The new, successful models disrupting real estate these days are surprisingly similar across the world, global real estate tech strategist Mike DelPrete told Inman.
On Wednesday, DelPrete released a new study, “The 2021 Emerging Models in Real Estate Report,” which details emerging trends currently shaping the industry and the major players putting those trends into action.
The 152-page report’s sweeping scope covers a variety of topics, from case studies of successful models disrupting the industry in the U.K. — like fixed-fee online agency Purple Bricks — to national iBuyer trends, the rise of Power Buyers and more.
“It’s all really the same, and I think that kind of comes down to that we’re all humans and it doesn’t really matter what country we live in, but human beings have the same sorts of psychology that’s important to them when it comes to finding and purchasing shelter for themselves and their family,” DelPrete said in an audio file sent to Inman. “And a lot of that comes down to trust, a lot of it comes down to having an expert advisor or someone to guide them through the process.”
DelPrete said the most successful players currently moving the industry forward are balancing innovation with a human touch.
“So as much as people love to talk about instantaneous home transactions where you click a button and transact the house, click a button and get a mortgage, the reality on the ground is radically different — people don’t want that,” DelPrete said. “People want these models where they can see people face to face, shake their hand, go into houses and interact that way. So I’ve seen that kind of in a lot of different markets around the world.”
Highlights of DelPrete’s report include how iBuyers accounted for about 0.5 percent of U.S. market transactions in 2019, double the previous year’s transactions, and $8.1 billion of homes. However, iBuyer transaction volumes declined by about half in 2020, as a result of the pandemic. Still, iBuyers expanded into the Northeast in early 2021, a geographical region previously untouched by iBuyers.
Opendoor, which led the way for iBuyers in 2014, continues to be the biggest player in this segment of the market.
DelPrete also notes in the report how the last year has seen a huge rise in Power Buyers, or companies that help support buyers with incentives like cash offers, bridge financing or trade-in programs. As the market has increasingly leaned in favor of sellers during the pandemic, Power Buyers have become a more popular option for consumers. DelPrete’s report shows that Power Buyers Orchard and Homeward saw 150 percent growth in 2020, and over 300 percent growth into 2021.
In general, DelPrete explains in the report how traditional brokerages will need to spread their scope to support buyers, sellers, the transaction and the home search process through things like cash offers and bridge financing, good search portals, value estimates and instant offers in order to remain competitive in the future.
DelPrete also identifies Compass, Redfin, Purple Bricks and Opendoor as the four major companies in the industry creating the greatest disruption to the traditional brokerage model, with each occupying their own niche.
Redfin and Compass combined doubled their U.S. market share to 3 percent in 2019. But, DelPrete added that eXp Realty has grown its U.S. market share even more rapidly, and is now the third-largest broker by transaction count after HomeServices of America and Realogy (Compass and Redfin follow eXp). The company’s aggressive agent recruitment has allowed them to grow so quickly, and as stories published on Inman have pointed out, a number of teams have flocked to the brokerage recently.
In summation, DelPrete told Inman that one of the most interesting surprises he uncovered in the report is how traditional brokerages and agents are responding to big industry disruptors.
“What you don’t really read about, whether it’s on Inman, or the Wall Street Journal, the New York Times, or any other media publication, you don’t really read about how smart agents and brokers are launching their own programs to compete,” DelPrete said. “You don’t read about how smart agents and brokers are kind of coopting the best ideas out there and the best new models and taking them and making them their own — it’s really smart.”