I thought I will share this with you soliciting your feedback why it has a chance to disrupt the real estate industry. Most is extracted from Barron.
Amazon is joining forces with the largest residential real estate brokerage in the U.S. to connect agents with home buyers and lure customers to Amazon.
Amazon (ticker: AMZN) and Realogy Holdings (RLGY) will offer a service called TurnKey that the companies said in a release “simplifies the process of finding and settling into a new home” in 15 American cities.
“Amazon is not getting into real estate — we are leaving that up to Realogy ,’’ an Amazon spokeswoman said. ‘”We simply work with industry leaders, including Realogy, to help customers enjoy all the benefits smart home products and home services provide.’’
Realogy , which owns well-known names like Coldwell Banker, Century 21, and Corcoran, saw its stock pop on the news in Tuesday trading, while Zillow Group (ZG), which has pushed into the home-buying and mortgage business, is up slightly, and Redfin (RDFN) is down.
Realogy stock has plummeted 85% in the past 24 months as agent fees have fallen across the real estate industry. Realtors are leaving for greener pastures.
The U.S. residential real estate market is worth many trillions of dollars, and despite the worsening economics for agents, it has resisted the large-scale digital transformation that has hit other industries like retail and media.
Several iBuyers—technology firms that use algorithms to make instant home offers—have emerged to try to offer a new model for home buying and selling. Companies like Opendoor, Redfin, and Zillow (through its Zillow Offers unit) will purchase homes directly from owners and hold the property while they work to resell it.
These companies aim to provide certainty, speed, and a simplified process to sellers, who can go from getting a quote to receiving a check for the price of their home in a couple of weeks, and buyers, who work with a company that has direct access to large inventory of homes that are available for immediate move-in. For those benefits, iBuyers charge a fee, typically a few percentage points higher than the 6% industry standard commission.
What’s new? The TurnKey site can be accessed through amazon.com/turnkey, which redirects visitors to a Realogy website. Potential home buyers then enter their contact information and receive a call from a Realogy employee, who connects them with an agent. If they end up buying a home, they’ll get a credit of between $1,000 and $5,000 to spend with Amazon Home Services, which provides services like hanging art and installing TVs or Amazon’s Ring doorbell security service.