Tech Enables Super Agents. But Where's The Disruption To Real Estate?
Technology in Real Estate continues to streamline the buying and selling process and decouples agents from their desks via mobile apps allowing them to spend more time with their clients, but where is the real disruption to the industry?
Thus far, companies like Redfin that have launched new, potentially industry disrupting business models, saw slower than expected acceptance of their pure per-transaction model compared to the commissions based norm. Additionally, charging for tours and other standard services proved to be a bust.
Ultimately, Redfin was forced to abandon its per transaction model and move back to the commissions based norm with special Redfin rebates instead (a hybrid model of sorts). With a combination of realtor base salary, bonuses tied to customer satisfaction, and commissions based on the number of price points attributed to deals, it learned quickly that the longstanding industry model was quite resilient after all, and a pure per transaction play was out of the question.
But why have companies like Zillow and ZipReality chosen to bow to the existing industry norm and instead work alongside the longstanding model versus launching new models, hybrid or otherwise? By identifying ways to both enhance and streamline the existing process, they have carved a niche that continues to serve them well and certainly adds value to both realtors and buyers/sellers. It's not as progressive or potentially disruptive as others like Redfin set out to be.
I suspect that the answer is "volume" and "risk." Let's face it, most people simply don't engage in buying or selling property all that often. It's really something that will only happen a handful of times in their lifetime and chances are, due to the complexity and high stakes at play, they will just turn to an expert and fork over the commission and fees versus trying an alternate.
While other tech giants like Uber and Airbnb have certainly disrupted their respective industries in relative short order, they are targeting markets where per customer volume is a big part of the equation. Additionally, risk is low, given the product, and industry expertise isn't really valued or needed and each transaction is relatively small. If the stakes were high, and transaction amounts high, chances are most people would have never tried Uber in the first place and would still be hailing taxis.
Change is nerve-racking, and disrupting an industry that manages some of the largest and most infrequent transactions that most people undertake in their non-work lives, makes launching or seeking out an alternate model a bridge too far for most at the moment. Plus, any cost savings offered by a non-traditional model, flat fee or lowered commissions via rebate, don't seem to feed into the value proposition for most because cost savings of a percent or two seems to get lost in the big numbers.
I do believe that alternate business models will continue to be launched by tech first real estate companies and most of them will fail at first. Through a culmination of big data, artificial intelligence, hyper automated processes, and strong customer first corporate mantra, the most successful real estate companies will master the art of capturing and delivering a steady customer pipeline from its website or mobile app to its agents. These agents will be equipped with the best data and market intelligence to effectively match clients with properties based on hundreds or thousands of variables, and will execute transactions in record time for lower commissions.
With technology evolving at a staggering pace, the industry is now primed for more substantial disruption, but it will present itself (at least at first) through "Super Agents" who will be equipped to use the latest tech with spectacular results. They will always be able to ensure that the best options are on the table and will be able to process transactions more quickly and in higher volume. These "Super Agents" will also spend less time drumming up new business and more time focusing on the customer experience. All hail the age of the Super Agent, half human, half machine.