7/17-20/18: Follow #ICSF18, share your perspective on real estate in 2020 using hashtag #RE2020
Invite real estate innovators & affordable housing advocates to listen to the podcast episode below and let us know if you'd like to join us for a LIVESTREAM Watch Party. For several years, #RE2020 has been asking "What will the real estate ecosystem look like in 2020?" Let's hear how panelists at #ICSF address the question below in their General Session at noon on Wed, 7/18 and use Anchor to share our perspectives before and after.
Real Estate in 2020: Here is What It Looks Like
Innovators are on fire, disruption is full speed ahead, consolidation is the norm and the winners and losers are becoming more evident.
What does the future look like?
Bill Wendel Fri 20 Jul 2018 1:55PM
@jbattan Thanks notes above: What do others think of this session, prediction -- how big will the slices be?
Clelia says in five years:
Bottom layer will be full tech disintermediation. Push a button to buy a house.
Middle layer of discount brokers like Redfin and PurpleBricks.
Existing brokerage continues to exist in high complexity, high value markets. Lots of pressure though to show their value. Many fewer brokers because they don’t add value. Like Private Wealth model in finance.
The question is how big are those three slices?
AGREE! Psychology, not technology, is the barrier to disintermediation.
DISAGREE: Zillow sees higher commissions when a seller is given a menu. Menu of Services will exist in all three tiers, hence will provide both money-saving opportunities to consumers as well as savings opportunities. BILLIONS annually!
Poll Created Fri 20 Jul 2018 2:22PM
Snap Poll: Which real etate business model will emerge as the consumer favorite in next 5 yeas? Closed Tue 7 Aug 2018 3:02PM
When asked what real estate will look like in 2020, the question #RE2020 has been addressing for three years, one panelist at #ICSF (Clelia Peters, Co-Founder & Advisor, Warburg Realty and MetaProp) described three broad market segments. Which will emerge as "consumer favorite" within the next 5 years?
Bottom layer will be full tech disintermediation
Middle layer of discount brokers like Redfin & PurpleBricks
Existing brokerage continues to exist in high complexity, high-value markets
Use this platform to rank the three options, below or add another real estate model you think will become a player. We've already added iBuyers and Fee-for-Service to Clelia's scenarios.
Comments welcome, as well as insights into niche market opportunities, or the resurgence of existing models like Exclusive Buyer Brokerages (who do NOT take listings).
Results
| Results | Option | Rank | % of points | Points | Mean | ||
|---|---|---|---|---|---|---|---|
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|
Discount brokers | 1 | 26.7% | 12 | 4.0 | ||
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|
Fee-for-service | 2 | 24.4% | 11 | 3.7 | ||
|
|
Existing brokerage | 3 | 20.0% | 9 | 3.0 | ||
|
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Full tech disintermediation | 4 | 15.6% | 7 | 2.3 | ||
|
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iBuyers | 5 | 13.3% | 6 | 2.0 | ||
| Undecided | 0% | 0 | 0 |
3 of 45 people have participated (6%)
Jim Battan Fri 20 Jul 2018 2:38PM
| 1 - Full tech disintermediation | ||
| 2 - Fee-for-service | ||
| 3 - Discount brokers | ||
| 4 - Existing brokerage | ||
| 5 - iBuyers |
Our hope is that in five years, Builts and other AI-based apps will be better than 90% of the agents of today, and so full tech will be the predominant method. In some states, lawyers will still be required by law.
Tom Wemett Fri 20 Jul 2018 4:27PM
| 1 - Existing brokerage | ||
| 2 - Discount brokers | ||
| 3 - Fee-for-service | ||
| 4 - iBuyers | ||
| 5 - Full tech disintermediation |
I don't think any one will dominate the industry. It will continue to be a blend as it is now with slight changes in percentages of the market. There are buyers and sellers who will opt for a DIY approach but more want an agent involved.
Jack Barry Sun 22 Jul 2018 9:17PM
| 1 - Discount brokers | ||
| 2 - Fee-for-service | ||
| 3 - iBuyers | ||
| 4 - Existing brokerage | ||
| 5 - Full tech disintermediation |
I. when acting as the Listing Broker, and charge One Percent Fee. If the buyer has no agent, the seller's total cost is that One Percent..... This is the future.
Bill Wendel Fri 20 Jul 2018 5:20PM
Only three more sessions left in #ICSF's LIVESTEAM.
LIVE now: Why is Softbank pouring hundreds of millions into Compass?
https://www.inman.com/2018/07/10/livestream-inman-connect-san-francisco/
Last session: Will shared equity drive real estate prices higher or allow would be first time buyer to get into the housing market by splitting the wealth with Wall St? Here's what Inman says:
A new breed of companies is redefining what it means to own your home. Hear how these alternative financing models work and why they are so attractive to investors.
Jim Battan · Thu 19 Jul 2018 1:38AM
Today's notes:
Brad’s opening:
We’re the best and brightest. We’re curious and courageous. We have conviction. We’re aware of the changes in the industry. Our vision is to improve the RE industry to improve the customer experience. Change is upon us. Long story about Randy. Keep your head high because you are doing good work. Act as a service rather than sales industry.
Panel discussion:
Clelia Warburg Realty
Mike Del Prete
Jeremy Wacksman Zillow
Vija with KW
Clelia says in five years:
Bottom layer will be full tech disintermediation. Push a button to buy a house.
Middle layer of discount brokers like Redfin and PurpleBricks.
Existing brokerage continues to exist in high complexity, high value markets. Lots of pressure though to show their value. Many fewer brokers because they don’t add value. Like Private Wealth model in finance.
The question is how big are those three slices?
Will iBuyers be a force? Unclear. Gives sellers options.
Psychology, not technology, is the barrier to disintermediation.
Homie and ? in Atlanta are making some traction.
Zillow sees higher commissions when a seller is given a menu.
Adapt in this massive environment of change.
John Cary: Experience with co-housing in Oakland. 160 of them in US. Homeless encampments everywhere. How do we create more temporary, transitional, and permanent housing?
Data For Democracy, Haven: disinformation is messing up your reality. Social networks suggest content, keep user on site, gather data, target ads. Creates manufactured reality, interferes with truth. Leads to polarization, and sometimes radicalization. Russia uses these tactics often. Amazon reviews are remarkably manipulated via Facebook groups. Anyone can be duped by messages that confirm their biases. An informed citizenry is the only true repository of the public will.
Compass reinvented the for sale sign, circular, with a light and bluetooth.
Gary Kelly: vision of the industry’s future. Businesses moment of innovation. You won’t recognize the industry in a year. Nothing has happened yet. Add data and AI to commodity hardware to power the inflection point. Agent -> tech-enabled agent (with MLS) -> agent-enabled tech (Z, Opendoor, Purple, all the firms than Inman worships) -> tech. Tech will never happen. The fiduciary is either an agent or tech. Redfin would run without agents if they could. A-ET want to reduce commissions by 30%. They want tech to be the rockstar. Don’t spend more than 10% on leads. KW have no agreement with Z, but do with dotLoop. If TEA doesn’t own their tech, they succumb to AET. KW agents spending $300k/yr on tech will spend $0 next year. Amazon, Facebook, Netflix all own their software. Takes 2-3y to build an industry-specific cloud service. Must have AI. Extensive banter with Brad. Who will own the data? $1B in KW profit share. Tech is driving KW’s growth, not profit share. Build an end-to-end consumer experience. Voyeurism, search, offer, close. The mortgage industry hates them because they have their own with no origination fees. Brad says Gary sees the future more than most of us. Z wanted KW’s data to improve Z’s AVM. They can’t have it and are audited twice a year to prove it. Lots of standing up cheering from his fans (employees presumably) in the crowd. Lots of snarky comments on social media.
Panel discussion with Trelora, PurpleBricks, and eXp CEOs. Microservices are here. TMS, commissions, etc. Joshua says KW is in the same boat as Sears, Sports Authority, and Kmart. All dying. Barrier to entry is so low. Agents are still needed. PB is great service at flat fee. 90% of owners would say they don’t want to pay commissions. Independent contractors fighting their brokers. Joshua says $75B to $35B in commissions in 5-7 years. Everyone can see the clear path to the future: a better experience. Consumers want a fair price, extraordinary service, and full transparency. Not “Gabby Lipstick’. PB and Trelora CEOs are good at this discussion. eXp doesn’t see the race to the bottom on commissions. Huge pay raise due to less work for much higher commissions due to home appreciation. Lots of agent cheering when eXp says the agent is required. How long to major changes? Joshua says 8-9 years until a major player files for bankruptcy. PB says 3-4 years for reduced commissions. eXp says not clear.
Glenn Kerman Redfin: was scheduled to talk about innovation, but instead talked about Race in RE. How do we improve RE for all races?
Dialogue with Brad: consolidation. VC money flooding in. Redfin has NIH syndrome, and are tightwads. Disagrees with Gary: no longer wants to remove agents, but did 14 years ago.
Wall Street effects on RE with The Agency CEO and Citron Research. VCs pay a lot for disruption; e.g. Netflix and Amazon. There won’t be just one disruptor. Amazing that Compass market cap is near Realogy’s, which is a much larger company.