Many in real estate likely read with satisfaction Teke Wiggin’s story about Xome being placed on the auction block. Another real estate start-up bites the dust — the latest in a long line of them. By extension, that means the traditional brokerage model persists. And that traditional real estate remains to be alive and well.
In fact, Wiggin led off his story by writing:
“New, well-funded real estate tech ventures have reached a fever pitch lately, promising to change the world. But over the years, these grandiose undertakings often sputter or fail and are broken into pieces — never to realize their promise.”
He’s not wrong. The past decade is littered with startups that bubble up, promising to change real estate and then fail. But it’s incredibly dangerous for those in the industry to become complacent and think that this will always be the case. It won’t.
Things will change. In fact, they are changing now.
When Wiggin referred to “new, well-funded real estate tech ventures” that have “reached a fevered pitch lately,” I immediately thought of Opendoor and its new model, and you might have done the same. And maybe you reached a similar conclusion that assumed that Opendoor would be the next to fail.
But there I disagree.
Although real estate continues to resist the evolution of the consumer real estate experience, the home transaction and how we serve consumers are changing quickly.
This not about discounting an existing offer, this is about changing the offer and the process entirely. Options for consumers have changed. We all know this because at our core we are consumers.
Who do you know under the age of 40 who uses taxis anymore? Lyft and Uber took away the pain points of riding in a taxi — bad service, no air conditioning, broken credit card machines — and consumers aren’t going to look back for a taxi.
Further, Google Voice and Amazon Echo allow us to truly multitask. We can find out how many cups to a liter while our hands are covered with flour and carry on cooking.
We can ask about the weather or play music without ever touching a button. And everyday, the functionality of these devices is being enhanced with the goal of enhancing the consumer experience.
In this new world, do we really think consumers are going to be alright waiting for agents who don’t return phone calls, having to wait to see a home that just came on the market, dealing with “papered” transactions and closings that take 30 days or more? They are not.
Real estate is going to be forced to catch up because consumers have gotten used to unprecedented convenience. Consumers are disrupting real estate, and companies like Opendoor are responding — with success.
Think about this point. In late December, Mike DelPrete did some number crunching and estimated that Opendoor was on track to sell 1,000 homes in Phoenix last year and that those numbers were rising quickly.
Double that number this year, and it’ll be claiming more than 2 percent of the for-sale homes in the market. Why? It’s simple.
Because it makes the transaction easy for the seller.
As an industry, we have a clear choice to make. Are we going to stand by and complain while companies like Opendoor listen to the consumer and eat our lunch in the process?
Will we stand by the assumption that everything is fine and consumers are happy with what we do and how we do it? Or will we think critically about everything we do in agreement that we need to evolve and reassess our value proposition?
This industry suffers from too much complacency, constant fighting and a strong resistance to the type of change that is going to take us on a march headed directly toward the tar pits.
What the residential real estate brokerage industry needs to do now is to “listen to these actions.”
We need to embrace change and look for our own avenues to be a part of that change.
It all starts with the same principles that great agents have always lived by in reducing the consumer’s pain points and working to make the process more organized, transparent and less stressful.
But we also need to go a step further.
Are there new business models or technologies out there that we can leverage? Not every startup is anti-industry by design.
Do you have clients who really need to sell quickly? Make sure they know their options, but think of ways to keep adding value.
There are mortgage companies out there that guarantee shorter time to closing, which makes a traditional home sale a much more appealing process.
Do your homework, evolve your businesses and work to always put the consumer’s interests first. These new models are wake-up calls; now, more than ever, our future depends on our ability to evolve.
Kenneth Jenny is an expert in the residential real estate brokerage industry and real estate marketing.