Tech companies want a piece of the real estate pie. Amazon. Zillow. Opendoor. Rex. It seems like every week there’s a new company announcing its venture into the game. Here are some things swirling through my mind as I think critically about this trend.
1) Stress & real estate hold hands: Tech companies talk about real estate like it’s as easy as the click of a button, but it’s complicated because humans are involved. There are real people trying to negotiate, advocate for their interests, and navigate complexities in the housing market. Can we make things less stressful? I sure hope so. But are real estate transactions innately stressful because of all the moving parts? Probably.
2) The obsession with speed: There is space for escrows to be faster as tech firms say, but I hope we don’t lose sight of the importance of time. It’s okay to have space for necessary inspections, negotiation based on those inspections, and a reasonable contingency period so buyers and sellers are sure about their decision. There’s this idea that real estate should be instantaneous, and maybe one of these days it will be on the blockchain, but mistakes are easy to make if we go too fast. On that note, let’s be cautious about expecting too much from appraisers in this climate because speed can water down quality. Do you know what we need more than fast appraisals? Reliable appraisals.
3) The fine print: A company like Opendoor or Zillow can offer to buy a house at a price that seems reasonable on paper, but it can quickly become low when money for repairs is skimmed off the top – not to mention a higher commission than what is being paid during public sales on MLS. This is where sellers need to weigh how much they’re going to net with a tech company’s offer.
4) The narrative of convenience: Big brands are trying to capture consumers with the idea of making transactions easier. This sounds amazing and consumers certainly want convenience, but in my mind the bigger issue is money. Sellers want the highest price possible and buyers want to pay the least amount possible. I wonder at times if this idea is getting lost in the midst of clever marketing. Or are we as a society starting to value convenience more than anything? To be fair there is a segment of the market that will sacrifice profit for the sake of convenience. How much of the population will do this? We’ll see. The market gets to decide.
5) Models change: We no longer go to Blockbuster to rent videos, we use Google Maps instead of the Thomas Guide, and when booking a vacation most of us don’t use a travel agent. Thus when it comes to real estate, let’s expect to see change in the future. I’m not saying tech companies are going to take over and humans will lose to Skynet (a Terminator reference). But for anyone working in real estate, it’s a good idea to watch this trend, listen closely to the narrative being spun, show your value to consumers, and try to think ahead of the trend so you can position yourself for the future.
Anyway, that’s what’s on my mind. I hope that was helpful or interesting.
Bubble story on CBS: Yesterday I was interviewed for a piece on CBS Sacramento about Sacramento home prices being similar to the peak in 2005. Check it out if you wish. One quick note. The reporter said, “Have no fear” in the story. I wanted to clarify that those were not my words.
Questions: Which point resonates with you most? What did I miss? What are you most and least excited about with tech companies in real estate?