Tech, teams and the total cost of competing

The ‘billion dollar question’ might just have a $945 answer

On the heels of Inman Connect, I’ve never been more certain that big money is not the solution to simplifying the real estate ecosystem and improving the customer journey.

The hostility between industry leaders is escalating.

Ryan Gorman, CEO of NRT, criticized rival brokerage Compass as “taking advantage” of agents in an email to his executives. “I can no longer remain silent as entrepreneurs’ livelihoods are put at risk.”

Keller Williams CEO Gary Keller slammed VirBELA, a virtual education company recently acquired by rival brokerage eXp Realty, comparing it to Donkey Kong.

The Agency co-founder Mauricio Umansky derided Purplebricks’ agents, referring to them as “plumbers” who can’t offer what a traditional agent can.

Do you know what this tells me? No one has the solution. Not even with billions pouring into real estate tech. There’s too much fragmentation.

Can a real estate brokerage create an end-to-end platform that will meet the needs of 50 states, 1,000 offices, and over 150,000 agents? Hmm, no.

During Brad Inman’s interview with Ryan Schneider from Realogy and Robert Reffkin of Compass, I felt he was begging them to state their unique value proposition. I heard a lot of generalities. What I didn’t hear is a business altering, organizational structure or an economic model that would be truly transformative.

Look for the wins

Without question, there have been successes. The iBuyers have created a new market segment and proven that consumers will pay more for convenience. But even in their most mature markets, that represents less than 5% of all transactions. What about the other 95%?

Do you know what is working? Teams.

  • According to Real Trends, annual transaction counts from 2011 to 2018 increased 117% for the 250 top-producing teams, while only increasing 13% for the top producing individuals.
  • Today less than 25% of Realtors are on a team but account for an estimated 40% of the residential sales volume, according to the NAR Teams report.

The reason behind their success is no secret. No solitary human is good at process, sales, marketing, and technology. That’s unicorn status. But with a team, they can accomplish on a small level what is too complex to accomplish globally: a refined ecosystem that meets the needs of their clients.

Common challenges. Common solutions. Extraordinary results.

If you don’t have a CRM, real estate is a hobby, not a business. Virtually all successful agents have systems: workflow automation, integrations, IDX website, operational intelligence, power dialers, in some cases AI assisted advertising.

Average cost of a CRM: $475 annually, plus leads starting at $500 per month and variable pricing for branded ads.

Engaging leads quickly and setting in-person appointments dramatically increase conversion rates. An agent is 238% more likely to convert a lead if they’re the first agent to make contact. They are 21 times more likely to convert a lead if they contact them in the first 5 minutes. How do they accomplish this?

Average cost: About $195 a month plus $5 per lead processed.

They have to nurture their network. Over 80% of home sellers state that they would be likely to work with the same agent that sold their last home. 12% do.

Average cost: $50 a month.

Total monthly investment: About $945. Now you can focus on your commission split.

But speak to someone who has just bought or sold a home and they will tell you it took longer than expected, cost more, and was stressful. Because it continues to exist in three distinct silos: real estate agent, lender, and closing.

I compare this to being picked up in a limo, dropped off in a rat maze, and then carried for the remainder of the journey in a wheelbarrow full of chicken manure.

JetClosing is redefining the closing process. Built from the ground up with highly defined processes, we leverage technology to provide transparency resulting in an efficient, stress-free digital experience. Every transaction, every time.

Cost to the agent: $0.00

It’s not the least bit surprising that a prolific industry like real estate is awash with companies all seeking the holy grail that technology represents. Especially given the seismic shifts in consumer behavior. The billions of dollars being spent to win this race may very well be worth it in the end. Personally, my money is on the company that solves the question of the customer journey and how their product makes it less expensive, more transparent, and easier to manage.