REAL Trending Episode 48
2019 Gathering of Eagles Recap
Hi, this is Steve Murray reporting from the Grand Hyatt Hotel in downtown Denver at the 2019 Gathering of Eagles. This is a special REAL Trending episode number 48. What did we hear this week and why does it matter to brokerage companies and agents? The most interesting thing, I think we heard from technologists like Josh Team of Keller Williams, Ned Stringham of Inside Real Estate, Scott Smith of Constellation Real Estate Group, Jack Blaha from Lone Wolf technologies is this: Technology will be deployed by real estate organizations, whether national or local, to build a better experience for consumers. It’s not technology for technology’s sake. It’s technology to improve the interaction between agents and consumers.
2019 Gathering of Eagles Recap
Really, its main focus must be improving the experience for housing consumers, for buyers and sellers. I thought that was a real revelation that we’re beyond just talking about who’s got the best tech stack, which is the sexiest, which has the best pictures, which has the most terabytes, which moves the information the fastest, how well everybody’s integrated. It seems like the leadership, the real thought leaders, are now able to verbalize and explain that the purpose of real estate technology is to improve the customer experience in their relationship, particularly with the real estate agent whether they’re buying or selling.
Another big “aha” that we all discovered was that while it’s true that six, seven, or eight national real estate companies, Keller Williams, Compass, Redfin, Realogy, Berkshire, RE/MAX, Zillow, and others are likely going to build phenomenal national platforms, which integrate information from consumers, and properties, and sales, and neighborhoods. That those kinds of resources will be available to the independent brokerage if they have 25, or 50, or 80 agents.
Firms like Lone Wolf, and Inside Real Estate, and Constellation are almost complete building out those same kinds of platforms, which will be available for any brokerage company, in any market, of any model, of any size. It’s very, very critical as we move forward in the next three to five years. We heard some interesting input from the leaders of four of the major iBuyer companies.
The first one is they don’t like being referred to as iBuyer companies. The fact is nobody at this time could come up with a better name for them, so we’ll leave it alone for the time being. Look, according to these guys, some of the outcome of what they’re doing is they’ll be buying thousands and thousands of homes every month. Somehow through artificial intelligence, accurate data, long-term experience, they’ll be able to buy these things close to market value, and pay for the caring cost, and the selling costs, and the acquisition costs, and not lose money doing it.
Those of us who have any background in the relocation business or other functions like that, scratch our heads about exactly how that’s going to come about. With those kinds of razor-thin margins, granted, if they turn the same dollar four times a year buying four homes, and they only make a penny, so to speak, on each dollar invested, still what would be the benefit of earning 4 to 5 cents with the deployment of the tens of billions of dollars of capital it’ll take?
On the bright side, they voice the opinions, several of them did, that the impact of having instant offers or cash offers to buy homes may well, in fact, expedite and increase the number of homes being bought and sold each year. If you eliminate the friction and the cost of moving then people may move more frequently. They may trade more frequently. You know what? They may not be wrong. Some could imagine that rather than 5 million existing homes sales one day because of these companies, and those yet to come, we may end up with 7 million homes trading hands or 8 million.
Even if maybe they don’t pay full commission on one side of the transaction or another when they’re buying or selling these homes. By the way, most of them said they use agents. They use realtors on one or both sides of the transaction. I mean, that could be a real boon to the industry that nobody has ever written about or talked about before. We heard that yesterday from these leaders of the iBuyer industry.
Last thing we want to talk about, what did we hear this week? We heard this week that brokers remain optimistic about the future, concerned about the short term, not afraid of technology, not afraid of new entrants, dismayed with the short term impact of new low cost or more aggressive competition, but not bothered really all that much. Veterans of this industry know we’ve been there before.
It’s not like competition from people like RE/MAX 30 years ago, or Keller Williams 15 years ago, or Merrill Lynch and Sears 30 years ago wasn’t every bit as aggressive and threatening as that from Compass, or eXp, or Redfin today. There is a bit of head scratching as to why Wall Street investors pump money into companies that seem bent on losing money for years to come on the basis that someday they’ll get big enough scale that they can make a profit.
Gosh, you know, the truth is there’s still so much we don’t know about the future, but we do know this: 90% of all buyers and sellers last year used an agent. Two-thirds of them found an agent because they know one or someone referred them. Those two data points are the most important ones for every broker and agent to keep in mind as we look forward to the future. This has been Steve Murray, president of REAL Trends. Thanks for tuning in.