Steve Murray talks about the real estate tech arms race, a report from industry conferences, and brokerage priorities. Let's jump in.
From REAL Trends, the trusted source for real estate industry news, this is REAL Trending episode 38. We're breaking down trends of the week, and showing how they impact brokers and agents. I'm Steve Murray, president of REAL Trends.
Today, we're discussing the real estate tech arms race, a report from our conferences, and priorities.
The real estate tech arms race is fully engaged and underway. We recently attended both the Keller Williams family reunion, and the RE/MAX R4 conference, and you would think that the most important thing happening in our industry is technology, technology, technology, and who will develop, deploy, and integrate the first fully comprehensive database-driven artificial intelligence-guided tech platform of the real estate industry in the attempt to gain dominance over the real estate brokerage industry, one supposes. Gary Keller and Keller Williams made it a central focus of their conference.
Gary Keller and Josh Team, the new president and architect of the Keller Williams command platform presented three separate times with various discussions about the importance of the Keller platform, how it works, the rollout schedule, and everything else that goes along with it. Very impressive. This observer was able to sit front row and look at much of this system and hear the comments afterward. There was a tremendous focus on getting to this space first, grabbing space, or land if you will, and becoming the dominant firm blending both technology and a real estate brokerage network platform.
Not to be outdone, RE/MAX, at the R4 demonstrated many new features of the RE/MAX booj platform, which is being rolled out shortly and through the rest of this summer and into the fall. Tremendous features, from what we could see, a lot of positive reaction from the audience.
The main question we ask of all leaders in this industry is, at some point, people are going to understand and wake up that there will be four, five, six, eight different national organizations with relatively full functioning real estate tech platforms. They'll have everything embedded in there. We would count, perhaps Realogy, and Berkshire Hathaway, Keller Williams, RE/MAX, Redfin, who probably already has one of the most complete platforms, and Zillow, we can't count them out, they're coming at it from the other direction. Let's not leave realtor.com out of this either, their acquisition last year of Opcity signaled their intention to play fully not just in technology, but in lead generation and lead management.
What happens three to five years from now when there are six, seven, or eight large, well-funded national organizations with comprehensive tech platforms? A question we have posed to some of these leaders is you must assume that's going to be the case, and at that point then now what do people compete on? The speed, whether they're 5G, whether they have virtual reality, or augmented reality, or somebody's artificial intelligence engine is better than somebody else's? Might it consolidate the industry further around those companies who have such a platform?
Will any of that make a big difference?
We don't know the answers as we sit here today, but we do know from our consumer research, that housing consumers really do like using agents for their services. They really do like selecting agents on the basis of a relationship. They know one, or they were referred to someone from a source that they trust. Might that be affected? Might people use these powerful systems to engage with agents as opposed to making a personal selection? Will that make a big difference that somebody's tech platform is more integrated, is faster, has more data, is more intelligent than the other systems?
No one can say how this is going to turn out, but we do recognize that unless consumer behavior changes greatly in the use of agents, or how they find and select agents, which again is an unknown, it is also clearly unknown, whether one has the massively best tech platform in the industry or not, just how much of a difference it'll make in the performance of that network, and affiliate brokers who are associated. Not to mention future challenges that could come from giants like Amazon, Google, or people like them.
This is a report from the conferences, as we commented earlier when we talked about the real estate tech wars it was a fascinating experience to be able to attend and observe that Keller Williams Family Reunion followed by Leading Real Estate Companies of the World conference, and RE/MAX's R4. What we found overall was a great deal of cautious optimism among agents and brokers of these networks, about 2019 housing sales and what the market may look like. No one was ebullient about the prospects, no one expected a huge rise in sales, but most people we spoke to indicated a strong belief that the downturn of 2018 has cooled the market off a little bit, inventory is rising a little bit in most segments, in most markets, and that they felt, as of late January and early February, that there was a great deal of activity among buyers somewhat because of the mortgage rates backing off that there were a good flow of buyers out looking at real estate in the first several weeks of the year. Talking to others about what their main concerns were it was where do those interest rates go next? There are indications, of course, that the Fed may not raise again in 2019. Generally speaking, very positive, very upbeat.
Secondly, a lot of conversation among broker owners about downward pressure on gross margins and profit margins. Trends that have been going on for the last 3 to 4 years throughout the industry. Most brokers have experienced the same thing, a great deal of competition for top producing agents is the main culprit here. The fact that it's harder also for new agents to gain ground as they once did, and that a lot of new agents are joining teams as opposed to trying to go it alone are all factors contributing to these trends. A lot of consolidation discussion, a lot of questions about the valuation of brokerage companies, a lot of questions about merger and acquisition activity throughout these conferences. Very lively, generally upbeat, generally positive. There is some concern at the brokerage level about the economics of the brokerage business as we go forward into 2019.
Lastly, a comment on priorities. We heard at the REAL Trends Gathering of Eagles two years ago from Jim Collins, noted consultant and author of books like Good to Great, and Better to Best. One of his key points in his talk with the audience that day was that if you don't have priorities, or if you have more than three priorities you have no priorities. [That] really sunk into the people who were there, and to this observer. If you have more than three priorities you have no priorities. The question becomes, what are your priorities?
I'd like to make suggestions for brokerage, teams, and individual agents for 2019. When we get a down-sloping market or a flat market, if actually, you are not gaining share, you're likely losing share; concerning yourself with all the things going on in the industry that has no bearing on your performance is a colossal waste of your time. What Zillow, Redfin, Keller Williams, RE/MAX, or the national companies may do in technology is not much going to affect your business this year but this is a critical year.
For brokers, your priorities should be to focus on those things that will help get you more sales, more listings, greater revenue flow. That would be focusing on activities that lead to recruiting, increasing productivity among your agents, and cost control at the brokerage because if you can gain share in this kind of a market you will have a practice that is worth a lot more at the end of this year than it was at the beginning of this year.
For teams and agents the same kind of direction. Gary Keller said it best, said it probably 10 times at the Keller Williams conference for all agents and teams, essentially, your database is your business. For teams and agents, you better make sure you're attending that database and trying to grow it. Number two, that you are constantly in communication with your database this year in every way imaginable that makes sense to you, and the way you operate your business. Thirdly, you stay very close to those customers and watch what you're spending to make sure you're spending it effectively.
Let's call 2019 the year of priorities. The national networks have theirs, they've laid them out very clearly, which is technology, paying careful attention to their growth. For the brokers, I should be recruiting and developing talent, improving productivity, focus on activities leading to listings and sales, getting far closer to their agents than ever before, and watching your costs. For teams and individual agents: mind that database. Number two, mine the database, and get close to your customers, and watch your costs.
More on this later from REAL Trends. Learn more about industry trends, marketing, and technology strategies, as well as listen to past REAL Trending episodes on our website. This has been Steve Murray. Until next time.
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