We see the headlines all the time: “Death of a real estate broker,” “Down with Realtors,” “Why some homebuyers are ditching a real estate agent and turning to startups.”
These are examples of news stories Drew Uher, CEO of agent matching company HomeLight, brought up at the beginning of a session called “Be The App Store, Not The App,” at Inman Connect New York Thursday. And he had an unsurprising opinion about them, given his customer base.
“These writers have no idea what they’re talking about,” Uher told conference attendees.
“Every year they say the same bullshit and every year agents are still here. You’re not going anywhere.” Attendees whooped and clapped.
Uher acknowledged that the real estate industry is changing and $10 billion is going into proptech.
“If you don’t want those headlines to come true, take all of the tools and all of the technology that’s coming out of this wave of innovation and view them not as a threat, but as an opportunity,” he advised. “If you take those tools and put them in your tool belt, you will become indispensable to your clients.
“To put this another way, if you want to own 2020 and beyond: agents, be the app store, not the app.”
He explained that an app is typically designed to solve one particular need, and once the consumer no longer has that need, the app is worthless.
Historically, agents have fulfilled the role of three apps for their clients: home search, home valuations, and home listing, he said. All of those functions are now either being fulfilled by tech companies, or in the case of iBuyers buying unlisted homes, starting to be fulfilled.
Agents risk “being deleted” if they’re no longer relevant, according to Uher. So he suggest five must-have “apps” agents should offer consumers in their “app store”:
1. Home financing that’s certain and guaranteed
More than a quarter of all closings end up either being delayed or falling out of contract altogether, Uher said, citing data from the National Association of Realtors. The top culprit is the mortgage, he said, noting that when he and his wife bought their first home the lender “just couldn’t close on time.”
“Fortunately, there’s some technology companies that have developed solutions for this,” he said.
“We basically will turn your buyer into a cash buyer,” he said.
2. Creative down payment assistance
Seventy percent of renters in the U.S. say saving for a down payment is their largest obstacle to homeownership, according to Uher. Agents should partner with rent-to-own startups such as Divvy Homes and ZeroDown to allow their clients to find a home they want, have the startup buy it, move in and pay the startup rent, part of which will go toward a down payment. They also offer the option to buy the home.
3. iBuyer offer
More than 80 percent of people want to look at an iBuyer offer when evaluating their options for selling their home, Uher said, citing data from the Houston Association of Realtors.
“But 93 percent of the same people ended up listing their home with a real estate agent,” he said.
4. Home trading
It’s very common that a client will need to sell an existing home before they can buy a new one. That kind of home sale contingency typically makes for a weaker purchase offer. But startups such as Orchard, Flyhomes, Reali, and, also as of this week, HomeLight, offer trade-in services in which they’ll buy the existing home from the seller and sell it to make buying the new home easier, Uher noted.
5. Liquidity without having to move
Homeowners often need cash but don’t want to sell. Startups are offering two solutions, according to Uher: Leaseback companies such as EasyKnock will purchase a client’s house from them, then rent it to them, and give them the option of buying it back later once they rebuild their credit and can get a loan to do so, he said.
Firms like Unison and Point offer a second option: fractional ownership. They buy a fraction of a client’s home and share in the home’s upside or downside when it sells in the future, according to Uher.
“I envision a world where every single real estate transaction is simple, certain and satisfying,” he said.
That doesn’t mean consumers want an instant home purchase. “They do not just want to push a button. They want to talk to someone who knows what they’re doing,” Uher said.
“This is a big transaction. They want to talk to someone who can give them reassurance that they’re on the right course at a very important moment in their life. Agents, they want to talk to you. But when it’s time to have that conversation, I urge you to come not as the app, but as the app store.
“If you do, agents, you’re going to be at the center of the transaction for many, many years to come.”