The iBuyers are going to improve their algorithms. They’re going to push their prices closer to market rates. And they’re going to get better and better as they eat up more of the real estate industry.
That was the future envisioned by a number of real estate leaders as Inman Disconnect in Palm Springs wrapped up Wednesday. In a wide-ranging discussion on a legion of issues facing the industry, company heads, brokerage leaders, and other key players kept returning again and again to disruptors like Opendoor, Offerpad and Zillow — all of which are rapidly building business around the quick cash offers model.
“Do we not think these companies won’t get the price closer to retail?” 1000watt CEO Brian Boero asked a crowd of attendees who were gathered beneath a sprawling white tent. “Most reasonable people would say, ‘Yeah, they’ll probably figure out a way to do that.'”
Boero had made a similar point a day earlier during a smaller group conversation, and in each case his thesis was that iBuying, generally, will overcome some of the most common obstacles — pricing, for example, or valuation — that restrict it right now. During smaller conversations Tuesday, people in the group predicted iBuying could eventually grow to include as much as 30 percent, 40 percent or even more of the national real estate market. Even the skeptics in the room — who were in the minority — seemed to agree that iBuying still has plenty of room to grow.
On Wednesday, as Boero painted a future in which iBuying becomes more advanced, members of the crowded nodded along in agreement. They also kept bringing the discussion back to iBuying.
“What are the ripple effects for the buyers?” Shelley Specchio, CEO of Mibor Realtor Association, wondered of the cash offer model.
“Is buying right for the seller? Is it right for people to spend as much time on Facebook as they do?” Michael Doyle, a managing broker of Windermere Real Estate Company in Seattle, asked. “I think it’s important that we get back to remembering that these are consumer driven things.”
Others in the crowd raised still additional questions, but Boero said that while it’s clear iBuying is having an impact, it also doesn’t spell the end of traditional real estate models.
“We all kind of agreed that these new companies were going to take a big bite out the market in the future and everybody was kind of comfortable with that,” he said of his conversations about iBuying at Disconnect. “What ever happens through this disruptive cycle we’re going through you’re going to be fine. If you’re really good at what you do you’re going to be fine.”
Jerry Coleman, a co-founder of iBuyer Offerpad, was also in attendance Wednesday and spoke up in agreement, saying that “human touch and relationships” will continue to play an important role in real estate for the foreseeable future.
“As some of these new models emerge,” Coleman said, “competent, successful people who are adding value to the transaction will continue to be successful.”
Wednesday’s conversation didn’t reach a clear consensus about iBuying, other than that it is a massive trend in the industry and that its impacts have not yet been fully realized. The conversation also ranged to a number of other issues. Here’s a sampling of what came up:
Change is coming, but not everyone actually wants it.
If Disconnect had one overarching theme, it might be that real estate is changing, and doing so quickly. But Jim Walberg — a Compass agent based in the Bay Area — argued Wednesday that while many people claim to be in favor of change, their enthusiasm wears off when the disruption comes for them.
“There’s still segments within our industry that are up for change,” Walberg said. “They just don’t want it in the space that they’re in.”
Consumers want better experiences.
The consumer real estate experience was another recurring topic at Disconnect, and during Wednesday’s conversation Jessie Beaudoin — CEO of lead automation company CallAction — argued that consumers are having positive, tech enabled experiences in a variety of other facets of their lives. And that means the real estate industry needs to respond accordingly by improving the experiences it offers.
“We’re competing agains the rest of the world, not just within our own industry,” he said.
Consumers are also getting smarter, and want more transparency.
Beaudoin also argued Wednesday that consumers have a better understanding of real estate transactions, and the industry should confront that fact head on.
“People are going to start to question what we do,” Beaudoin said. “We need to speak to this intelligently as an industry and confront it first and lean into it and not be defensive about it.”
This point — that consumers are more empowered and knowledgable — came up in a number of conversations over the course of Disconnect, with multiple attendees urging colleagues to take a more direct approach to various parts of the consumer experience.
On Wednesday, Jeff Corn, CEO of real estate imaging company Virtuance, suggested this idea applies to real estate commissions.
“I don’t think we’re being authentic in suggesting that buyers don’t pay the buyer’s commission already,” he said, admitting that such an argument probably wouldn’t make him popular. “That is an industry norm, to say that it doesn’t cost anything. I think buyers are getting smart to that.”
But Corn argued that the real estate industry now faces a new reality, and that ultimately professionals have to embrace that. And while everyone may not have agreed with Corn’s specific point about commissions, it was clear everyone agreed change is remaking real estate.
“You look in particular at the newer companies, the new money coming in,” Corn added. “The whole world is run on change.”