End-to-end times: How the all-in-1 platform became the holy grail

On the heels of our first-ever Agent Appreciation month, Inman is leaping into February with our Residential Finance theme month. Join us as we investigate how buying and selling a home is changing, from companies backing consumers in new ways to integrated services that handle the entire transaction.

Table of Contents

• How big a deal is this trend?
• Why is this happening right now?
• How do companies’ platform strategies differ?
• What does all of this mean for agents?

Not long ago, Zillow’s chief industry development officer Errol Samuelson was talking to one of his company’s customers. The man, a Southern California DJ named Tim, was relocating to the Phoenix area and opted to sell his home to Zillow Offers, the firm’s iBuying division.

The transaction went smoothly. So smoothly, in fact, that the man decided to use Zillow Home Loans to get a mortgage for his new place and, Samuelson said, ultimately wanted to buy a new house directly from the company.

“He wished that there was a Zillow home in the neighborhood,” Samuelson recently told Inman. “He said, ‘The peace of mind I would have had to buy a Zillow-owned home would have been much greater.”

The man’s experience became a small marketing nugget for Zillow, but it also highlights a fast-growing trend in the real estate industry in which consumers turn to one company for more and more of the real estate experience. A generation ago, a transaction might have involved a buyer, a seller, two agents at different brokerages, and various companies to handle things such as lending and escrow. But today, one firm like Zillow may end up providing nearly everything a consumer needs. And they may do most of it through a smart phone app to boot.

Companies today, in other words, are building end-to-end platforms: Comprehensive service ecosystems that, eventually, their customers may never have to leave. Though most of those platforms are still relatively new and have gaps in just how much they can do, more than half a dozen industry executives and observers who spoke to Inman for this story agreed that these platforms represent one of the most significant trends in real estate right now. And while the outcome of the trend is still unknown, what is clear already is that these platforms are already reinventing the consumer experience and forcing agents to evolve.

How big a deal is this trend?

Throw a dart at a list of every North American real estate company and you’ll probably hit one that’s working on some form of comprehensive service ecosystem. It’s a big deal.

“I think this is the driving force in the real estate market today,” Nate Baker, CEO and co-founder of title startup Qualia, told Inman. “By a lot. There’s vertical integration happening because there are a lot of companies out there saying, ‘We’re going to go win the consumer.'”

Baker’s own company offers an example: The firm started with a product to streamline the work of title agents, but has steadily expanded its services and, among other things, now works with agents and their clients as well.

“We started with the title agent and built a platform that brings all the different participants together,” Baker explained.

Similar expand-and-conquer projects are currently ongoing at most of the biggest names in real estate.

Zillow, for example, doesn’t just buy and sell houses now as part of its iBuying project, but has also expanded into lending for buyers. And of course that’s on top of its portal, where buyers can both look at houses while also finding agents — an experience that feels natural today but which historically did not happen all at once and in one place.

Like Zillow, Redfin, too, operates a portal where buyers can begin their search. But Redfin also employs its own agents, offers mortgages, fields direct offers from unrepresented buyers and has its own iBuyer, among other things.

Asked if such efforts represent a pattern in the real estate industry, Redfin CEO Glenn Kelman replied, “I hope it’s a trend because we’ve bet so much on it.”

If Redfin and Zillow represent portal-ish companies expanding into more traditional lending and brokerage spaces, there are also legacy firms growing in the opposite direction. Keller Williams may be the most explicit example of this. The company has for some time now been working on a consumer-facing app that will include features such as search and transactions. The app finally debuted this week, just days after company President Josh Team told a gathering of Keller Williams personnel that the goal was to emulate the portals.

Significantly, the app also integrates into Keller Williams tech platform Command. The idea is that agents and their clients are working within the same system, and that the chaos of cobbling together different tools is reduced. And during his remarks at Keller Williams recent conference, Team said that the goal was explicitly to build an “end-to-end platform.”

 

That goal has been a long-simmering one at Keller Williams. Command launched last year, but prior to that, the company debuted Keller Cloud in 2015, Keller Mortgage in 2017 and an artificial intelligence-powered assistant dubbed Kelle in 2018. When all those pieces are put together — as they increasingly are via the company’s platform and app — they represent one of the more significant investments in an end-to-end platform in the industry.

Realogy, too, has aggressively expanded its services in recent years. The company is best-known for owning prominent brands such as Coldwell Banker and Century 21, but it has also built out a suite of tech products and embarked on mortgage ventures, among other things.

And these efforts aren’t limited to the very biggest names in the business. Just last week, for example, Ben Kinney Companies announced it was launching mortgage, title and escrow services. The firm has an established history of scooping up other companies and expanding beyond the typical brokerage model, but specifically described its new mortgage product as “revolutionary.”

“Its revolutionary value proposition to consumers is: no lender fees, no origination fees, no processing fees, no admin fees, $1,000 credit at closing and extremely competitive rates,” Ben Kinney Companies said in a statement.

The company’s title and escrow services charge an $800 flat-fee, “which includes courier, wire, doc prep, and remote signing without additional fees.”

The take away here is that this trend is widespread, but also that it’s happening on specific fronts. These companies are expanding their footprints incrementally, in smaller-but-targeted ways that they hope will solve one particular problem after another.

Samuelson summed this idea up for his company by saying Zillow’s goal is focused on individual pain points rather than the entirety of the transaction.

“It’s not, ‘Should we build an end to end platform?'” he explained. “But rather, ‘How do we look at individual pain points in the transaction and how do we eliminate them?'”

Why is this happening right now?

The short answer is that buying or selling a house is tough, and many companies see an opportunity to make money by streamlining that process.

But the longer answer is that there are a few very specific forces driving this push to create an end-to-end platform.

One of the most obvious propellants behind the trend is the influx of big money into real estate. Vik Chawla, a partner at venture capital firm Fifth Wall Ventures, noted that a number of investors are currently backing companies building platforms — which makes sense.

“Venture capital has rightly pointed out that real estate is a huge transaction, but it’s easier to buy a package on Amazon than to rent an apartment or buy a home,” Chawla said. “Venture capital said, ‘Let’s use our capital to unlock other types of business models.'”

Additionally, Chawla explained, the reason so much of this capital has poured into technology-oriented products like platforms — or the companies that build them — is because software is relatively easy to create compared to other types of products while the payoff can be tremendous.

“The margin profile of building and selling software is very attractive,” Chawla explained.

Technology itself, regardless of its funding, is also a source of fuel for the end-to-end platform trend.

Samuelson explained that today “it may be easier and may be more cost effective to write software than it was maybe 15 or 20 years ago.” And he compared the idea of an end-to-end platform to Uber, saying that before the ride-hailing startup could emerge smartphones had to be invented.

“Uber might have been a great idea 20 years ago but it would never have happened,” he noted. “Uber would not have arrived without smartphones.”

In other words, a platform is the result of an evolving technology ecosystem. And today’s platforms are encompassing more of the real estate experience because foundational technologies — portals, phones, etc. — have advanced to the point that they’re enabling new products.

“There are two reasons that houses sell faster now,” Kelman said when similarly asked about technology. “One of them is that there’s a massive inventory shortage, but the other is that Redfin, Zillow and Trulia have an app on every adult’s phone.”

Kelman also believes there’s another factor contributing to the growth of end-to-end platforms: The real estate transaction, he argued, has actually gotten more difficult over the past decade, not easier. And more challenges are driving a growing demand for solutions.

“I think part of it is that the market has gotten more competitive,” Kelman said. “And then part of it is the credit market has changed. It used to be that you could get all kinds of loans, even when you had one house and wanted to buy another.”

Redfin’s own solutions, such as the iBuying service RedfinNow, are consequently meant to address the challenge of consumers facing a tougher landscape. The platform is a solution to a problem.

There are other factors at play as well. For example, some firms have simply become much savvier when it comes to their business model. Ben Kinney Companies, for example, not only now offers mortgages, but according to Director of Growth Vija Williams also has “rates that are super competitive.”

So how does the program make money?

“We make profit by selling the loan on the secondary market,” Williams explained. “The business model only works with volume.”

All of these factors — money, credit, technology, etc. — speak to the reasons behind the rush to develop platforms covering most or all of the transaction.

However, if you simply ask companies why they want to expand the services they offer, most have a fairly simple answer: They want to help consumers.

“We always want to offer a huge value add to the consumer first,” Williams said of Ben Kinney Companies’ efforts.

“At some point,” Kelman said of Redfin, “if you really want to be accountable to the customer and get them into that house, you start looking at the other pieces of the puzzle.”

How do companies’ platform strategies differ?

There are a couple of distinct philosophies available to a company when it sets out to build an end-to-end platform.

One option is to own every part of the transaction outright. That’s more or less what iBuying behemoth Opendoor is doing.

“If you don’t own the company,” Opendoor vice president Dod Fraser told Inman, “it’s very hard to have your partners align with you and grow with you as quickly as you may need them to.”

Opendoor, which has received massive amounts of venture funding, started out simply using its technology to buy homes for cash. However, over the years it has expanded into lending, as well as title and escrow services. Fraser explained that Opendoor built its home loan business from the ground up, though with title and escrow it initially used partnerships to bring those services onto its platform. Eventually, however, the company decided that offering its own in-house services would “unlock and unblock” the various obstacles consumers face.

“The reason we wanted to own it was scalability,” Fraser added.

The result is that some of the more arduous parts of the transaction now essentially happen in the background for Opendoor customers. And Fraser said that the response from those customers is that they wish the company handled even more of the transaction.

“In 2019, we consistently were hearing from our customers that they want more of a bundled experience, more of a curated experience,” he explained, adding a moment later that, “really building out that whole ecosystem, that whole marketplace, is that end goal.”

Other big companies such as Redfin, for example, have a similar strategy.

“Our thesis is that being a one-stop shop will prevail,” Kelman said.

But other companies are pursuing an approach based more on partnerships between companies. The title startup Qualia, for example, isn’t about to start employing agents like Redfin or buying houses like Opendoor. Instead, it’s working to build a platform that exists in harmony with other technologies created by other companies, such as REX and HomeLight, as well as title agents at smaller local firms.

Individually, then, Qualia and its partners may not aspire to the same level of control that Redfin or Opendoor do, but they are aiming to provide a similarly streamlined consumer experience.

“I think that even if you, your company, aren’t providing that, that you’re going to work with partners that do,” Baker, the company’s CEO, said. “The experience of really having an all-in-one easy, manageable transaction that happens in one place, which is straightforward — that’s the direction we’re going.”

Few players in this space, though, are absolutists.

Fraser said, for example, that Opendoor does want to build a comprehensive ecosystem, but that there will always be some services falling outside of its platform. For instance, Opendoor wants to be able to recommend moving or landscaping companies for its clients, but Fraser doesn’t anticipate a day when his firm hires an army of landscapers so that it owns that service outright.

And Samuelson, of Zillow, said that he envisions a future where the winning formula will “be a system where multiple parties can plug in.”

What does all of this mean for agents?

One big question that comes with the rise of these platforms is where they leave agents — especially those working at smaller companies that don’t have the resources to build their own platform. If a consumer can sell directly to Opendoor or buy straight from Zillow, will they still need an agent? If they can do everything inside of Redfin’s ecosystem, will the only agents left be those working at Redfin-scale companies?

The answers to those questions remain to be determined, but the good news for real estate professionals is that virtually everyone who spoke to Inman believes that agents aren’t going extinct thanks to platforms.

“I think our view is the agent will continue to play a role in the transaction, but it’s correct that the role is changing,” Chawla, the venture capitalist, said. “Twenty years ago, the agent was the only one who had access to the MLS. Now with online platforms, the information has become so much more readily available that the role of the agent has changed. It’s so much more about facilitating the transaction. But we do anticipate the agent continuing to play a role in the transaction.”

Eric Fontanot, president of Houston-based Patten Title, agreed that real estate professionals who operate outside the big companies will stick around. Like other executives, Fontanot has watched in recent years as various companies have tried to tackle more and more of the transaction. Those companies are streamlining the process, but his firm has focused instead on its core title operations, rather than on developing its own platform. It’s a kind of quality-over-quantity approach that Fontanot believes will continue to have appeal well into the future.

“I believe that there is always going to be a place for the high-end individual company who does an amazing job at what they do, who pours into the processes and puts in the time and effort,” Fontanot told Inman. “I do not believe you can get that through vertical integration. I think it becomes marred, the personal touch becomes lost.”

At a glance, Fontanot’s argument appears to be at odds with the popular view — at least among the leaders who spoke with Inman for this story — that big, techie ecosystems are the future. But in fact it may be that both can coexist. Kelman made that argument, comparing real estate to grocery shopping and pointing out that today big supermarkets have largely replaced specialty stores like butchers and fish mongers because they’re more efficient.

“The reason a grocery store has better prices is you only pay the rent once,” he explained. “But there are still people who go to a butcher for a really nice cut of meat or because they are kosher.”

And according to Kelman, the same thing may prove true of real estate.

Ultimately, though, it’s worth remembering that efforts to build an end-to-end platform are still nascent. Many of the companies pursuing this concept are less than a decade old, and even among the legacy firms, platform-building is a comparatively recent effort. It remains, in other words, an open question where all of this leads.

“The first thing that’s changing is how you find your real estate agent, how you find your lender, how you find your title company,” Baker said. “But I think we’re in very early days.”

Email Jim Dalrymple II