“Real estate disruptor” is a description that’s been used to characterize every kind of technological innovation in the industry, from online discount brokers to iBuyers to comparative market analyses powered by artificial intelligence.
But irrespective of whether they threaten the traditional relationship between broker and client, industry leaders and technology trailblazers at Chicago’s Accelerate Summit, held earlier this month, said brokers need to adapt or get left behind.
The panel, moderated by The Kno Agency co-founder Matt Dollinger, featured Midwest Real Estate Data LLC CEO Rebecca Jensen, Remine CEO and co-founder Mark Schacknies, HomeLight Director Maria Seredina and @properties co-founder Thad Wong.
The forum naturally focused much of its discussion on the iBuyer trend, which is expected to soon move into the Chicagoland market. Wong said @properties is working to develop its own iBuyer program and sees it as a big opportunity, but added that it’s still unclear whether the profitability outweighs the potential negative impact. An offer of 12% to 15% below market could turn off the seller if they believe it’s a lowball offer, Wong said.
Seredina said it’s not a matter of if, but when iBuyers will come to the Chicago area, and that agents should be ready. HomeLight draws from a network of 70,000 agents and analyzes transactions over the previous decade, “so we can recommend the right agent for this particular seller or buyer based on the property characteristics, their preferences, their budget,” Seredina said.
These kinds of innovations are already available, and clients expect them, she added. “An agent should become more of an app store, not the app,” she said, noting that 40% of consumers in markets like Phoenix and Atlanta are already requesting iBuyer offers. “If you want to stay relevant in the conversation, you should be incorporating all of these new technologies into your listing presentations, so you’re way ahead of the curve.”
New technology is not only reshaping how brokerages think about real estate, but also prompting structural upgrades, such as the MLS Grid, a network of listing services across the country collaborating to improve multiple listing services. MRED’s Jensen, who also serves on the Grid’s board of managers, said brokerages in the future will be increasingly tech-enabled, and the project aims to accommodate new third-party companies. “We want to make sure they have that good, quality, clean data feeding through their system no matter which system they choose,” she said.
While new technologies can disrupt the market and send agents scrambling to catch up, Schacknies said the promise of big data and artificial intelligence is that it will increasingly eliminate some of the guesswork with comparative market analyses and that some agent-based models will be self-improving. “When Zillow launched [its Zestimate tool] 15 years ago, it was a joke,” he said. “It was a 20% error rate. I think now it’s down to 6%. HouseCanary has it down to 2%. There are other models where it’s down to 1%.”
Schacknies said Remine’s CMA is the only one that allows agents to click a button and immediately pull comps in the area regardless of data source. “We don’t just look at the MLS comps, we simultaneously look off-market, so if and when iBuyer starts coming into the market in a significant way, within 30 seconds you’ll know every single transaction that’s happened,” he said.
Those curious to see the spread of iBuyers can consult Remine’s ibuyermap.com, which provides a public display of all such deals across the country, Schacknies said. Those deals represent one-half of 1% of all transactions now, but that number is growing, he said. “It’s definitely something to watch, but understand that 99.5% of all other buyers were human beings,” he said.
While the iBuyer trend is keeping the industry on its toes, it’s not the only concern for Wong, who said discount brokerages are another disruptor to contend with. He noted that, prior to the Great Recession, programs like Help You Sell and Sell By Owner were approaching 13% to 15% of the market. Now companies like Redfin have taken their place, Wong said.
“For Redfin, their big strength is the agents are employees,” he said. “Now the negatives of that is they do a lot more work for a lot less money, but by being employees, it allows Redfin to set a baseline for the amount of service they can provide to the customer and some of the specific things they provide the sellers that are truly beneficial.”
He said that, although Redfin has captured a substantial portion of the market in places like Seattle, where their market share is 4% to 5%, they’re still not profitable, Wong said.
“They started before Zillow, so they’ve been around for 14 to 15 years; most people would consider that a failure,” he said.