In 1997, when I started in this business, “disintermediation” was a hot topic.
The real estate advertisements had just been put online. Expedia had launched the previous year and was already shaking up the travel industry. Many thought real estate agents were next.
At the time, there were 716,000 real estate agents in America.
Today there are 1,563,000 real estate agents in America.
An asymmetric fight for the future
As I write this, there is one real estate agent for every 165 American adults (in comparison, there is 1 doctor for every 262 American adults and one lawyer for every 250).
According to the NAR, the average homeowner stays in their home for 13 years.
This means that virtually everyone knows a group of real estate agents, but people’s engagement with the real estate world is largely episodic. It creates a diffusion – a sort of amorphous, confused, often irrational web of relationships, really – that makes transformative change extremely difficult to effect.
The trickle of this? Most importantly, the way people buy and sell homes and the way real estate agents get paid has remained virtually the same since 1997. Billions in funding, very bright business minds, a technological revolution – all this has swept the real estate landscape only for the most part, over time, receding, leaving the basic structures intact.
The effort to disrupt real estate over the past quarter century has been like a toothless gear motor: there’s a lot of spin, but very little forward drive.
Disruption with benefits (for real estate agents)
Yes, in recent years iBuyers has pioneered a new way of selling that “disrupts” the traditional model. But according to Zillow, in March they accounted for just 1.3% of existing home sales.
Power buyers, companies that face cash or create the cash effect, for homebuyers who want to buy before they sell, or compete in a hot market, have increased in over the past 2 years at a pace that seems unlikely to persist in a market downturn where buyers find it less imperative to pay a premium for such service.
It is important to note that iBuyers and Power Buyers vigorously seek referrals and/or partnerships with real estate agents.
Zillow, the most powerful brand in housing history, was launched with a “power to the people” philosophy aimed at wresting control of real estate information from real estate agents. Today, more than 75% of its income comes from these people.
Hearts, minds and dollars
My point with all of this: Realtors still hold the keys to the realm of home buyers and sellers. If you are a lender, you have always known this. If you are into Proptech, you came to learn it or accept it.
But here’s the thing: very few have mastered the art of winning the hearts, minds, and money of real estate agents. Many tech companies use the most tired, off-the-record, and often insulting approaches. They fall on deaf ears. Much of the marketing from lenders to real estate agents shows a superficial understanding of the needs of today’s practitioner and is poorly executed.
At my company, 1000watt, we help businesses and brands connect with real estate consumers and the real estate agents who serve them. We’ve seen what doesn’t work, helped create what works, and fully understand the sprawling complexity of this market.
Will there be 1.5 million real estate agents in 25 years? I do not know. But I’m quite sure that today, real estate agents remain at the center of the residential real estate world.
Brian Boero is the co-founder and CEO of 1000watt, a real estate brand and strategy agency.