There’s a lot happening in the real estate world right now that raises the blood pressure of those of us making our living here, and as usual, Brad Inman didn’t miss an opportunity to bring those issues front and center with a week of presentations from some of the industry’s most influential (and opinionated) leaders.
We spent three and a half action-packed days in Sin City, and after listening to as many sessions as we could handle, chatting with every vendor in the expo, and striking up conversations with dozens of workaday real estate agents who were there just trying to get better at what they do, we left with some powerful conclusions.
Here are our 11 most important takeaways from Inman Connect Las Vegas 2019:
1. Zillow 2.0 Is Coming…Or Maybe It’s Already Here?
Zillow founder and CEO Rich Barton gave one of the most interesting interviews of the entire week, and reactions were as passionate as they were mixed. Sitting in the eighth or ninth row of the center section, we could hear some people audibly groan and practically boo during his conversation with Brad Inman, while others were applauding his every statement.
Founder of Expedia, Glassdoor and Zillow, Barton knows a thing or two about creating and then adapting successful businesses to changing markets, and the narrative he created for Zillow didn’t disappoint.
Straight From The Mouth Of The CEO
When asked what Zillow was and where it was going, Barton laid out his case for decisions made in the past as well as where the sees Zillow headed in the future:
“We’re motivated by following and trying to anticipate where our consumers want to go. In the early days of Zillow, customers wanted the lights turned on, transparency, begetting a media approach, a media company. We became a partner and a natural technological continuance of the old (newspaper) system.
As Zillow continues to evolve, we’re not pivoting, we’re expanding. We’re not getting rid of the old, we are just shedding light in new places, mainly the transaction. We think the “Real Estate 2.0” innovations that are coming can be combined with what we’re doing to offer incredible services. Services beyond our imagination. Services that are, quite frankly, offered inefficiently, expensively, and without explanation by the current model.”
The Future of Zillow
What does this mean? This means that Zillow wants to be a part of more.
They’re an iBuyer in over a dozen markets. They’re listed as a broker in as many states. They see opportunities in title, insurance, buyer representation, and just about every other aspect of the real estate transaction.
It has always been Zillow’s M.O. to roll out things slowly in strategic markets, continually testing and improving processes, but rest assured, changes are coming.
2. The Legal Fight Between Realogy and Compass is Getting Ugly
The next Ultimate Fighting Championship event in Las Vegas isn’t until December, but listening to NRT’s CEO Ryan Gorman talk, you’d think he was gearing up for a fight that day.
In a session titled “What Does the Real Estate Chess Board Look Like in 2020?” it took Gorman all of 45 seconds to launch into battle mode about the ongoing lawsuit his company has pending against Robert Reffkin and Compass.
“We don’t sue for show…the industry should be taking this very seriously. People need to read beyond the headlines. If you do, you’ll stop asking why we’re suing and start asking what took us so long.”
Gorman’s beef with Compass is over what the lawsuit alleges as “unfair business practices and illegal schemes to gain market share at any cost”. Though Gorman seemed to stay pretty focused on Compass as a brand, he couldn’t completely hide is obvious disdain for Founder Robert Reffkin.
“He personally solicited Realogy to enter into an illegal price-fixing agreement where the two companies would agree to limit agent compensation and ‘compete on brand,’ but not on price. He proposed the most anti-agent thing I’ve ever heard,” Gorman said.
Reffkin Responds To Gorman’s Allegations
In a later one-on-one interview, Reffkin responded relatively casually to questions about the lawsuit.
“I have a lot of respect and empathy for Realogy. They’re all good people, working for their clients and trying to create the best company they can,” he said. “But, there is a subset of brokerage firms whose margins are declining and agents are leaving. That puts a lot of pressure on people.”
In all the times we’ve heard Reffkin speak, he has never so much as raised his voice, let alone spoken ill of a competitor, so this sort of coy response isn’t a surprise. However, the rumors and outright allegations of less than savory Compass business practices are pretty persistent, even coming from Reffkin’s interviewer Clelia Peters, president of Manhattan-based Warburg Realty, who suggested that Warburg had been the target of Compass’s “rumor mill”.
Reffkin responded to this with a sly smile and “I’ve never heard or seen any of that, I as a CEO have only said positive things.”
Where Do We Come Down On This Argument?
Are aggressive tactics like Reffkin’s harmful to the industry? Some would say they’re undermining a historically congenial business, but we’d say no.
If Reffkin broke the law, he should be held accountable. If he remained in bounds and just ruffled feathers, good for him. Congeniality can often be a preventative of a level playing field.
If you only do things the way they’ve always been done, those who benefit the most are the ones who have done it the longest. Real estate should be competitive. Brokerages should compete (legally and ethically) aggressively for the best talent. Agents should compete (legally and ethically) for their clients. Competition breeds excellence.
3. Love Them or Hate Them, iBuyers Are Here to Stay
Just like at Inman Connect New York, iBuyers were the front and center topic for the first full day of ICLV.
Like in January, we heard strong opinions on both sides of the iBuyer movement into real estate, but unlike New York’s conversation, we heard from real estate agents whose businesses and communities were being affected right now.
If you don’t know about iBuyers and how they work, here are the basics:
Rather than selling a home on the open market where buyers consider the home and make an offer based on what they see to be fair market end-user value, a company (the iBuyer) makes a cash offer on your property, usually sight-unseen, typically between seven and ten percent below market value, with a closing window up to 75% faster than a traditional transaction.
The iBuyer then turns around and lists that property for sale with the goal of selling it close to market value, clearing a profit. Home sellers sacrifice a potentially higher sale price in exchange for a quicker, more convenient sale.
Agent and Broker Reception of iBuyers Has Been Mixed
Many real estate agents who have jumped on the iBuyer bandwagon laud the option as great for consumers and ultimately great for the industry. Yes, an iBuyer transaction has one (and sometimes two) fewer real estate agent in it, but if more sellers will consider selling thanks to extra options, the overall positives should outweigh the negatives.
On the other hand, some real estate agents are saying that iBuying artificially lowers the market value of property, thus throwing off comps in the area. We also heard passionate reminders when an iBuyer is operating in a transaction, they’re not bound by the NAR code of ethics to represent any fiduciary best interests other than their own.
If an iBuyer like OpenDoor or Offerpad or even Zillow makes what they call a “fair market offer” to a seller, it is “fair” and “market value” based on the goals of the iBuyer, not the market or consumer at large.
John Gafford of Simply Vegas Real Estate went as far as saying “iBuyers steal money from Main Street and deliver it to Wall Street. More than 60% of Americans have no measurable wealth other than the equity in their home, and iBuyers are taking that from them and they don’t even know it.”
iBuyers Are Penetrating Our Markets Now
Agree with it or not, iBuying has taken root in the real estate market. Some major markets like Phoenix are seeing close to 10% of transactions in certain areas going to iBuyers, and the list of cities where iBuying is becoming prevalent (places like Las Vegas, Sacramento, Nashville and Los Angeles) is growing every day.
There are no overtures from The National Association of Realtors or at the federal level to regulate or limit this practice any time soon, so real estate agents need to prepare for this trend in their market, because it’s coming whether they like it or not.
4. The NAR Lawsuit Could Change Everything
If you’re not up to date on what’s happening with the NAR lawsuit, here’s the skinny:
NAR is currently a co-defendant along with Realogy, HomeServices of America, RE/MAX and Keller Williams in two class action lawsuits alleging violations of anti-trust laws for requiring sellers to pay both sides of the real estate agent commissions.
The legal jargon is pretty thick, but essentially the argument is that agents working on behalf of the buyer are involved minimally (if at all) on behalf of the seller, and thus the requirement (written, unwritten or otherwise) to pay them a cooperative commission is unfair.
NAR’s Attorney Speaks
At Inman, we heard from Jack Bierig, council for NAR, as well as Houston Chronicle reporter Rebecca Schuetz and 30-year real estate industry veteran broker Russ Cofano. Led by Bierig, the on-stage consensus was that these lawsuits didn’t have a lot of teeth…unless they made it to trial.
“The real estate profession has always been about choice,” Bierig told the main stage audience, “and there’s nothing in any of these allegations that suggest any of these defendants, and certainly not NAR, believe anything different.”
As we all know, sellers are not legally obligated to offer a “standard” commission of any sort to any side. The lawsuits allege that the organizations listed as defendants conspired together to require such an offer, and sellers who don’t comply risk lower levels of market exposure, fewer showings,or otherwise poorer performance as a result.
The language in most boilerplate listing contracts, local MLSs and certainly at the national level is pretty clear: sellers are in no way obligated to provide a commission to a buyer. Though we aren’t privy to the internal communication of the listed defendants, we’d be willing to bet there isn’t any sort of official communication stating otherwise there either.
Nothing To Worry About…Unless This Case Makes It To Trial
However, that isn’t the real concern. The real concern is that if these cases actually go to trial, attorneys for the plaintiffs could argue that there’s a consistent response for not paying a standard commission or paying a commission at all. If that happens, the reach towards conspiracy is actually pretty close.
Collectively, damages of over half a billion dollars are being sought, and while we think it’s unlikely these cases won’t be settled before trial, a number of folks in the industry are watching this situation carefully.
5. Predictive Analytics Will Be a Part of Your Lead Generation Whether You Like It or Not
Traditionally, real estate leads come from one of three sources: referrals and repeat business, incoming lead generation campaigns like Zillow Premier Agent, and outgoing lead farming.
While we don’t think these categories are changing, there’s a new element to each that is making things very interesting: predictive analytics.
Using the trends that big data provides us, predictive analytics use new tools help real estate agents better predict who in their sphere is most likely to buy or sell in the next year, which demographics on Facebook are the most lead-rich in your community, and which homes in your neighborhood farm are the most likely to be listed soon.
We heard predictive analytics touted on the main stage by Wendy Forsythe and Amy Somerville in their session “The Top Tech Trends Impacting Real Estate”, but predictive analytics was a hot topic on the vendor floor too.
Companies like First and SquadVoice each use algorithms to analyze your personal sphere and your CRM (respectively) to identify where you should be spending time and who you should be talking to.
The more data we collect about our consumers, about our clients, and about our markets in general, the smarter these processes become.
6. We’ve Recovered From 2008, But The Industry Has Changed For Good
Joe Rand, Managing Partner and General Counsel for Better Homes and Gardens Real Estate delivered a very interesting retrospective of the real estate industry going all the way back to the 1970s, giving great context for the major market corrections of 2008 and 2009, and making his case that we are now, officially, post-crash.
“Every shift in the market, whether it be the consumer market or the agent market is accompanied by measurable change. During the crash, most of us were holding on for dear life, weathering the storm, just hunkered down. Costs were being cut left and right because we simply didn’t have the income to support them. Well guess what? The income is back, but the expenditures didn’t come with them.
Through that incredibly difficult time, we moved from the broker-agent partnership era to the era when agents look at their brokers like another vendor providing a service. The crash is officially in the past, not a current event.”
If you were in real estate in 2010, you remember, things got lean there for a while. Brokers were slashing the services and amenities they provided to agents by the boatload, and most interestingly, agents found that they didn’t need that stuff anyway.
Brokers started providing specific, targeted services. Yes, what they could charge agents went down, but so did their costs.
Could brokerages start offering these deluxe agent service packages again? Yes. Will they? We doubt it.
7. Voice Search is Going to Change the Way Consumers Search
We heard a ton last week about tech and how it will continue to affect real estate in real ways. Voice search took front and center in a number of presentations, and for good reason.
By 2020, it’s predicted that close to 50% of all Google searches will be done via voice, and more than 30% of web browsing will be done without a screen.
Amy Somerville, Senior Vice President of Professional Development and Engagement at RE/MAX shared, “Nearly 40 Million Americans now own a smart speaker of some sort. Voice initiated activities are changing the way we think about search, and the way we consume content. The rise of voice search has happened hand in hand with the rise of smart-speaker optimized content, like podcasts, of which there are now close to 700,000 active choices out there.”
Will the smart speaker take and voice search take over real estate?
We doubt it.
Much of the real estate online experience centers around pictures and video, two things that voice search and even the most entertaining podcast or flash briefing can’t provide. However, we do believe it is only a matter of time before things like showing scheduling and agent reviews are integrated into this space.
And, as voice search continues to migrate into our other technology, imagine the power given to a consumer when they are driving down the road, see a home for sale that they’re interested in, and simply say to their integrated dashboard interface, “Alexa, call the listing agent for the property I just drove by.”
Voice search is about adding subtle degrees of convenience. Those who recognize where that convenience is will be the winners in this space.
8. Time is an Agent’s Most Precious Resource, Not Leads
Embattled CEO of Compass Robert Reffkin had a lot to talk about this week, ranging from iBuyers to the Realogy vs Compass lawsuit. But, in between these more controversial topics, he mentioned something that tied very nicely with Joe Rand’s declaration of a new brokerage business model:
“An agent’s most precious resource is time, not leads.”
We had just finished listening to Joe Rand’s presentation “10 Years After The Crash: What Did We Learn?” where he laid out evidence for a new brokerage model, one where agents aren’t quite partners, and brokerages are more vendors that offer them services.
With this is mind, Reffkin’s statement about the most important thing to agents really hit home.
In order to sustain a business, of course real estate agents need leads, but most agents don’t rely on their broker for leads. They pick up the phone and get their own. There are a ton of places to get leads, and once these agents are capitalized by some success, it’s a matter of investing where you can continually get the best ROI.
What agents really need is time
Time to strategize, time to experiment, time to expand their business. Time to relax. Agents no longer accept that $100,000 in commissions comes with a 60-hour work week price tag.
Brokerages, service providers, and markets that can provide agents with time and flexibility are going to be the next round of winners.
9. Tech Stack vs All in One: Where Do You Fall?
Back in January, attendees of Inman Connect New York heard a lot about the attempted development of an all-in-one platform for agents. Lead generation, CRM, IDX website, and transaction management, an end to end solution that promised to be the only software any agent could possibly need.
While there are still plenty of service providers (and brokerages like Compass and Keller Williams) working towards that goal, there was renewed acceptance of the “tech stack” approach to the real estate business as well.
The reality is, the trade-off of from multiple platforms that collectively get the job done well to a single platform that struggles through some portions of an agent’s day just isn’t worth it, which is why the layering of multiple single-use products remains an attractive option for many agents.
In a session titled “Tech Tools Powering Front End & Back End Operations”, we heard a lot about how the way tools work together is nearly as important as the tools themselves. This leaves many real estate professionals with the question of whether or not they want to sacrifice performance for compatibility, and ultimately how much of their time (or money) they want to devote to getting their tools to work together.
We come down on the side of a stack rather than a single solution, at least until a platform we can really get behind emerges. Our major takeaway here is “Your tools should make you better, not busy.”
What does that tech stack look like? Different for every agent, of course. But, a good example might be:
- BoldLeads for lead generation
- PropertyBase for CRM
- Placester for website
- Docusign for electronic signatures
- Buffer for social media management
- Rex for review solicitation and management
10. Already Have Leads? Dozens of Apps Want to Help You Close Them
Our biggest takeaway from the expo floor was the emergence of service providers looking to supplement your existing services with add-ons, widgets, or services. At first, this seemed a little silly, but the more we got into it, the more it made sense.
For instance, the good people at SquadVoice pitched us the following:
“You’ve got a CRM full of leads that you’ve worked hard for, that you’ve paid good money for, that are just wasting away. We analyze who you’re working with and using predictive analytics and our own proprietary data, help you identify the best leads in a way that your CRM can’t.”
Adding another layer to the tech stack is something we’re always cautious about, but a relatively silent layer that simply enhances another? That makes sense.
Never Heard Of Agentology? You Will Soon
Another company we got pretty excited about was Agentology. After hearing the elevator pitch, we wanted to hear more.
“If you’re buying real estate leads online and can’t immediately follow up with them in the few minutes after you receive them, you’re missing opportunities. Agentology is the bridge between you and your leads, we live in that moment of immediacy, responding to, following up with and qualifying your leads within minutes, 24/7, 365. We provide live, US-based team members who act as a member of your team and make sure you connect with your leads when you are ready.”
Sounds pretty great, right?
We took an actual elevator up to the Agentology RocketSuite on the 55th floor of the Aria to hear more about the company, get the skinny on the podcasts they were producing in the suite this week, and to hear more about what they do to help agents succeed.
The Case For Another A Safety Net Is Strong
Apart from the cold beer and the warm fuzzies from a good conversation, we walked away with the following conclusion:
If you’re operating a tech stack-style real estate business, you’re going to lose leads and opportunities in the handoff from one provider to another.
Solutions provided by Agentology and SquadVoice are the nets under those exchanges, catching what you’re dropping. If one of these nets catches just a single transaction, it’s worth considering.
11. Big Data Gathering, Interpolating and Modeling Will Drive The Industry For the Next 10 Years
Every industry (including real estate) has been collecting consumer data for years, and the fruits of the big data harvest are really starting to show, but in our industry, we’ve just gotten started.
Consider your local MLS. Your local board has hundreds of data points on every sale going back for years, probably decades, and properly analyzed, this data can be used to make startlingly accurate market predictions, develop hyper-local consumer profiles, even help us better understand the effects of non-real estate events on our real estate markets.
Now, consider the California Regional MLS, a gathering point for ALL MLS data from across the state.
Not only does the volume of data absolutely explode when your umbrella expands, but the accuracy of the predictions and the different insights from that data are very exciting.
Big Data Is Being Used By The Major Players To Expand Their Reach
Now that we have companies like Zillow getting into the transactional side of the business, they have their statistical data to support their business decisions, allowing them to make smarter decisions about the services they offer. There is no question that big data is crucial, but who ends up owning that data will determine who wins and who loses in the next decade. It isn’t unreasonable to think that complimentary service providers will start sharing data with one another in order to better improve client experiences.
There is no question that big data is crucial, but who ends up owning that data will determine who wins and who loses in the next decade..
Did you attend Inman Connect in Las Vegas or New York this year? What were your takeaways? Got some thoughts on our observations? Share them in the comments below, let’s keep the conversation going.