Brad Inman will be joining real estate’s leaders this April 8-10 for Inman’s annual retreat, Disconnect in the Desert, in Palm Springs. It’s an invite-only gathering, and tickets are limited. If you think we missed you, drop us a line.
A massive 8.0 earthquake is shaking the real estate industry.
Look no further than the CEO purge.
After John Davis exited Keller Williams last month, KW founder Gary Keller stepped into the top spot. Last year, Realogy named Ryan Schneider, a Ph.D., and data guru as its new CEO, who wasted no time before cutting and pasting the executive org chart. Schneider promoted the smart and sometimes snarky Ryan Gorman as NRT’s chief executive.
Earlier this year, after parading around a new logo, Century 21 CEO Nick Bailey was suddenly out, and Michael Miedler took over. Last year, RE/MAX turned to steady hand Adam Contos to take over for the iconic Dave Liniger.
Upstarts are not immune to CEO slashing. Likeable Purplebricks U.S. CEO Eric Eckardt departed last week, as the company stock plummeted.
All of which brings us to this bracing fact: CEOs running companies that control 60 percent of the residential real estate market in the U.S. are new to their jobs in the past year. It’s as if the mythical Greek god of all gods, Zeus, hurled his thunderbolt and roared: “Get rid of the old guys, and start fresh!”
And there’s the seismic rumblings at Zillow. Last month, Spencer Rascoff unexpectedly exited, and charismatic founder Rich Barton took over as CEO. Barton’s longtime business partner Lloyd Frink is the company’s new chairman.
With a CEO change comes new CMOs, CTOs, CFOs and COOs. Keeping up with the new faces can give anyone a headache. And that’s just at the top of the real estate heap.
On Main Street, changes are everywhere
Big and small brokerages are being bought and sold at record levels, according to M&A advisor Steve Murray. Three of the largest brokers in the country — Pacific Union, Allen Tate and Ebby Halliday — were acquired last year. Yesterday, Compass acquired the nation’s 7th largest brokerage Alain Pinel.
Teams are moving around like field mice, and top producers are switching affiliations faster than NBA all-stars. One veteran broker-owner told me, “Too often, someone walks into my office wearing that goodbye face.”
The industry’s technology companies continue consolidating, too. Tech firms are selling out at valuations high enough to dangle semi-retirement for the founders. Spacio, booj, Opcity, Contactually, Bold Leads, Smarter Agent, Open Listings, WolfNet, VirBELA and many smaller startups have been gobbled up by bigger partners.
Everyone’s scrambling to find their place in a new real estate world — an uncertain future that comes with a long list of daunting changes.
Everything in flux
Some of the largest companies are scrambling to win a platform race. Everyone is promising everything. This sideshow is a distraction, while bigger stuff is at stake.
For one, the industry’s mightiest platform, Zillow, is changing its customer offer, both how it delivers leads and how it charges for them. The money at stake is in the billions of dollars, as the online portal moves from a pay-for-lead model to referral fees. But even this move looks like the same old ham and cheese sandwich with a little extra mayonnaise.
More profound shifts are changing how real estate is bought and sold.
Agents and brokers face a formidable new market entrant, iBuyers, who often need less help from Realtors and who come touting a radical new consumer proposition.
The smartest private equity firms are invested in this new line of business. And Zillow, which owns the consumer online real estate experience, is investing like crazy in iBuying. Once feared for getting too close to the transaction, Zillow has become the transaction.
Will it bug homesellers if Zillow or Blackstone is buying their home? No.
Not just for Wall Street investors, iBuying is empowering consumer homebuyers as well. Ribbon, a new financing solution, guarantees buyers a cash bid, even if they need a mortgage. Middle-income buyers can now compete with the all-cash crowd.
Knock is offering a version of this for buyers, leveling a stiff-arm to home loan lenders. The old-fashioned, lethargic and mindlessly bureaucratic mortgage process seems ill-suited for the fast and furious home transaction.
With all iBuyers — institutions and consumer buyers — sellers are cashed out instantly. Like it or not, on-demand is coming to real estate. With data more ubiquitous and the process more transparent, consumers will adopt these new ways of buying and selling.
Here’s how it’s going down: Home valuation algorithms are becoming more accurate. Those who facilitate the sale — agents and brokers — and those who buy homes — iBuyers — will begin to use more standardized estimates.
Everyone will agree that my home in West Hollywood is worth X, give or take $5,000. With the price of my house resolved up front, I can focus on choosing which competitor makes the process more certain and my home easier to sell.
No more black boxes, no more lock boxes
Convenience, transparency and speed will define competitive advantage. Biometrics, smart contracts, virtual showings and instant offers will supercharge the new consumer experience.
Those who offer a streamlined process while protecting the customer will grab market share.
The legacy industry has been caught flat-footed on this phenomenon. NAR and other trade groups are eerily quiet on iBuying. Sadly, they squandered lots of good will and influence on big tech fails, like their once scandalous and now diminished role with second-place portal realtor.com; the embarrassing Upstream saga and the expensive and inconsequential RPR adventure.
New leadership is working hard to put the trade group in touch with its members, but where exactly does it stand on these seismic changes on how homes will be sold?
Companies today must be fortified with transformative leaders — not executives who hold on to the past, peddling fear and resisting change.
Agents should find enlightened leaders, visionary mentors and progressive companies to hang their brand. Never has emotional, market and technology intelligence been more important, at the top and at the bottom of the real estate pyramid.
Great agents will still be able to thrive, but only at companies where the executives are the opposite of complacent. Place your bets accordingly.