Tim Heyl, a mega agent with Keller Williams and a budding tech entrepreneur, argues that the residential real estate industry’s business model is going in two directions and that successful firms don’t want to be caught in the middle.
Redfin and Opendoor, which are both focused on putting the consumer at the center of the residential transaction, are at one end of the spectrum. They both run efficient business models with salaried employees.
“Redfin is this super-efficient, controlled business model and Compass is this super inefficient, uncontrolled business model that is looking to increase commissions,” said the Keller Williams team leader. “You want to beat Compass, or beat Redfin, but anything in between those two companies is the messy middle.”
“As companies, we fail if we’re in between those models,” Heyl added.
He made the remarks at a CEO Connect panel at Inman 2019 Connect, Las Vegas on Tuesday.
Heyl believes Redfin and Opendoor will resemble each other in the next five to 10 years.
As someone who currently runs two businesses now, with an agent team and a startup, he’s existed in that messy middle. One of the biggest mistakes he made was “building his business completely around the agent,” he said.
Companies that put the consumer at the center and fought against the traditional transaction are the ones that have gotten unlimited access to capital.
Sarah Kirsch Richardson, the CEO of Tru Realty, disagreed slightly on the differentiation between Compass and Opendoor, saying that she believes it’s SoftBank — the venture capital fund that’s heavily backed both companies — that’s trying to “control luxury from the top down.”
The discussion stemmed from a panel at the invite-only CEO Connect event at Inman Connect in Las Vegas. The panel, titled, “You and The Instant Offer Movement?” focused on how agents can benefit from the iBuyer craze.
Richardson built her company in 2010, she said, to exploit the cheap property values in the Phoenix area. Phoenix has become a sort-of ground zero for the iBuyer movement. Richardson has fully embraced the iBuyer, with a call center in Chandler, Arizona, making 20,000 calls a week. She’s also made a big push toward education for agents.
“For us, it’s educating our agents on what they have to say in a listing presentation because if they’re not having a conversation with their sellers about iBuyers, or about what we can provide as a service, they’re probably going to lose the business,” Richardson said.
Craig McClelland, the vice president and chief operating officer of Better Homes and Gardens Real Estate Metro Brokers in Atlanta, is also operating in a crowded iBuyer space. His brokerage has more than 2,400 agents competing with the likes of Opendoor, Offerpad, Zillow and Knock.
“We are inundated with every iBuyer, every new program, every idea someone comes up with comes to Atlanta,” McClelland said. “We have 2,400 agents, my job was to find a way to explain, tell the story, weaponize the agents to still do business.”
“We don’t see this as a threat,” McClelland added. “We see it as an opportunity. We’re helping you through that”
One of the ways that BHGRE Metro was able to do that was through a partnership with zavvie, a tech startup that white labels an iBuyer comparison tool.
“Instead of teaching 2,500 agents how to submit an offer through an iBuyer, what we did that actually changed the game for us, was we hired [zavvie],” McClelland said. “We have one form the agents fill out. When they hit submit, it goes to a team that aggregates all the offers from all the iBuyers and it sends them back to the agent.”