Wall Street vs the Real Estate Agent
Last week the Revaluators were in Vegas (again) – this time to hang with the Engel and Volkers crew and The Leading Real Estate Companies of the World (AKA Leading RE) for their national conference. Previously, Leading RE has the dubious destination of being the last conference IRL prior to Covid. Allegedly there were reports of covid at that event – and they stopped the event and sent everyone home – the Vegas hotels would be locked the following week and as we know, the country would shut its doors seemingly overnight. So this event had some interesting feelings and stories for sure.
We enjoyed a few awesome dinners but the best part was the afternoon poolside at the Revaluate cabana. When we do this next time, I hope to see you there. However, the session I was most looking forward to seeing, was Fellow Coloradan, Mike DelPrete as he discussed the future of Real Estate, and specifically WallStreet vs Individual Agents.
Mike has really refined this presentation to lean into his audience of realtors, brokers and mortgage folks – generating hardy laughs and plenty of applause. He only had 10 min to present (he deserves more IMO) but his point was clear. Wall St came to remove real estate agents by bringing in billions of cash – and they failed time and time again.
He used the Richard Branson quote “If you want to be a millionaire, start with a billion dollars and launch an airline” and then flipped it for real estate: “If you want to be a millionaire, start with a billion dollars then launch a real estate tech company”. He then showed examples of just that – Wall Street investing Billions into our space and turning it into millions – time and time again.
Opendoor, the iBuyer lost $1.6B since 2017
Zillow, lost $1.5B in 3 years doing iBuyer.
Compass lost $1.5B since 2016 doing a tech enabled brokerage model.
But Mike also said that standing still is a recipe for disaster. Realogy lost $2B in market cap in 4 years, not doing anything specifically wrong, they just stayed the course and just stood still.
Agents are getting replaced by other agents – not by WallStreet. Agents are still at the center of the transaction.
Mike argues that the The name of the game is one on one relationships, that the relationship is at the center of the value that agents have in the real estate world. I disagree. And frankly, NAR’s own data suggests otherwise. While homeowners SAY they want to use the same agent for their next transaction, they dont. The vast majority of consumers dont stick with the same agent – they “churn”. Across the industry, Real estate brands, brokers and agents are TERRIBLE at customer retention.
Technology, automation and processes are the solution. Revaluate clients know this – and leverage data to inform their systems to focus on those people most likely to move. Integration via API is the solution. You dont need an app, or another dashboard – you need the dashboard you have to be smarter and more automatic – so consumers effectively raise their hand when they are ready to work again with you.
For the next five years to a decade, tech companies, real estate companies, mortgage companies all need to upgrade and invest in automation of the lead gen, nurturing and followup process – and to mikes point, not at the expense of agents, but in order to keep agents at the center of the transaction.
