Realty One Group
It was commented by Sybil Campbell that real estate properties were listed and distributed in the form of a monthly listing telephone sized book not long ago. That was indeed the case. Good homes were already taken by the time the directory became available. When we arrived California four decades ago, listings were available from Time Share computer (e.g. GE Terminate) though an acoustic coupler phone line. That was the only way to access latest data. Homes had to be viewed in person since images were not available through lined phone.
Loopnet (1995), Costar(1997), Redfin (2004) ,Trulia (2005) and Zillow (2009), all technology based sites, have been around for a decade. They were first generation of technology merging lots of property, geo city, education, and crime data graphically and trying to match a buyer from a fast paced inventory. The earlier technology gets refined and become more accurate as the algorithm gets better. With machine learning the sites of interest follow one everywhere. That information is actually shared by the sites which buys the information is a question of privacy. Virtualization, artificial intelligence, machine learning work better for some than others. But they are all pouring at astound speed.
We are at second generation of the real estate technology. Some of the companies are engaged in: 1. Online mortgage, 2. Online real estate broker, 3. Buying homes direct from sellers and sell again online through virtual auction or combination of a realtor assistance, and 4. Market software for RE profession selling leads-telling me all about it. Some have been successful others are still under development.
The online auction site when used in conjunction with MLS drives more traffic. People put a credit card number and bid online. The highest bidder wins and the deposit is charged. If one wants to walk away (typical first 72 hours) he loses (e.g. $500) fee and second highest gets his chance. The seller has little to lose as the offers are often very close to each other.
Perhaps Airbnb (San Francisco, Ca) and Wework (San Jose, Ca) are examples of successful technology based commercial start-ups. Both are actually based in my area. Over $1B investment has poured into Airbnb development and potentially company has a $1B+ equity value already. This has so far created a niche for landlords who have extra rooms or wanting to lease their rental to short term renters at above average standard rate. Hotel and motel owners meantime have felt Airbnb presence. Wework is a direct competitor to traditional commercial real estate. It creates an office, lease or and entire corporate headquarter often with technology. Hoozz (Palo Alto, CA) goes one more step further to integrate interior design, decorating, landscape and architecture through virtualization and 3D tools at your finger tip. If one thinks Z is the first site experimenting with instant purchase, fix it up and resell. Not true. There are other companies like Opendoor that has been around even longer.
Opendoor (San Francisco, CA) relies on a complex algorithm to bid for homes sight previously not available, and it can close on those deals as short as 72 hours. It makes its profit by taking a service fee, plus an additional fee that varies with its assessment of the riskiness of the transaction and brings the total charge higher. It then makes fixes recommended by inspectors and sell its inventory for a small premium. It has bought $1.3B worth of homes and have hired Uber former CFO to get into mortgage business. The way it works it target sellers wanting no hassle quick closing and offer to close and the buyer a 30 day return plus a two year electrical & appliance warranty. Homes handled are mostly in good condition. This model will work even better when home sales will be more normal to slower. Opendoor already took 2% market share of Phoenix total housing sales in 48 months, and have launched to a number of other US cities. The company is packed with Silicon Valley famous technology gurus who have a successful track record. Its potential value is over $1B. In my opinion, when it is harder to sell from traditional MLS based or FSBO sources technology based business will do even better. I was offered to sell our old home to a company in midwest. I sold it myself as a realtor. I would sell direct next time since the time and stress was not worth the hassle. In this case I did slightly better by $350 sold through a RE agent vs.employer purchase out right. The same is probably true with Z to buyout right with a Premier Agent engage as listing agent. Opendoor allows potential buyers to view homes with a code without a realtor. Its offer price factors into risk associated with local micro-climate but taking no fee from buyers. Incidentally, its earlier team proposed a real estate site with listings and methodology similar to Zillow. The idea was so boring for investors and techies, they all walked out the meeting. Today Z, a me too, is a $11.4b public company. ReMax holdings which owned many name offices is a 0.925b, a small player.
The investment bankers see a $35 trillion dollar of US home industry that has not been tapped with better technology. It continues wanting to disrupt real estate space with better tools to help people making decisions and research sometime as good as neighborhood specialists. People are more opt to unload properties without hassle in hours and will enjoy the convenience having cash in 72 hours. The interruption is there is no real estate agents involved. When one purchase a car he already selected model, types, features and the internet fleet manager rewards you with better price without a licensed salesperson. It is estimated perhaps one third of car salespersons have been replaced by internet sales.
Traditional funeral director kit for goods- one can order them on-line today
The technology innovation has a tendency to disrupt traditional industry who prefer to do things the old way. It often affects fees and commission reduce the time to close a deal. Travel industry was the first to be greatly affected as many sites allow one to find optimum deals without agenct assistance. There are a lot of activities including product like virtual staging, Rogue platform tool for realtors (see above photo for similarities). If legal I imagine eNotary public may be next in line for change. There are also a lot device based applications to help people search or make decision even better in the immediate future.
Shueh, Sam How is my Silicon Valley home worth? (Silicon Valley Home Values)
Shueh, Sam (Real EstateBlogs)
Forbes Real Estate Council Ten technologies will change real estate
Snyder and Harris, Future of Real Estate Technology
Waldneir, C, Technology CES and Beyond that will interrupt RE in 2018.