Real estate in 2020 will stabilize into three categories of service, only one of which resembles the full brokerage model, panelists said Wednesday morning at Inman Connect San Francisco.
Warburg Realty President Clelia Peters, Zillow President Jeremy Wacksman, real estate analyst Mike DelPrete and Keller Williams group leader Vija Williams joined Inman founder Brad Inman in a roundtable to debate the future of real estate on the second full day of Inman’s conference.
“We’re going to see the brokerage business basically split into three layers,” Peters said to start off the discussion.
Those layers are a bottom layer of “full-tech disintermediation” where nearly every part of the real estate transaction is handled by technology, a middle layer of “discount/hybrid models” like Purplebricks and Redfin and a top layer that maintains the existing brokerage model, targeted toward high-value markets, Peters said.
“People will continue to pay the existing commission structure for the equivalent of a private wealth manager,” Peters said.
Not every panelist agreed with Peters’ analysis — although over 90 percent of the audience at ICSF said they did when polled during the session.
“Innovation never comes from doing things cheaper. The iPhone, the Tesla, these things come from doing things better. You’re going to pick a level of service that matches you on your terms,” Wacksman said. “Most people buy a house once in their life, you’re not going to cheap out on that transaction.”
DelPrete disagreed with the three-layer analysis entirely. He said that the psychological importance of buying a home will keep consumers looking for the full agent experience, even on the lower financial end of the spectrum.
“The thing that is holding us back is not technology, but psychology. The technology is here,” DelPrete said. “They’re still going to want someone to hold their hand, even if it’s the low-value end.”
Williams added that within brokerages, she expected there would eventually be fewer agents and fewer teams, but bigger teams.
These sweeping changes started happening in the real estate industry after the entry of Zillow and Trulia with accessible listings a decade ago turned real estate professionals from “guardians of information” into “professional service providers,” Peters said.
“We failed to change along with the experience our consumers were having,” Peters said.
The three categories of real estate discussed by the panelists didn’t single out iBuyers like Opendoor, Offerpad and Zillow’s own Instant Offers, although those services would likely fall into the “bottom layer” of full-tech services.
While the panel’s forward-looking title “Real Estate in 2020” sounds far off, 2020 is really only a year-and-a-half away. The changes described by the panelists are almost here.
“There will be a greater pressure on brokers in that [high-end] tier to really deliver their value,” Peters said.