Realtor Challenges- Innovation technology -part 2

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Real Estate Agent with (408) 425-1601 CA bre 1519182
https://activerain.com/droplet/5czG

                                                                                           Sam Shueh

                                                                                      Realty One Group

                                                                             Cupertino, CA 

 

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. 

 

 

Old fashioned funeral director tool kit -now replaced by online shopping 

              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.

 

SOURCE:  

Shueh, Sam  How is my Silicon Valley home worth? (Silicon Valley Home Values)

Shueh, Prediction of 2018 Home Prices in San Francisco Bay Area 

Shueh, Sam    (Real EstateBlogs)

Shueh, Sam    (My Website)   

Forbes Real Estate Council Ten technologies will change real estate  

Weber, How Robots will disruptive Real Estate  

Snyder and Harris, Future of Real Estate Technology

Waldneir, C, Technology CES and Beyond that will interrupt RE in 2018  

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Rainmaker
984,184
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Here is the continuation of part 2 TECHNOLOGY INNOVATION. It will not kill traditional realtors but will cause them to bleed if not able to change our way of doing business.

Jun 02, 2018 05:14 PM #1
Rainmaker
451,504
Bruce Hicks
Best Homes Hawaii - Honolulu, HI
Your Lifetime Friend/Helper!

it's all mind boggling Sam Shueh .  The future appears to be unknown, but that's the way it has been for the past 30 years, which I have been in Real Estate.

Jun 03, 2018 09:14 AM #2
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Another thought-provoking post, Sam. I also learned that Redfin came before Trulia - I did not know that! 

Yes, we must be adept at rolling with the punches (so to speak) because change IS inevitable. 

Jun 03, 2018 09:26 AM #3
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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

I was looking at the agenda for Inman and see the CEO for Redfin is speaking about data and the future. In my opinion, they have figured out what the consumer wants and are nipping at the heels of Zillow. Their website is superior looking.

Jun 04, 2018 03:25 PM #4
Rainmaker
4,796,501
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for the comprehensive technology overview, Sam.  It will be interesting to watch and see how it all shakes out.

Jun 17, 2018 05:33 AM #5
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Rainmaker
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Sam Shueh

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