CHICAGO — Both the outgoing and incoming CEOs of Coldwell Banker agreed Thursday that iBuying will be a “small component” of the real estate marketplace in the future, though they also said that disruptors offer valuable insights for established brands.
In a conversation with Inman Thursday at Coldwell Banker’s leadership summit in Chicago, current CEO Charlie Young said that there are a number of disruptive and “destructive” forces in real estate that are both “really powerful” and “really important.” Young described iBuying as the “biggest foundational change” among those forces, and he said that it is altering “the way we go to market.”
However, despite seeing iBuying as a major new development in real estate, Young also doesn’t believe the trend will actually grow to take up a significant part of the market.
“Do I think that iBuyers will be 50 percent of the market, 70 percent of the market?” Young said. “I don’t.”
Asked how big he thought iBuying could ultimately get, Young replied that “I think they will be a small component of the marketplace.”
A moment later, Ryan Gorman — who is currently CEO of NRT but will take over a newly recognized Coldwell Banker in January — agreed, telling Inman that he too sees iBuying growing to become merely a small part of the overall marketplace
“Look at the most mature iBuying markets today,” Gorman said. “They’ve actually declined in percentage and volume. And the iBuyers in those markets have yet to figure out how to actually make a profit.”
Gorman didn’t mention any markets or iBuyers by name, but the trend has become particularly popular in a number of Sunbelt cities such as Phoenix, several Texas metro areas, and Atlanta. The trend was pioneered by startups such as Opendoor and Offerpad and has more recently seen serious plays from companies such as Zillow and Redfin.
Realogy, Coldwell Banker’s parent company, launched its own version of an iBuying program in 2018, and then earlier this year expanded the program.
But while both Young and Gorman seemed to indicate iBuying would remain something of a niche business — a sentiment that other real estate executives have expressed as well — they also both said that its growth offers a valuable lesson about today’s market.
“There’s a consumer insight to come out of this,” Young said. “The insight is that consumers would like a simpler and easier process.”
Gorman added that “that’s an insight that with scale and intelligence about this business, can be exploited to deliver way more value for consumers and agents.”
Asked about other disruptive trends in real estate, Young dismissed many as “noise,” saying that among other things the influx of Wall Street money would eventually go away.
During an opening session at Thursday’s leadership summit, Young had also said that Compass — Realogy’s increasingly bitter rival that is funded by billions from high-rolling investors — was spending “stupid” money. Young later declined to elaborate to Inman on what made Compass’ spending stupid, though Gorman added that Realogy has been “pretty clear” what it thinks of its rival in an ongoing lawsuit.
That lawsuit accuses Compass of unfair business practices and of trying to effectively create a monopoly. Compass has denied the allegations, threatened to countersue and accused Realogy of lashing out due to poor stock market performance. The suit is ongoing and both Young and Gorman declined Thursday to go into detail about the case.
Other “foundational changes” impacting the industry according to Young include eXp Realty’s use of virtual office space and the rise of data and predictive analytics. Young said that in the former’s case it’s still too early to know what impact it’ll have. And in the latter case Coldwell Banker’s own products such as CBX have made it a leader in the space.
Young ultimately argued that “it’s incumbent on us now to understand the disruption,” but that Coldwell Banker has a long history of leading the industry through periods of change — and will survive this one as well.
“I believe that brands, led by Coldwell Banker, will come out the other side and still be relevant, key, leading players in the business,” Young concluded. “I think we will come out on the other side still leading.”