A trio of industry leaders discussed the latest trends in the real estate industry on Thursday, on the main stage at Inman Connect in San Francisco.
A trio of industry leaders discussed the latest trends in the real estate industry on Thursday, on the main stage at Inman Connect in San Francisco. The conversation covered a wide-array of topics including how technology is shaping the industry and what the future of agent commission will look like.
What’s trending in politics?
Despite strong gains in the economy, political uncertainty, at least in New York, has had a big impact on the housing market, according to the talk’s moderator, Clelia Peters, the co-founder and advisor of Warburg Realty and MetaProp.
Thaddeus Wong, the co-founder of the Chicago-brokerage @properties, agreed, noting that, political uncertainty has always created a bit of an unsettled feeling.
“Our hope was with the stock market and how incredibly inflated it is, that sooner or later people would take their money off the table put it back into real estate,” Wong said. “So far it’s not happening.”
Racquel Russell, the vice president of government relations and public affairs at Zillow Group, has spent a lot of time in Washington, D.C., and said Zillow constantly gets questions about whether the housing market will be impacted by the nation’s capital.
“I will say that most of the government officials, policy makers and politicians I speak to, their biggest interest is in trying to understand who today’s consumer is,” she said. “The most important thing to a government official is the consumer interest and what’s best for the consumer.”
What’s trending in tech?
Despite all the conversation and bantering about which companies have the best tech, Jay O’Brien, the co-founder and CEO at Client Giant, said there’s one place that all technology should be focused on: how to best serve the consumer.
“At the end of the day, it doesn’t matter who’s right or who’s wrong,” he said. “What matters is, if the consumer wants something, what’s the optimal way of getting it to them, and how are they going to feel when they get it? Those are ultimately the people who are winning in this room.”
Russell agreed, noting that she recently bought her first home, and the experience was overwhelming, so it’s important to focus on the consumer.
“When you think about your cell phone and you expect everything to happen immediately,” Russell said. “There’s an immediacy and a seamlessness that happens when you use your cell phone, whether you’re buying your dinner or groceries, calling an Uber or Lyft, and that is something consumers expect when they pick up their cell phone.”
She added, “We know that more and more consumers each day are starting their home shopping experience on their mobile phone, and so they’re expecting that same kind of immediacy and seamlessness.”
Despite working for a real estate technology company — and one where the homebuying process really does start online — Russell said she couldn’t have imagined buying her home without the help of an agent, which drew big applause from the room.
“He was basically my therapist for four-and-a-half months,” she said. “He sat with me side-by-side through that experience … I can’t imagine going through that experience without that person.”
Wong said it’s important to accept the other technology companies in your marketplace and not hold onto listing data as your only value proposition. He said he has the Redfin app on his phone and thinks it’s awesome, but not everyone that uses the app ends up using a Redfin agent.
“Anything that’s going to enhance the consumer experience at the end of the day and give them a better quality product, I’m all for it,” he said. “The days of holding onto data and thinking our value proposition is actually finding the house — if that’s your value then you’re really valueless.”
What’s trending in agent commissions?
Wong said the industry needs to be prepared for a commission suppression.
“Nobody is really saying gross commissions are going up,” he said. “If somebody says that, it’s a unique situation. Everybody knows over time we’re going to see a decline in the gross commission. And smart businesses are preparing for that.”
Some smaller companies are even seeing it as a time to exit the industry, especially if a bigger company comes looking for acquisition.
O’Brien said, it will all depend on the services that the agent can provide, comparing it to a Walmart and Nordstrom quality versus price scenario. At the conference, he met an agent who was charging 8 percent commission – the industry average is 6 percent.
“His whole thing is a 100 percent concierge service,” O’Brien said.
The agent tells their client, not to do anything — don’t clean, don’t fix the house up, don’t move anything.
“And that is unique,” he said. “There’s plenty of people who said, ‘Yeah, I’ll pay 8 percent.’”