Buying and selling homes hasn’t really changed much over the years. It still requires a buyer and a seller. Getting them together often requires a real estate agent or broker. Sure, technology has changed the brokerage relationship dramatically. It has also forced players in the real estate industry to change or get out of the business. A new trend of real estate brokers are embracing technology like never before. Will these real estate industry disruptors change how real estate services will be provided in the future? Will these industry disruptors drive a new enthusiasm for “real estate technology brokers“?
One the largest players in the real estate industry is Zillow. Although Zillow has a number of services that can bring home buyers and sellers together, they are mostly a technology company that serves to provide consumers information. The company generates revenue by selling services to real estate brokers and agents, as well as mortgage companies and loan officers. Many consumers visit Zillow’s websites to view information about homes for sale or rent that are listed with brokers or the homes’ owners. Consumers don’t pay Zillow a fee or commission for the service.
Over the years, many have talked about how Zillow’s technological influence will predict the real estate industry’s future. Those real estate prophets foretold a time when home buyers and sellers will be able to do business on the internet without a real estate agent or broker. But in reality, Zillow’s influence only cemented the necessity of a broker or agent to facilitate the transaction. Zillow’s success has generated millions of dollars in revenue, but the company has struggled to post an annual net profit.
Redfin is another real estate company that has a significant internet presence. Some think of Redfin as a technology firm offering real estate services. But the reality is that it is a real estate brokerage built around technology. Redfin has built its brand, and went public this year. Although the company generates millions in revenue, the Seattle Times reported that Redfin’s IPO offering indicated that the company has yet to post an annual net profit and has accumulated losses of $613.3 million (Seattle real estate company Redfin files to go public; seattletimes.com; June 30, 2017).
Companies like Zillow and Redfin are not the only players in real estate know for technology, but they may be the most well-known. These companies are part of a new generation of companies that strive for a huge internet footprint to drive business. But Zillow and Redfin demonstrate that technology in and of itself is not a guarantee of profitability, nor has it been an absolute “game changer” for the real estate industry. Instead, technology has been the catalyst for change.
Industry disruptors and real estate
Consumers probably don’t realize the subtleties, but the rapid changes in real estate technology has forced real estate agents and brokers to change how they engage their clients. Since companies like Zillow and other real estate aggregator sites have propagated the internet, the role of the real estate agent and broker has shifted away from being the source of information to being the source of a meaningful analysis. Agents and brokers have also shifted their roles from information keepers to transaction managers.
What better way to be a real estate change agent and industry disruptor than to build a business around technology. Redfin is probably the most poised to make major impact to how consumers are served in the real estate industry. With all of its tech goodness, Redfin’s contribution to the industry hasn’t been as much technological than financial. The brand will likely be known for being instrumental in reducing real estate commissions. In markets where Redfin has been successful in establishing its brand, agents have been under significant pressure to lower listing commissions and/or offer buyer rebates.
Copyright© Dan Krell
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