance our productivity. We believe this will lead to being able to continuously provide better customer
service at a lower cost. We are committed to constantly optimizing the performance and functionality of our technology to ensure that
it not only meets current market demands, but also anticipates and adapts to future trends.
Fintech: Financial Innovation
Cash Offer — Quick Home Purchase: We believe Linkhome’s fintech product, Cash Offer, will significantly
enhance the competitiveness of our clients’ offers, allowing them to secure their desired properties without merely relying on price
competition. Compared to loan-based offers, most sellers prefer all-cash offers, as this enables sales to close more quickly. By offering
Cash Offer, we believe our clients will be able to stand out among many offers, thus giving buyers who use our product more negotiation
power and a stronger likelihood of purchasing their desired home at the right price.
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Flash sell — A
modern way to sell: By selling to Linkhome, homeowners can avoid the stress of open houses, home repairs, overlapping
mortgages, and the uncertainty that can come with listing a home on the open market. Using our mobile app and website, sellers can receive
a competitive cash offer online. Post offer, we conduct an interior home inspection and a contact-free exterior assessment to verify the
home data provided to the Company. Sellers can then select their preferred closing date and sell to Linkhome, closing quickly.
Trade Up: For
customers who are both selling and buying homes, we have built a trade-up product that enables them to buy and sell in a coordinated transaction.
With the “Trade Up” service, Linkhome helps clients purchase a new home and move in without having to sell their old home
first. Through collaboration with third-party financial institutions, Linkhome assists clients in purchasing the new home and then selling
the old one. This avoids the hassle of finding temporary housing, moving furniture twice and dealing with storage concerns. We provide
a more relaxed, seamless experience for clients, making the journey to swap homes easy.
Currently, our front-end platforms,
such as the website and app, are intended only to receive customer information. Our back-end software then generates a plan for the user,
after which we establish a relationship with the user by having one of our agents communicate the plan to the user. We are working to
develop a front-end data platform that will provide such information to customers in real-time.
One-stop seamless experience.
We understand the complexity
of real estate transactions. Linkhome aims to provide a one-stop solution, offering tailored financing through our Cash Offer service,
bespoke renovation services, comprehensive property management, and extensive third-party insurance options. Designed to simplify and
expedite the home-buying journey, our integrated approach ensures clients navigate property transactions with ease, from initial purchase
to ongoing management. By merging clarity, efficiency, and personalized support, Linkhome aims to transform real estate transactions into
transparent, stress-free experiences, allowing clients to focus on the joy of finding their dream home.
Advantages and competitive edge.
Our business model is designed
to disrupt the traditional model of finding and buying a home. Linkhome’s main goal is to rapidly expand property sales by focusing
on providing AI technology for house hunting and helping customers with investment analysis. Since our founding in 2021, we have been
developing and leveraging the following key advantages of our platform, which we believe provide significant competitive advantages.
A purpose-built artificial intelligence
housing search platform.
Our platform combines a comprehensive
AI-powered home-finding experience with financial innovation, allowing us to control all key operational and transactional elements and
promote a fast, simple, and consistent user experience.
A differentiated home buying experience.
We have developed the Cash
Offer home purchase model to use cash to help customers compete for target properties faster and more cost-effectively. This gives people
the confidence and trust they need to buy properties on our platform.
For buyers, using Cash Offer
avoids the need for excessive overbidding to purchase a home. We charge a 1-2% platform usage fee, which saves a significant amount compared
to overbidding. For example, for a $947,000 home, we charge a 1% service fee, approximately $9,470. Without using Cash Offer, the same
home may sell from $990,000 to $1,000,000. In this example, a buyer would save $40,000 to $50,000 on the transaction.
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For sellers, traditional home
selling services require expenses such as repairs, renovations, listing fees, and 4-5% agent fees. These expenses can be substantial for
sellers, and the waiting period to sell the home is uncertain. Using the Flash Sell, the home can be sold immediately, reducing the costs
of repairs, renovations, and 4-5% listing agent fees, which can amount to 8-12% of the home’s price. We only charge a 5% service
fee, saving sellers both time and money.
Currently, our funding for
Cash Offer comes primarily from investments made by our CEO and existing shareholders. Following the close of our IPO, we plan to expand
our Cash Offer program. We believe and are confident that our revenue will continue to grow, and we will become more profitable over time.
Proprietary financing technology.
In the future, assuming we
obtain proper licensing, we intend to offer differentiated financing solutions to enable clients to select their preferred financing method
from hundreds of pre-approved down payment and monthly payment combinations and enable us to generate property finance receivables, often
sold at a premium to third-party financing partners.
An efficient and engaging home selling experience.
Our proprietary APP software
and artificial intelligence quick quotation system allows us to quote prices for users selling their homes predictably and efficiently.
Customers do not need to wait several days and can quickly sell their properties to Linkhome. We believe our platform will provide customers
with a unique home-selling experience, thus setting us apart from our competitors.
Large-scale real estate transaction infrastructure.
We believe we are a leading
property technology company that provides a comprehensive suite of end-to-end property solutions and services through a single, integrated
platform. Our platform functions as a one-stop-shop solution to serve all of our customers’ property-related needs. We believe this
provides us with a strong competitive edge as compared to our peers, who may only provide services related to one segment of the property
transaction.
Highly scalable business model.
As of the close of our Fiscal
Year, we cater only to the Southern California market, we intend to scale the enterprise to service additional markets. We believe we
have a highly scalable business model and can adapt our service offerings to cater to prevailing market and technology trends to maintain
our competitive edge. Our business is predominantly generated through our online website and mobile application platforms, which, assuming
we have obtained proper licensing, will allow us to expand rapidly into new markets in a quick and cost-efficient manner.
Our Growth Strategy
● Increase penetration in existing market. We
are focused on increasing our penetration and market share in the Southern California market. As our recognition grows, we’ll attract
more home buyers and sellers to transact through Linkhome.
● Expand into new markets. While
our business primarily serves the Southern California market, we believe we have a tremendous opportunity to expand our business coverage
to major markets across the United States.
● Increase our service offerings and become an “all-in-one”
property platform. As of the close of our Fiscal Year, we offer real estate brokerage services, Cash Offer,
and other services like property rental management, and home renovation services. In line with our focus on providing a seamless experience,
however, we are in the process of creating a digital one-stop moving experience, as well. We plan to add additional services over time
to further simplify transactions and support our customers. These services include title insurance, escrow and mortgage services, home
insurance, property management and home maintenance services.
● Continue to develop our artificial intelligence real estate
platform to enhance user experience. We seek to continuously strengthen our artificial intelligence technologies
to improve our platform and the solutions we can offer to our customers. To this end, we intend to invest in research and development
to enhance our technology capabilities and service offerings.
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Marketing
Our marketing strategy employs
a multi-channel approach aimed at efficient and low-cost growth while expanding our market footprint. We leverage AI algorithms to deploy
ads targeting customer interests, significantly enhancing the precision of our customer targeting.
Our marketing focus extends
to several areas:
● Social Media & Video Marketing: We
engage in comprehensive digital marketing, utilizing platforms such as YouTube, Instagram, Facebook, and X (formerly known as Twitter)
for both video and social media marketing. This approach allows us to engage audiences with visually compelling content and leverage
the vast user bases of these platforms for broad visibility and engagement.
● Paid-search Advertising: We
partner with high-traffic search engines for paid-search advertising. We continuously adjust our bids on keywords and phrases and tweak
our campaigns based on performance metrics.
● Targeted-email Campaigns: Our
email marketing efforts are enhanced by machine learning, enabling us to send targeted emails that recommend relevant new listings to
homebuyers and sellers at critical moments in their journey with us.
● Online and Offline Seminars: We
organize online seminars to educate and engage with our audience, offering valuable insights and building trust. In Southern California,
we conduct limited, in-person seminars to inform our customers about the complex and competitive market.
Competitor Analysis
As a company dedicated to artificial
intelligence real estate technology, we operate in the highly competitive and fragmented U.S. housing market, with over five million
residential real estate transactions annually. Our main competitors include traditional offline real estate brokers and agents; these
include franchise operations associated with national or local brands as well as small independent brokerages. We also face increasing
competition from a growing number of internet-based brokerages and companies operating with new business models.
We believe we primarily compete
based on:
● Efficient AI online chat capabilities;
● Financial innovation services, such as Cash Offer, that help
clients quickly secure offers;
● Traffic to our website and mobile application;
● Our ability to recruit and retain agents who can provide the
best customer service;
● The cost of our services and the price to consumers;
● Consumer awareness of our services and the effectiveness of
our marketing efforts; and
● Innovation in artificial intelligence technology.
We believe that our customer-centric
values and artificial intelligence technology, along with the application of financial innovations, set us apart from our competitors
and give us a competitive edge in all of the above areas.
Government Regulation
We are subject to a wide
variety of laws, rules, and regulations enforced by both governments and private organizations. Many of these rules and regulations are
constantly evolving. If we are unable to comply with them, we may be unable to obtain the requisite licensing to conduct certain aspects
of our planned business, such as offering insurance, escrow or mortgage services, and we could be subject to civil and criminal liabilities,
revocation, or suspension of our licenses or other adverse actions. We may also be required to modify or discontinue some or all of our
offerings, and our ability to grow our business and our reputation may be harmed.
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