In 2022, using a real estate agent still remains the most popular and effective way to sell a home. Billions of dollars are paid to real estate agents in commissions every year and for many years now there’s been a lot of talk of disruption in the space and replacing real estate agents with technology. It’s a tasty proposition for technology companies, but many that have ventured here have failed and there’s good reasons why. If it ever happens, it’s going to take a unicorn to get the job done.
I’d like to be clear, the last thing I want to see is real estate agents go away. I’ve spent a good portion of my career developing technology that’s exclusively for use by real estate agents and continue to do so. If real estate agents go away, I’ll be looking for work. 💩
Here are a few of strong reasons why would-be disruptors are having a tough time:
- Real Estate is personal — Most home buyers and sellers do business with real estate agents that they’re friends or family with. It makes for a pretty awkward dinner conversation with your friend at your house-warming party if your friend is a real estate agent and you didn’t use them. Also, you might have a business as well, and in-turn lose some business of your own.
- Agents get you the most visibility — When you use a real estate agent, your property gets listed on the MLS. The MLS is a powerful marketing platform. When a property is listed on the MLS it gets syndicated to thousands of real estate agents, thousands of websites, and ends up in the inboxes of thousands of potential buyers that are looking for a home. The thing about the MLS is that if you want to use it, you must use a real estate agent.
- Agents are in your corner — Selling or buying a home might be something you do once every ten years; it’s something real estate agents do everyday. They’ll coordinate all aspects of buying or selling a home including photography, staging, cleaning and even financing if required. Selling or buying a home can be intimidating but it’s much more comfortable with an experienced agent in your corner.
So, who’s the unicorn?
For a company to disrupt the real estate industry, they’ll need some serious momentum on day one. It would be difficult to convince a seller to use the disruptor’s service if the disruptor’s service didn’t already have a lot of activity. Back in 2000, there was a disruptor called SellingItMyself.com. The value-proposition was great, sell your home for a low flat-fee with no real estate agent involvement. The problem was, they couldn’t actually sell any homes, at least not at the scale they needed to survive, not without millions of users on day one.
In my opinion, Airbnb can disrupt the real estate industry, the question remains whether or not they will;
- Airbnb has approx. 10 million hosts — Many of these hosts are in the market to sell their property today. If Airbnb put out a disruptive offer that enabled their hosts to sell their properties on Airbnb they would have thousands of homes for sale overnight.
- Airbnb has millions of users every day — It’s possible that Airbnb, with all their users, could potentially market a property for resale as effectively as a property listed on an MLS. Airbnb could also leverage users that want to buy Airbnb host properties with the intention of becoming hosts themselves, making for seamless ownership transitions.
- Airbnb could offer significant discounts — Airbnb’s revenues are mostly made up of small transactional fees. It’s likely that they would approach resale real estate with a similar model.
- Airbnb is a real estate company — This isn’t totally out of their realm. Airbnb has a lot of real estate assets and technology (virtual tours, photographs, reviews, etc.) and they already service the short-term and long-term rental markets.
- Airbnb is a multi-billion dollar company — This helps. The company already has sustainable revenue and could easily fund a new vertical of business, the announcement would likely push their stock price up as well.
Happy to chat
I’m a technology provider with a keen interest in the real estate space. If you’re interested in talking shop, feel free to reach out to me — I’m always interested to meet new people in the space and expand my network.
