REAL Trending Episode 47
RE/MAX Beta Tech Platform, IBuyer Impact On Housing Market
Also: Marriott’s announcement that they’re entering the daily rental market or short term rental market.
REAL Trending Episode 47
RE/MAX Beta Tech Platform
So, RE/MAX announced that they’re entering the new phase with their new platform. Their acquisition a year and a half ago of booj is starting to pay dividends. They’ve been through the alpha testing stage with hundreds of agents, perhaps as many as 1,000 playing with it, giving input and helping design the ultimate platform. Now RE/MAX has announced they’re coming out into the beta version and will expand the number of agents to the many thousands who would be able to access the platform, play with it, make recommendations and changes to it. Adam Contos, CEO of RE/MAX, announced that the platform has some very, very strong CRM features and in fact much of the platform is focused on making contact management, relationship management and business flow the focus of what they’re trying to do in this first release.
It’s interesting that we now have a number of national companies joining the fray in the real estate technology arms race. Booj was known to be a high quality, among the very high quality, website providers to brokerage companies around the country so certainly their leadership and their development team, which has been substantially increased in size, has extremely good background in knowing what works for brokerage companies and agents. You could say that it’s baked into their DNA and now they’ve had well over a year of interaction with the RE/MAX executive team but more importantly, with hundreds if not thousands of RE/MAX real estate professionals who, as we all know, on average are more productive than most everyone else’s. It’s going to be a very interesting year to watch this platform roll out.
Two points to keep in mind, whether it’s Keller Williams or RE/MAX or Realogy or Berkshire Hathaway or any one of them, building the tech platform obviously is critical and getting input from agents and brokers is critical. What will be just as important is can they build a system that will overcome the reluctance of many agents and even some brokers to share their customer data with a database system, a big system if you will, that is controlled by a national franchise or corporate-owned system. That is a big question for the relationship between brokerage companies and independent contractor agents and teams and even more so between national franchisers and agents and teams. Because generally speaking, while a great CRM is useful, what I think we all come to realize now, it’s the aggregation of this data and it is the systems that can be built to learn from that data that ultimately will be most helpful to all agents and brokerage companies and franchisors in the coming fight for housing buyers and sellers.
’ll be very interested to see how RE/MAX proceeds through their beta version and what the reaction is from brokers and agents as they continue to expand the number of people that are using and testing and amending and making suggested fixes to the system. More on that later.
iBuyer Impact On Housing Market
Second, the iBuyer companies seem to be growing like proverbial weeds. We had Opendoor and Offerpad and then we have Knock and now we have Easy Knock and we have several others and we have local ones and we have Keller Williams also launching and expanding their iBuyer programs. Zillow, of course, is expanding theirs rapidly. So, we have 8, 10, 12 companies or more that are all going to offer this form of a service to consumers. As we’ve said before, we think it’s a great service. We think it’s great to have as an option for home owners who need certainty and need a short period and they’re prepared to pay via a discount in their home value or fees that they have to pay to access that kind of service.
The question, however, is with a slowing housing market, are they buying into a hurricane? Is it possible that they’re going to end up owning a lot of homes for a longer period of time than they had thought they might have to? And how does that effect their economics? Now, those of us who’ve been around housing a long time understand that housing recessions are like the sun coming up. They happen, they will happen again and no one can totally predict when they’re going to happen necessarily or how long they’ll last or how severe they will be or which markets they will affect the most. What we do know is most of the iBuyer companies are being very careful to stay in the entry level of the housing market, where there is far more liquidity than as you move up the housing price. For instance, Dallas, we’ve learned that at least one of the firms has limited their offering to sellers whose home prices are $300,000 or over.
That’s a very good hedge. Now, there is a problem with that if you’re talking about Dallas or Phoenix or Vegas or Atlanta and so on and so forth, which is well, that’s the strongest part of the market and most sellers don’t need to accept a discount for a quick sale of their home because there are dozens of buyers seeking those kind of homes what will pay full price in cash and close within 30 days. Well, there’s the benefit of certainty out the window as a benefit for iBuyer companies. And they’ve raised a ton of money so they can’t say, “Well, we’ll just sit this market cycle out.” What happens when they are forced to by their own investors start purchasing riskier homes? Number one, because they have to grow and growth brings its own risks, including growing when maybe you shouldn’t think about growing. Number two is, as we’re already seeing, time on market is starting to grow in many markets around the country, including yours truly’s Denver.
Now having said that, the MLS in Denver recently reported that there was a shocking increase in the time on market. As of the end of April, the time on market is now six weeks but that’s up from two weeks a few months ago. iBuyers will need to watch the pressure to grow their business into a market that’s slowing down and where the time on market for all categories of homes will likely stretch. Now, our faith is that these are professional people, that they have economic models and evaluation models and they’ll be careful about how they’re pricing these homes so as not to get caught holding hundreds of homes far longer than they thought. I suppose worse case is they could rent them at the end of that time.
Lastly, Marriott Corporation announced it’s jumping into the short term rental market to compete with Airbnb.
You know, you take a step back at Airbnb and you think about the impact of them and others like them and now Marriott jumping in is basically they’re using a finite resource, that is the number of residential rooms or properties available for rent, and in a much more efficient way matching a user for that space with that available space without having to actually increase the number of spaces. So, you could look at this and say, “We’re getting much more productivity out of the housing stock because we’re matching buyers with available,” as I said, “rooms.” We’ve interviewed agents who have a practice where they’ll buy an investment home and it’ll have three or four bedrooms as opposed to renting it to one person or one family, they’ll rent it to two or three different entry level college graduate people who don’t have the money to afford a full rental on an apartment or to purchase a home.
It’s fascinating that Marriott, it’s my belief and research, that they own and operate or own and franchise and operate more hotel rooms than any company in the world, is now seeing that this is a key market segment that they can exploit. How will this effect the typical brokers and agents out there? Well, you could look at it both positively and negative. It’s positive that a company with the credibility of Marriott and obviously the capital behind them is building out a system to match buyers and sellers. This may help investor owners. It may even help home owners who are actually providing inventory to Airbnb. There’s some of those people that may think. “I’m safer and feel safer doing it with a Marriott than I do with an Airbnb.” We’ll wait to see what the offering for Marriott brings to this market that may make it better from that point of view than, say, an Airbnb.
On the other hand, it’s another big company entering the housing market. Most people won’t think, “Oh, Marriott’s getting in the brokerage business.” Well, in a matter of speaking, this may be the first step of yet another company that’s deciding to look at a $70 billion marketplace and saying, “Is there an opportunity for us to play there as well?” Although you won’t hear that out of most people.
Learn more about industry trends, marketing and technology strategies as well as listen to past REAL Trending episodes on our website, www.realtrends.com/blog/. This has been Steve Murray. Until next time.