If you follow your humble columnist’s writings at all, you know by now that I’m skeptical as to the future of buyer agency in general. I base that skepticism on general trends on consumer feedback and behavior, as well as simple reasoning.
Until today. Today, I got a sneak peek into what the future of buyer agency looks like, and it is wonderful and frightening.
A Minnesota-based startup, DealCurious LLC, has launched a website, BuyerCurious.com, that’s aimed at allowing consumers to buy houses without any professional representation.
I had the opportunity to speak with the founder and CEO, Jim Lesinski, who gave me permission to write about and talk about his company.
Let’s start right at the home page:
Your eyes are not deceiving you. It says right there on the homepage what BuyerCurious aims to do: allow consumers to buy houses without professional representation. "Be Your Own Agent" is the message, and quite frankly, BuyerCurious.com means it.
The main benefit, of course, is to save money. BuyerCurious is straightforward in claiming that consumers, by representing themselves, can save thousands of dollars if the seller doesn’t have to pay a commission split to a cooperating brokerage.
Screen shot demonstrating BuyerCurious.com’s value proposition to buyers.
The secondary benefit — and the one that I think is actually more important — is the proposition that the buyer can pick and choose what professional services he wants to purchase.
According to the website, the BuyerCurious platform "is built to allow you to choose how you work. You can work independently, collaborate with an agent, or glean wisdom from friends, family or professionals throughout the process — all in a virtual workspace. And if you’re seeking professional guidance, you may find the expert you’re looking for in BuyerCurious’ service provider database."
BuyerCurious provides an online transaction management platform with document management capabilities, but puts the control in the hands of the buyer, rather than the agent. So the buyer chooses whether to ask an agent for help. The buyer hires the inspector directly, or gets a real estate attorney involved. Want a title company to help? Just invite them into your transaction. It enables true a la carte service delivery.
Some boutique brokerages have experimented with this approach and failed. But it may be that delivering a la carte services outside of a brokerage framework might make a difference.
A GPS for real estate transactions
At the heart of the entire concept is the "offer-making platform," which, in the words of BuyerCurious, is a "sleek, Web-based interface where industry jargon is explained in plain English." I tried out the "Build a Practice Offer" option to see what it looked like.
I can report that as a plain old unlicensed civilian, I found it pretty easy and straightforward to put together an offer on a fictional house and submit it to the fictional listing agent. This column is hardly the place to go over it step by step, but you can go check out the features yourself. I found it easy to use, straightforward, and it took me about three minutes to go through the five steps involved.
Five minutes after I submitted the fake offer, I got an automated phone call from BuyerCurious informing me that changes had been proposed to my offer by the fictional seller, and that I should go check it out online.
You know what? I was impressed, because being instantly informed like that — if it were on a real offer on a real house — would have made a whole lot of consumers I heard at various HearItDirect sessions extremely happy.
Reviewing the changes made by the seller was simple, and editing my offer to make counteroffers, or to reject the changes, was also simple and straightforward. In the practice run, the seller accepts my counteroffer, and I get another phone call congratulating me.
In a real transaction, the next step would be a private "Deal Room" where the nonbinding letter of intent would be translated into a legally binding contract.
The experience is not unlike following the directions given by a car’s GPS navigation system. In much the same way that Fidelity Investments used the "turn-by-turn" analogy of GPS in helping investors negotiate complex transactions like rolling over an IRA, the BuyerCurious experience should and does resonate.
Disruption from within
Most of the above you can find out for yourself playing around on the site. But I found the whole concept even more interesting after speaking with Lesinski.
For starters, DealCurious’ founder and CEO is not a 20-something technowizard out of Silicon Valley with zero knowledge of real estate and how it works.
Lesinski spent five years as vice president of sales and marketing for Pulte Homes, ultimately reaching the position where he was responsible for the entire national sales effort. For five years after that, he was with M.A. Mortenson, a major construction company out of the Minneapolis area.
In speaking with him, I was immediately struck by how well he knew the residential real estate industry, how it worked, what the incentives of the parties were, and the roles played by multiple listing services, Realtor associations, brokerages and franchisors.
In other words, Lesinski isn’t an outsider trying to disrupt the industry. He’s an insider trying to disrupt the industry.
The other truly interesting takeaway for me was that Lesinski concedes that yes his company actually is trying to disintermediate some real estate agents. It’s difficult not to be honest about that, obviously, when the tagline of the site is "Be Your Own Agent."
But at the same time, he was remarkably frank about the value of listing agents, and he maintained that BuyerCurious would actually benefit listing brokers and listing agents tremendously.
The basic assumption Lesinski makes is that listing agents do a lot of work, and provide quite a range of valuable services, from pricing to marketing to staging to advisory services. In contrast, he felt that buyer services are fairly commoditized, and with the search technology that is a given today, buyers find their own properties, and know what they want to spend on them. They get hung up only when it comes to the actual transaction process.
By providing a step-by-step "GPS" for real estate transactions, Lesinski feels that his system really helps buyers and sellers (and the selling agent) work through the transaction in a much more efficient way.
That efficiency, of course, translates into lower transaction costs for the buyer and seller, while not hurting the listing agent at all. The buyer’s agent, of course, is left out in the cold — quite intentionally.
I asked Lesinski about the emotional component of purchasing a home, since many buyer’s agents feel that their value to the consumer is often providing emotional and psychological support and counseling.
Lesinski’s take on that is consumers are free to consult whomever they wish. They can work with buyer’s agents for emotional support if they wish, and Lesinski can see a scenario in which a buyer’s agent is paid on a consultative basis by the buyer directly for providing just the psychological support.
I was skeptical that his system would hold up in the extremely complex legal regimes from the federal to the state to the local that exist in real estate. Lesinski’s says he’s confident that BuyerCurious is standing on solid legal ground. The company has spent hundreds of thousands of dollars with lawyers, he said, to ensure that both the offer process and process of drawing up the actual legal contract would work under current real estate laws in the 48 states where BuyerCurious is active.
Big picture implications
At this point, it isn’t clear whether BuyerCurious will succeed or not. It should be noted that DealCurious, the parent company, recently closed on an angel round of funding, bringing its total raised to $1.75 million. That’s a fair amount of money, and promises at least a chance at making some noise.
The business model of the company is also somewhat unclear, since the service is free to consumers. Perhaps there’s a referral model or a lead-gen model to the sellers and listing agents.
But the big picture implication has little to do with this one company. What one entrepreneur has seen, others have also seen. If this attempt fizzles out, others may ultimately succeed.
The big picture is that the value of buyer agency has been eroded to the point where automation is possible, and quite possibly desirable from the consumer’s point of view.
The question for brokers, agents, MLSs, Realtor associations and vendors (and I suppose consultant types like me) is what to do about it. Is this development to be resisted? Or is it to be embraced? Can it be resisted, if technology continues its inexorable march?
If this kind of automation and "do-it-yourself" (DIY) software are the future of buyer agency, what services can the buyer specialist offer that can’t be automated?
We’ve seen the tax preparation industry affected by DIY software like TurboTax, but it still survives. Is there a parallel for real estate? What does that look like?
My bet today, based on what I know right now, is that the future of buyer agency will have to become consultative, not transactional. The services that cannot be easily automated are those that require in-depth local knowledge, high-touch customer service elements, and wide networks of private contacts (that is, not available to all on the MLS).
It may be that platforms like BuyerCurious will force buyer agency to become more a la carte, charging $500 for a consultation, or $250 for assistance in negotiation.
Who knows, ultimately, what the future will actually look like until it gets here? I do know, however, that this was a sneak peek of a possible future, because it is a look at what is in place right now, right here.
Start thinking. Start planning. Don’t get caught off guard while relaxing in your comfortable bubble.