Here’s Why Agents Aren’t Going Anywhere
The role of the agent has thus far remained untouched despite advances in technology. How likely is that to continue over the next generation?
How Much Has Really Changed In the Last 20 Years?
Easily lost in the numerous changes throughout the real estate industry is the fact that the way in which homes are actually bought and sold has not changed. Buyers gather their finances, figure out what they’re looking for, hire an agent, look at some houses, make an offer, wait, close and move. Similarly, sellers have not had to deal with much changes to the “how-to’s” of home selling.
It would be quite easy to look across tech blogs, traverse startups, or ask anyone but agents and clients and think that agents are in serious danger of becoming obsolete. It’s just not happening. As hard as Silicon Valley wants to push, the role of the agent isn’t going anywhere, but change is certainly coming for what that role means.
With an already process-warping product, the internet has ushered in changes for how consumers search for homes, information is shared, and communications are created. Furthermore, Zillow recently announced its joining the fray of iBuyers, along startups such as Offerpad. Love it or hate it, tech-backed firms like Compass and Redfin are likely here to stay. The common theme? No matter how much tech you throw at the process, nothing can supplant the agent.
Redfin, which we’ve previously discussed, is an obvious candidate for discussion. By amassing an nationwide brand and army of agents, lowering the operating costs of a transactions and passing that savings on to consumers, Redfin is signaling that the future of the industry features fewer agents doing more.
By all standard accounts, Zillow has done exceptionally well and has built a business dependent on agents. Even the new iBuyer arm affords agent the opportunity to partner with Zillow through either side of the transaction. Due to the fact that iBuyer’s buy homes at below-market rates (trading in speed and convenience for full value), agents may make less per transaction, but could benefit from higher volumes. A strategic play against Redfin? Likely. Or another step to becoming a full scale broker? TBD. Zillow knows better than to bite the hand that feeds. But should it have ever existed in the first place?
A Huge Missed Opportunity
Zillow should have never existed. Zillow is an amalgam of listings, which are freely accessible to the consumer, and is nothing more than a medium to connect with agents. Sound familiar?
Any national powerhouse firm (Keller, Berkshire, RE/Max) could have built Zillow. Easy? No. Doable? Absolutely.
The “old-guard” mentality that brokers must protect their data has led to 680+ different MLS’s across the country and more practically, Zillow. All Redfin has since done is taken the idea of a publicly accessible, national portal and built a brokerage behind it. What happens if this continues? The portals have the audience, the technical means, a consumer-oriented product, and the cash.
The recent moves by Zillow are putting the company closer and closer to the transaction. For now, Zillow is hedging it’s bets by continuing to focus on providing business to agents (recent changes to Premier agent as well as previously mention iBuyer). The longer term is less defined, but strategically speaking, it’s clear Zillow is moving closer, not further from a more traditional business model.
So what about startups in this space? Will fancy machine learning and artificial intelligence transform the home buying process into walking side by side with a robot throughout an open house? (Maybe…but not really).
What About the Next 20 Years?
Let me be clear: I’m writing this as CEO and founder of a real estate tech startup. Let me also say this: We believe in the agents and believe startups that attempt to dislocate agents from this process will fail. It’s all about enabling the agents through technology that creates a better and more transparent process.
The truth, as every agent knows, is that buyers and sellers look to agents for advice. They need education, they want answers. Clients aren’t necessarily looking for flare and gadgets (although they do appreciate technologically inclined agents with good and appropriate apps). What else would you expect in a relationship-driven business?
The billions pouring into the real estate technology sector suggest change is coming, and agents need to understand that the next generation of home buyers and sellers will be like any other in the past.
The good news is that the expertise and knowledge that make a great agent will continue to as critical as ever. What we’re excited about is the ability to help agents quit spending time on the mundane, non-value-add activities. Zillow has opened up the real estate world to a new source of leads, more informed buyers, and combined with future tools and abilities, an agent who can spend more time finding the right home, providing the best advice, and delivering better service.