When I was a journalist in the 1980s and 1990s, I penned 1,500 bylined articles that appeared in metro newspapers around the country. Last year, I resolved to use my old dry clippings to start fires in my wood-burning stove.

Today when I reached for an old newspaper, I came across the June 6,1993, edition of the business section of the Los Angeles Times, where I wrote weekly about economic policy. On the cover of that section — not my article — was a story with this headline: “Wayne’s World: Blockbuster’s Huizenga Dominates Video Rentals, but Technology Threatens to Erase His Lead.”

This was four years before Netflix was founded.

At its peak, Blockbuster was sold in 1994 to Viacom for a staggering $8.4 billion. But just 16 years later, the video rental company filed for bankruptcy.

Another classic story of disruption, caused by technology innovation.

Lately, I cannot get my mind off the obvious disruption unfolding in real estate.

Already, printing companies have been disrupted by technology; newspapers have lost their hold on real estate advertising; and now MLS organizations and brokers face a looming threat to their traditional livelihood as search portals now dominate the consumer lead industry and soon, I predict, the data business and the agent’s CRM experience.

I have never believed that real estate disruption comes from consumers selling their own houses. Individual real estate agents are here to stay. They provide an invaluable service that most of us need and want.

Instead, it is the enterprises that have traditionally recruited, partnered and supported the independent agents that are challenged by technology’s disruptive forces — brokers mostly, but also MLS organizations and even franchises.

Important lessons can be gleaned from industries outside real estate that are being disrupted.

Look what’s going on in personal transportation.

Uber is an app-powered on-demand car service provider for smartphones. It has created a highly successful marketplace for suppliers (drivers) and users (passengers who need cars instantly to get around). Uber provides an addictive experience that includes driver ratings and GPS tracking and that is supported by a friction-free digital transaction when you exit the cab.

Uber is disrupting an industry that often disappoints the consumer.

Ready to leave a party, a friend of mine recently called her longtime car service. The back-and-forth process of communicating with the dispatcher and figuring out the address and the timing was painful to watch. Worse, her car did not come for 30 minutes. The arcane role of the dispatcher — an old-school middleman — is what mucked up the process.

Then consider the taxicab companies who deploy a business model that does a lousy job of screening drivers with no rating or ranking service for the passenger. Plus, there is not an easy way to order a cab, and the payment pain at the end is always yucky.

All of this compromises the customer experience creating a tension between the company and their suppliers and between cab drivers and their passengers.

The parallels to real estate are uncanny.

Similar tension has been rampant in real estate for many years. The traditional broker business model centers around recruiting more and more, often not very carefully screened, agents, which dilutes the quality of real estate services generally. This is aggravated by the opportunity for the broker to get better splits from poor-performing agents who create a reputation problem for the industry.

At the heart of the real estate disruption threat is the value proposition. Already, top-producing agents get a better economic cut because they are providing the most value, which infers something about the diminishing value of the broker.

Where does disruption come in real estate? For now, we do not have an Uber, but one is either already in the making or coming soon.

Fast-growing and well-capitalized platforms like Zillow, Trulia and realtor.com are already delivering better and better consumer experiences that far outpace what most brokers are capable of.

Plus, they are building tools and relationships directly with individual agents at a furious pace. Visit the sophisticated Zillow call center in Irvine for proof.

ZT&R are already incorporating agent CRMs into their platforms. Just like Uber, they become the go-to platforms for growing an agent’s real estate business. Tools like DocuSign and dotloop are making one-on-one contract signing easy and simple for the agent, and it is only a matter of time before Zillow, Trulia and realtor.com add these services and integrate them into their lead machines.

When confronted with Uber’s success, cab companies were late to the game with their own poorly created apps, and they have attempted unsuccessfully to use their regulatory specialness to fend off services like Uber.

Brokers often tout their role offering Realtors protection from legal liability, but this too could give way to the power of a new marketplace and technology innovation.

The real test will be what new agents do on these new portal platforms. Thousands of new drivers have built thriving new businesses around Uber — all new car services with Uber as their platform and engine.

Many new upstart agents and small real estate companies are hitching up to one or all of the portals as their business launch pad and primary partner. When the portals figure out how to appeal to home sellers, the link with the portals will be inseverable.

Uber provides a level of protection and service for the drivers. It is essentially a new car service broker. It is out innovating existing brokers through a better experience that empowers the consumer and driver, and Uber gets out of the way. Also, many traditional car service companies are reorienting their business around Uber to survive.

The question for real estate brokers is do they:

  • Let Zillow/Trulia/realtor.com become that new layer — de-facto broker?
  • Redefine themselves so that ZT&R can’t compete on whatever that differentiator is?
  • Completely reorient their business and value proposition around the reality of the portals. (Note: ZT&R promise not to disrupt the brokers, but the ultimate outcome will be driven by the actions of those who create the most value — the agents).

Smart brokers, I believe, should spend more time figuring out choice No. 3. Real estate’s Uber may be out of the garage, already.

What do you think? Where will the real estate value chain be disrupted, if it all?

Brad Inman is the founder and publisher of Inman News.

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