Even as record amounts of capital flow into the real estate industry, Realogy CEO Ryan Schneider believes the future of the real estate agent is “brighter than people have been saying.”
“We expect that market data will show that agents are being used more than ever, both during COVID-19 and during this recovery,” Schneider said Thursday during Realogy’s third-quarter earnings call. “We are very excited to see the power of agents versus other models in the third quarter.”
“We remain focused on supporting the great agents who continue to be central to this very personal, very infrequent and very large transaction for the typical consumer.”
The disruptive business models competing with Realogy for transactions are also now realizing how central agents are to that transaction and are increasingly moving towards partnering with or hiring agents, Schneider said. With the largest agent base in the country between its own-side and franchise businesses, Realogy, of course, has a large stake in agents continuing to be integral to the transaction.
Schneider didn’t name those so-called disruptive models, but he did discuss iBuyers specifically. Zillow announced in the third quarter it would be using its own employee agents to manage its iBuyer transactions and both Opendoor and Offerpad have moved further into the brokerage space, offering real estate listing services.
“I would be remiss if I didn’t discuss iBuying given the substantial capital flowing into that business model,” Schneider said. “iBuying simplifies the transaction experience but we don’t believe it’s actually great for consumers since they pay substantially higher fees and get below-market prices for their homes.”
The competition, however, is here to stay, Schneider said. That’s why Realogy plans to scale up its own iBuying-like solution, RealSure, in 2021. Schneider called RealSure a “better way” to serve consumers considering an iBuyer.
RealSure, a joint venture with Home Partners of America, gives sellers an all-cash guarantee that they can accept within 45 days of listing their home, as a backup. RealSure Buy (previously known as RealSure Mortgage), essentially allows the homeowner to use a RealSure cash offer as collateral to purchase another home.
“Our RealSure program provides our agents with a differentiated offering to help them win listings,” Schneider said. “Our goal is not to put our capital at risk buying and selling houses, but to support our agents with products that help them stand out from the competition.”
RealSure is live in roughly a dozen pilot markets and Schneider said the company has plans to expand to a “substantial” number of new markets in 2021.
The bright future of the agent isn’t the only trend Realogy is tracking. COVID-19 has also led to more and more agents and consumers getting comfortable with using digital tools. Realogy, which owns a title business and has a massive technology operation, has benefited greatly from this trend, according to Schneider.
“We benefited substantially from the acceleration of digital adoption driven by COVID-19 in the last six months,” Schneider said. “We continue our work to reinvent the transaction, taking the learnings from this year as both agents and consumers become more comfortable using digital and virtual technology throughout the transaction process.”
Realogy is also continuing to invest in other parts of the transaction, which has led to the company capturing the economics of integrated services. The company’s joint mortgage venture with Guaranteed Rate, for example, generated $95 million in operating earnings before interest, taxes, depreciation and amortization in the third quarter of 2020.