While their approaches to brokerage strategy and technology differ, the power leaders of Keller Williams Realty, Inc., RE/MAX and Fathom Realty agree on one thing — they believe in the real estate agent.
“When times change and agents get scared, they look up and say, ‘Who should I listen to?’ What’s different this time is that there aren’t 500 technology intermediaries,” said Keller Williams Realty President Marc King to the audience at HousingWire Annual in Scottsdale, Arizona, noting that solid leadership during shifting markets is vital.
King was joined by Nick Bailey, president and CEO of RE/MAX and Josh Harley, CEO and founder of Fathom Realty on October 4 to discuss the future of real estate brokerage and highlight the different strategies each applies to building a brokerage technology platform.
King noted that between Keller Williams and RE/MAX, they have 30% of the transaction data out there. And, says King, “Data is the new oil.” And, to protect the Realtor, King says that Keller Williams is keeping its tech in-house.
Bailey disagrees, nothing that they are a brokerage, not a tech company, and they want to focus on what they do well.
“My position, or I should say “lens” on this, might be a little unique because, when I left the brokerage franchise side, I actually went to Market Leader, which is a SAS-based CRM, that was acquired by Trulia. That was a major moment in the industry because you had a portal acquire a CRM company. And, I was part of that transition-leading industry, and, of course, we all know how the story continued with Zillow acquiring Trulia. What I saw happening in the brokerage world is, ‘Oh my gosh, Trulia paid $344 million for Market Leader. They’re bringing in a CRM database to grab leads and stay tight with the consumer.'”
He notes that was a pivotal moment when brokerages decided they needed to build their own. And, he says, “There was a recruiting and retention advantage to that.”
Now that most major firms have a tech platform, that advantage isn’t there anymore.
For Harley, he says he was forced to build his in-house tech platform. “We could not charge the small transaction fees if we were paying for multiple third party tech platforms. Our technology allows us to streamline our operations, eliminate the need for offices, and minimize the need for employees to run the business. Since we own the technology, as we get bigger, our tech expenditures on a per agent basis actually decreases over time.”
Here are their three strategies:
RE/MAX moves away from in-house tech
A few months ago, RE/MAX made the decision to move away from Booj, a platform that they acquired in 2018, and implement a third-party platform now dubbed MAX/Tech, powered by kvCore.
“We’ve done a number of tech acquisitions over the last few years. I don’t believe tech is going to replace a real estate agent. I don’t believe tech is going to replace a loan officer (LO), but I do believe that an LO and agent that don’t use tech will get replaced. And, I think that that’s a fine balance.”
Bailey noted that, “There’s been a rush of companies that want to build their own, and I think this industry is guilty of trying to be ‘Jack-of-all-trades, master of none.’ And so, we’ve said, ‘Hey, here’s how we make sure that we’re not only profitable, but we’re here to stay’, which is to do what we’re good at, and that means partnering and outsourcing some tech. And we do that for our mortgage arm, and for the real estate side.”
He adds, “If we can pour our energy, time, and resources into our agents, helping each one be more successful, then we as a brokerage can be more successful. We’ll also be much more attractive to other agents, as well.”
And, he says, “Newsflash, folks. At some point, you have to turn a profit. We’re a real estate company, real estate franchise company that uses tech to drive business.”
“We built an asset-light business, focused on technology,” said Harley.
On the other hand, Harley, who runs a virtual, 100% commission that differs from the RE/MAX model, started his firm building an in-house platform. “We built our technology platform with an initial focus on streamlining and automating brokerage operations, rather than home search, which is where virtually every brokerage starts.”
He notes that in a down market, “You’ve got to cut your cost, you’ve got to cut the bloat, you’ve got to find ways to streamline your operations. And, that’s exactly it. So, we built a very asset-light business, focused on technology. Our technology allows us to streamline our operations, eliminate the need for offices, and minimize the need for employees to run the business. Since we own the technology, as we get bigger, our tech expenditures on a per-agent basis actually decrease over time.”
Harley notes that it’s “ultimately what allows us to charge small transaction fees and no monthly fees and yet achieve adjusted EBITDA profitability in our brokerage operation.”
King says, “It’s all about owning the data.”
King told the audience that Keller Williams fundamentally disagrees with RE/MAX’s position on technology. “Remember six months ago when data was new oil, and everybody was building their own tech, and then everybody got out? Well, here’s the reality, here’s what you won’t hear. Stock price is driven by short-term decisions. So, you see a bunch of people acquiescing their tech and giving their tech away.
“Data is the new oil, and suddenly we don’t need oil. We are going to push forward and do our own tech because we believe, long-term, we have to protect the agent. We [Realtors] don’t even own Realtor.com anymore. We trademarked the name and then we sold it. So, if you’re looking 10-, 15-, 30-years out, you need to be able to own and control your own tech.”
King notes that his main concern is that a third-party will sell to somebody down the road, much like Realtor.com did. “Yes, it’s stupid expensive [to build in-house]. It [costs] hundreds of millions a year to do this, and that’s why you see people backing out.”
However, King’s idea comes with a twist. “I don’t understand why every real estate company hasn’t come together to create their own. Because, it’s not a Keller versus RE/MAX, it’s about who do you want to fundamentally own and control your data.”