Jay Thompson is a former brokerage owner who spent the past six years working for Zillow Group. He retired in August 2018 but can’t seem to leave the real estate industry behind. His weekly Inman column publishes every Wednesday.
Last week, Realogy launched TurnKey in partnership with Amazon, and the internet swiftly lost its mind.
Wall Street took notice, too. Realogy’s battered stock “soared,” at one point trading at $6.40, up almost 25 percent from the previous day’s close.
But remarkably absent from the media frenzy is the fact that five trading days later, Realogy stock closed at $4.93 — lower than it was before the “game-changing” announcement.
But that’s all a subject for discussion some other time. This is about the real estate industry’s reaction to the collaboration.
It’s fascinating to look at how humans react to change, uncertainty, and doubt (along with a healthy dose of buzzword-laden headlines), and the reaction to the announcement of one new partnership — that is, in effect, nothing more than a lead generation play for Realogy and more revenue and market share for Amazon — provides an interesting glimpse into the current psyche of the real estate establishment.
The happy dancers
There were some very positive reactions, limited exclusively to Realogy brand agents and brokers. (Realogy includes brands like Better Homes and Gardens Real Estate, Century 21, Climb Real Estate, Coldwell Banker, Corcoran Group, ERA, Sotheby’s International Realty, as well as NRT, and relocation services leader Cartus. There’s also title, and probably more.)
There were comments scattered about the internet using platitudes like, “game changing,” “massive” and “separates Realogy brands from the pack.”
A significant portion of these glowing reviews came from people outside the 15 markets TurnKey is live in. While it’s almost a certainty that the platform will expand to other markets if it proves successful, the early praise seems a little odd.
It should be kept in mind that TurnKey is currently only available to what amounts to about 20 percent of all homes sold through Realogy-affiliated agents. And from what I can gather, not all agents in those 15 markets will be allowed to participate
The three home purchase price tiers the TurnKey site currently uses certainly cover a wide spread (from $150,000 to $700,000-plus), so it could be applied across a wide geographical/market swath. Growth seems likely, but only time will tell how, when and if the program actually expands.
It’s OK to cheer for your team, but you should be aware of what you’re cheering for.
Of course there are a few ready to dance on Zillow’s grave. Headlines like, “Amazon and Realogy gang up on Zillow to entice homebuyers,” help feed that frenzy. I know a little about how Zillow works and can say they’re fully aware of what Amazon is doing. Of course they’ll be watching this partnership along with the rest of the industry, but they aren’t losing any sleep.
Seems a sizable portion of the reactions so far fall clearly into the “meh” category. Generally these folks just don’t really care. It looks like it might be a way for some Realogy agents to get some leads. The mehs don’t look at this as the long-awaited and oft-feared Amazon entry into real estate.
They’re not brokering real estate. They don’t seem to be salivating over the demise of agents. They’ve built a pretty page that sits under Amazon.com that will undoubtedly attract a lot of consumer attention. Amazon is a marketing machine and fully capable of driving consumers to TurnKey.
That doesn’t spell the end of real estate as we know it. Not even close.
If you don’t work under a Realogy brand, this whole thing is a lot of hyped up talk that will swiftly die down, while quite likely funneling leads to Realogy, which will then pass them along to agents.
Ostensibly, and according to Realogy’s press release, consumers will be “matched according to the homebuyer’s profile” with an experienced agent who has “been selected based on their exceptional customer service record,” and are a “local market expert.”
I hope that’s the case. It would be good for the consumer, and the selected agent, too. Something tells me that it won’t quite be the fully vetted, hand-selected process it sounds like, but again time will tell.
I’ll freely admit that I fall squarely into the mehs category. I just don’t think this collaboration and TurnKey is that big a deal, and I don’t see it as a signal of Amazon’s impending entry into the real estate vertical.
Many disagree with me …
This crew feels that with Amazon entering the real estate space, all hope is lost. It’s only a matter of time until there are no more real estate agents, homes are traded like commodities, and your deed comes with same-day delivery as long as you click “buy now” in the next three hours and 20 minutes.
That feeling is out there, it started literally within seconds of the news breaking. Like faster than anyone could even skim an article.
Imagine that, people reacting and commenting based on nothing but a headline. Even eight days post announcement, there is still a tremendous amount of misinformation, and subsequent misunderstanding, about what TurnKey is, and how it works.
Here’s a perfect example I saw this morning, paraphrased for brevity:
“This is horrible. With Amazon just giving away Echos and Ring doorbells, they’ll just take over everything. We’re screwed.”
Take a deep breath.
For one, Amazon isn’t giving away anything. Realogy is buying the hardware, installations and all the other services. Where is Realogy getting the money to pay Amazon?
Where do you think it’s coming from? The agents in the program are paying for it in the form of higher splits: 40 percent to 60 percent depending on the situation and whose numbers you believe (though I tend to believe what the Realogy agents have said).
As already discussed, this is one collaboration with one company (albeit the one with the most agents) in 15 markets. Just 3,000 agents have been trained on TurnKey thus far. For reference, there are 1,342,627 Realtors (as of April 2019). That means 0.2 percent of agents have access to TurnKey (cut that fraction even more if you include non-NAR member licensees).
This isn’t the end
Sorry to say it to the doomsday crowd, but this Realogy-Amazon collaboration isn’t the end. It’s not over. Just like it wasn’t over when fax machines came out. Or buyer agency. Or the internet. Or Zillow. Or FSBOs. Or discount brokers. Or Redfin. Or Compass. Or iBuyers.
People are still buying and selling houses every day. Many swing by Zillow in the process. Some will funnel through Amazon. Others from here, there and everywhere.
If you are worried that someone who wants a free chat with Alexa and a $99 Echo (installed!) is going to put you out of business, well, you’re probably right.
On the other hand, if you’re providing world-class customer service, providing value and helping your clients, then you have nothing to worry about. If instead of fearing technology, or Amazon, or anything else, take the opportunity to learn from it. Adapt and flex your business and services. Then you can not only stop worrying, but you can also watch your business grow and prosper.
Jay Thompson is a real estate veteran and retiree in Seattle, as well as the mastermind behind Now Pondering. Follow him on Facebook or Instagram. He holds an active Arizona broker’s license with eXp Realty.