From the Ford Model T to Apple's iPhone, Amazon, Uber and Netflix: the use of technology to disrupt traditional business sectors has been profound. And the success of many of these disruptors has been phenomenal. Now the global real estate industry is attracting the attention of canny entrepreneurs keen to take a slice of global real estate revenues (and turn the industry on its head along the way).
In fact, according to Forbes, venture investors deployed over $5 billion in real estate technology last year – that’s more than 150 times the $33 million invested in 2010. Considering the size of the market – in the US, real estate broker commissions are worth USD$62bn, in Australia $4.7bn and in Britain $4.6bn – it should come as no surprise that disruptive, technology-fuelled businesses are now targeting a share of those revenues.
So what does this mean for real estate agents and brokers?
Some see it as a threat to the agent model. For others, it presents new opportunities to deliver a dramatically improved customer experience. Above all, it means change.
In our latest Research Report, Real Estate in the Age of Disruption: How Technology is creating Winners and Losers – and How to Make Sure You’re a Winner, we take a look at the strategy of new disruptive players including fixed-fee online agents such as Purple Bricks and Trelora, for-sale-by-owner sites like PropertyNow.com.au and BuyMyPlace.com.au, iBuyers such as Opendoor and Sellable, and agencies such as Compass and The Agency that are targeting a dramatically improved customer experience.
We also detail how savvy, traditional high-street agencies are matching disruptors at their own game by utilising technology to deliver a better experience in an increasingly competitive market. But the successful emerging models do not rely on technology alone, according to global real estate analyst Mike DelPrete.
“While the most prevalent disruptive customer proposition is focused on saving the customer money by avoiding a commission”, DelPrete says, “the premise of a tech platform to connect buyers and sellers has evolved to one of heavy support.”
Meanwhile, the mobile-first next generation of buyers and sellers – the Millennials now entering the housing market -- is ensuring the way houses are marketed, bought and sold continues to change.
“Now no one comes into your office at all,” says The Agency’s Matt Lahood. “Buyers go online, type in a suburb and a price range and all the hard work’s done for them. If they want to see a property, they meet you there. And that’s changed the agents’ behavior.”
Property listing portals are still crucial to the process, but buyers now expect to be communicated to across a head-spinning variety of channels, from Facebook to FaceTime – and will sometimes buy a property without ever seeing it in person.
According to Raphael Bochner, co-founder and chief executive officer of real estate technology firm SweepBright, the future belongs to real estate agents and brokers who can deliver more robust digital marketing, increased productivity and a better customer experience.
“Being effective multi-channel marketers is crucial to success,” Bochner says. “The good brokerages are able to make the difference by being very good at their marketing on new channels such as Facebook or Instagram.
“Some large next-generation real estate companies -- such as Compass in the US or Purplebricks in the UK -- have created their own technology backbone from the ground up, and this has been a key driver of their success: they clearly understand the power technology can bring in terms of efficiency – automating, reducing or eliminating low-value, repetitive tasks to free up time that they invested in marketing or whatever their focus area is, and enabling agents to become far more productive.
“For the average agent it’s a complicated shift — but that’s the opportunity for incumbents: not to develop technology, but to adopt technology and change the way technology can work together,” Bochner says.
To find out more about how savvy agents are investing in technology to improve productivity and process, getting the most out of their data, centralising services, adding new revenue streams and leveraging local area knowledge to build a longer-term relationship with their customers, download our Research Report: Real Estate in the Age of Disruption: How Technology is creating Winners and Losers – and How to Make Sure You’re a Winner.