- The hot trend right now is to be the Uber of something and completely disrupt an industry.
- To those companies that believe they will be the next Uber of real estate, be careful when you make this claim.
- I have six reasons why real estate can’t be Ubered, including that the client always has the right to pull out and that no one gets paid until the deal is done.
The Uber of dating, the Uber of grocery shopping, the Uber of bean burritos. The hot trend at the moment is to be the Uber of something and completely disrupt an industry.
It’s worked in the financial sector with E-Trade and the legal industry with LegalZoom, but an Uber-like real estate service hasn’t gained much traction, though many have tried.
Hailing a cab is the same in New York as it is in Los Angeles as it is in Marion, Indiana, (where I grew up; I think there is only one cab supporting the city). So disrupting this low-touch industry using current technology is a simple concept to grasp.
To those companies that believe they will be the next Uber of real estate, be careful when you make this claim.
Not every industry can be “Ubered,” and if hiring a cab were as complex as a real estate transaction, the user experience would go something like this:
The customer would need to be able to research and pick the driver. Real estate is a relationship business. Taxi service is not. You can’t connect the nearest agent to the nearest buyer and expect a successful outcome worthy of you making money. A lot of time, money and effort by real estate agents go toward establishing this relationship that will never be replaceable by an app.
The car would need to be inspected. If customers cared about the car in the same way buyers care about the house they’re buying, the customer would require a visit to a local mechanic where the car would be inspected.
At the inspection, any defects would need to be repaired before agreeing ever to compensate the driver for the service provided.
You’d have to help the customer get the money to pay for the taxi ride. Imagine if half of your customers don’t have the money necessary to pay for the cab trip when they contact you.
You would need to begin working with this client 30 days before they intend use your cab service to help them obtain the funds necessary to pay once the drop-off is complete.
4. No guarantees
The driver can’t guarantee that he can deliver to the destination. Welcome to the world of title work. Not every property comes with a clean title, and at certain times, legal corrections are needed to successfully transfer ownership.
This would be the equivalent of an Uber driver telling the passenger halfway into the trip that there’s a problem that needs to be fixed. Either the customer can wait a couple months for the driver to fix the issue or can pick a new driver and start the process all over again.
There is total uncertainty throughout the ride. Before cab drivers had GPS or real-time traffic updates, the experience of getting from point A to point B was one of uncertainty. Now, barring an immediate car wreck, drivers know the best and fastest route to take at all times (thank you, Google Maps, I love you).
In real estate, little fires appear all the time that agents must put out. Navigating a real estate transaction would be comparable to an Uber driver navigating his trip without GPS but promising, in writing, to have the customer delivered at a particular time.
There is no guarantee of payment. What if a customer decided to get out of the car one block before you reached your destination and didn’t complete the trip? And what if the customer could do this and not have to pay?
People change their minds and deals are terminated all the time in real estate. The loan might fall through at the last minute, or the buyer gets cold feet and refuses to close, which results in a significant amount of time and energy wasted by many people.
Real estate is one of the few industries where compensation occurs only when all parties complete a successful transaction.
So when it comes to Ubering the real estate transaction, I don’t see how it’s possible given the way the industry operates today. The best advice I can give an ambitious startup is to Uber a single component of the industry.
Be the “Uber of getting a loan” or the “Uber of home inspections.” Perhaps only after every aspect of a real estate transaction is Ubered will there ever be a chance of the entire transaction resembling an authentic Uber-like experience. But by then, I anticipate that Uber will be forgotten and replaced by self-driving cars.