Inman Industry Update

Information from the Inman Connect conference in Las Vegas in July 2019.

iBuyer:

  • https://zavvie.com/ provides iBuyer estimates to homeowners
  • https://exitnest.com/ offers transparency to sellers. Is connected to iBuyers and walks the seller/Realtor through offer submission. Provides real numbers in side by side layout. Often pushes sellers back to the Realtor. Request a snapshot for all your listing presentations.
  • Right now Opendoor is winning the iBuyer game. Their goal is to get to 7% profit, but are currently not profitable
  • All work within a similar buy-box. Offerpad has the most flexible buy-box
  • The following slide does not include BINSR items and seller paid repairs
  • This is for Q2 2019, Phoenix metro area

Zillow:

  • Zillow is not making a profit on things, they do not need to
  • Zillow is not a disruptor
  • It is said that Zillow has the nicest iBuyer properties
  • Zillow purchases 2% of the homes requesting an offer
  • Starting 10/1/19 iBuyer turn-down seller leads will be available to Premier Agents for a 35% referral fee
  • Customer service scores (CSAT) will define who is able to “buy” these leads
  • Agents must have a 92% or higher to get the iBuyer turn-down seller leads
  • Score keeping started in April, done by Zillow

“Sustained Unprofitability”

  • Mike Delprete’s 20-minute presentation from Inman Connect: “iBuying Disrupted: Battle of the Behemoths.”
  • He points out the only profitable public real estate companies are RE/MAX and Realogy
  • “Red is the new black.”

Venture Capital Money in Real Estate:

  • Residential real estate is 13% of the US GDP
  • $66B in commissions are earned each year
  • FINTECH (financial tech) and PROPTECH (property tech)
  • $12,200,000,000 invested in 2018 in real estate tech
  • $2.2B in 2011
  • $12.6B invested in the first half of 2019

Broker Tech (main place for VC funding)

  • CRMs and productivity systems
  • automating the transaction = a huge market opportunity
  • End to end platform includes?
  • search listings to work with Realtor
  • home viewing to financing to close & title
  • signing
  • recording
  • and more
  • Who is working on this?
  • Realogy (zap end to end platform)
  • RE/MAX (booj end to end platform) booj: be original or jealous
  • KW (command end to end platform)
  • end to end platforms are not one size fits all
  • Newcomers:
  • Homie (FSBO help, cheap)
  • Reali (low fee, uses tech)
  • Reasi (built on blockchain, uses smart contracts, handles transactions electronically without escrow)
  • Compass
  • Claims to be a tech company but operates like a traditional brokerage
  • now valued at $6.4B, more than Zillow
  • Showing massive valuation increase due to “hockey stick” growth
  • Has spent $300M on purchasing brokerages and recruiting agents
  • they are spending on average of $200,000 per agent
  • using newly acquired Realtor’s stats to show growth in market share
  • Compass is valued as a tech company, but is it?
  • Roadblocks for big tech during expansion across the country
  • data access & congruence (biggest hindrance for these companies)
  • state laws and regulations (title vs title/escrow states/dual agency)
  • multiple vendors (security issues)
  • complexity of deals
  • Many MLSs cost more than ARMLS and they aren’t as big so companies love coming here.
  • we are a lot further away from this working because there are so many moving parts
  • Vertical Integration:
  • employees
  • they have to build to make money across platforms
  • W2 employees to incentivize them to use internal companies: mortgage/title
  • tech is integrating with own companies
  • Last 15 years (without vertical integration) big tech had $2-3B in revenue, with a $10B market cap
  • Next 15 years:
  • adding Mortgage origination $17B revenue
  • Title $16B revenue
  • leading to big opportunity $100B in market cap

What will we be talking about in 2020? Adam Contos, CEO of RE/MAX: “I think in 2020 we will find out what end to end platforms really means.” End to End Platform:

  • Law in AZ is changing on 1/20/20 allowing documents to be notarized via streaming video camera
  • end to end platforms are being forced
  • what is the min viable product? it will come out in the next couple of years
  • we are in a waiting game. we can use tech but get too distracted by it. watching to see what is the best option? we need to see other experiences
  • White Label end to end platforms
  • CINC, https://www.cincpro.com/, (maybe also broker mint to get 90% of the transaction)
  • Property Base, https://www.propertybase.com/, (about $80,000 to set up, through Sales Force)
  • Realvolve, https://www.realvolve.com/, (drag and drop workflows, triggers texts/emails/reminders. includes client follow up)
  • Kvcore, https://insiderealestate.com/kvcore/, (previously Kunversion. great for internet leads, good for some referral based business)
  • Liondesk, www.liondesk.com, & Real Geeks, https://www.realgeeks.com/, (dashboard for clients)
  • Brivity, www.brivity.com (shares updates with clients)
  • Amazon referral partnership with Realogy. Amazon will likely not go into real estate, it’s too complicated

New brokerage models:

  • Rex: Real Estate Exchange, 2% only to company, does not pay co-broke. they do lots of marketing, they do not put listings on MLS
  • Knock.com: buy/sell same day. Cash offer with no contingency. knock pays for the buyer to move the house. Knock owns the new house, moves the sellers out, clean up the house. Owner old house and new house sell on the same day. includes all of the challenges of pre & post possession. (VC companies do not understand pre & post possession) lease backs and the 6% fee
  • all these companies care about is the consumer feels they want simple.
  • “if you cannot explain it simply then you don’t understand it” Einstein
  • these companies want to be simple and sell it.
  • old school Realtors made the transaction seem complicated to maintain the consumer’s reliance. Realtors have to change the marketing to show the simplicity
  • remember these companies do not need to make money, VC funding is funny money.
  • It took Zillow 12 years to cover their own costs, it took that time to get the eyeballs.
  • they want the mindshare, once they have it, they can sell it. must hit critical mass in order to sell
  • Homie
  • Purplebricks (left the Australian market in May 2019 and the US market in July 2019)
  • Side: brand new, new funding. all goes back to marketing. brokerage paid advertising as a white label technology solution. brokerage behind the scenes. they have a robust tech platform that is great for big teams, teams plugin and go with it. only in NYC
  • Roosted, https://roosted.io/, referral based model, for people who don’t sell houses

Vacation Homes #2 for all of VC spending

  • 5.5-6M properties sell every year in the year
  • 1.8M are investment properties
  • about 700K are used as short term rentals
  • that is about $7-$8M in commissions, every year
  • Scottsdale is the best place to buy a vacation rental. most expensive is $6,000 a night because of the experience
  • occupancy rate is 81% in our area
  • average daily rate in AZ is $301 a night (info from airDNA)
  • HOA can legally tell you what to do, city and state cannot regulate. there are new rules coming that allow flexibility. Many HOAs require at least 30 day rentals. Allowed to have houseguests, owner can live in one bedroom and rent out the rest of the house
  • about 20% of realtors have sold vacation rentals, it is a niche market
  • in order to thrive in this niche market, agents need:
  • show value in the transfer of business assets
  • valuations on vacation rentals/how income impacts sales price
  • landlords vs host mindset/options for owner-hosts who don’t live here. hospitality industry
  • business opportunity for Realtors. Have a host mindset and manage the AirBNB. Garner good reviews, all about educating owners/buyers
  • Judy Lowe said that if you manage an airbnb you have to have a real estate license

Emerging Companies:

  • Vacasa (www.vacasa.com): manages 14K rentals across the country. buy a bigger house and rent one bedroom, for 2 years. they keep the income. did well enough to buy their own properties, managing and owning
  • AirDNA (www.airdna.co): provides investor data for vacation rentals from AirBNB
  • Vrolio (https://www.vrolio.com/): vacation rental real estate marketplace. offers investor snapshot of portfolios in 1 minute. provides investor leads, place to buy and sell rental properties
  • Pillow (https://www.pillow.com/): added income for residents. housing more transient. (good for NYC) long term rentals and not actually subletting. building manager can allow unit visitors to stay in an house while renter is out of town
  • Swimply (https://www.swimply.com/), this company allows you to rent your pool out. pool party host, people traveling, people who want to relax by a pool. This is so new, they have no idea if it is legal or not.

Over the past 6 years people are moving way more often. Evidence shows people would move even more often if it were not such a hassle to do so.
AI, Chatbots, Automation

  • Nurture your database and have better conversations with your clients, all about relationships
  • 61% of conversations with clients is on the chat on websites (for bots)
  • Automation Tools:
  • Eva Bot, https://www.evabot.ai/, highly recognized at Inman. closing gifts, talks to them finds out what clients like and orders it and takes care of everything
  • Botsify, https://botsify.com/, teach it how to interact with clients. at any point you can come in and have conversation
  • Disclosures, https://disclosures.io/, helps with the disclosures required for each property. air pollution, traffic noise. packages the disclosure package and share the info. homes sell faster when the disclosures are provided up front. disclosing early is good. can email to other agent
  • Call Action, https://callaction.co/, ($200 monthly) great solution if you can’t answer the phone. routes the caller through a workflow, lots of different numbers
  • Homebot, https://homebot.titlepro247.com/: based on wealth building, provides an estimated valuation.
  • Bytegain, https://bytegain.com/: predictive analytics/AI plugin for home searches. watches search behavior. integrates with website, learning consumer behavior. figures out who is most likely to transact in the next 3 months
  • Shyft Moving, https://shyftmoving.com/: app. take a picture of room and creates quotes for moving services. allows you to hire what you need
  • KeyMe, https://www.key.me/: been around for a while but is making a comeback, app on phone to save key info. kiosks in Phoenix available, instant keys
  • Dash CMA, https://dashcma.com/: with a heatmap, lines up comps, very visual to see pricing, $20 monthly

What will we be talking about in 2020? Glenn Sanford, CEO of eXp Realty: “Blockchain.”
Blockchain: “a safer place to store real estate transactional data”

  • it is millions and millions of independent computers all getting the same info.
  • cryptocurrency (anyone can verify transaction)
  • tokens (piece of code cannot be changed. cannot be hacked) title insurance, verifying ownership
  • company is creating tokens for every single residential property. currently already has done it for all vacant lots in the US
  • smart contracts (reasi) walk through steps and meets conditions. if this then that. stuff doesn’t happen unless requirements are all met
  • using smart contracts, once all terms are met, money is released. we as consumers are not comfortable with this yet.
  • this will change a lot of things about our culture, community, world, but we are nervous about it.
  • Propy, www.propy.com: handles financial transactions. Good for luxury, helps with marketing, global advertising

Commission Transparency

  • Bombshell Lawsuit: Realogy, KW, RE/MAX, NAR, ARMLS and others are being sued. alleging anti-trust laws were broken, steering based on co-broke offered
  • asks why seller pays for the buyer agent commission? seller is paying for own representation
  • Corelogic, FBS & other MLS data providers allows searches by co-broke offered.
  • Co-broke effects average days on market
  • home sits longer on the market when offered 2.5% co-broke vs 3%
  • lawsuit is scary because we know the evidence is damning
  • Federal government doesn’t want to destroy 13% of GDP, they may require more data sharing
  • commission amounts disclosures
  • closed properties info
  • who paid what and how much will be shown
  • Northwest MLS are now publishing co-broke and publicly
  • iBuyer is 6% of our market, putting pressure on commissions
  • Consumers are demanding more transparency, agents can show their strengths
  • lawsuits in CA for 1099 vs W2
  • Realogy suing Compass for unethical recruiting practices

Nerdy Stuff

  • Restb, https://restb.ai/: sees home features and creates tags. takes 3 seconds using AI. Realscout is using this system. search very specific options without the fields in the MLS
  • MLS are moving from RETS to web API, rets is a download and send, web API is immediate, means info will be shared faster
  • RESO web API, https://www.reso.org/reso-web-api/: oversees MLS. moving everything faster for MLS, everything is faster, cleaner, easier
  • Streetwire, https://www.streetwire.net/: heavily invested in blockchain. already tokenized vacant land, “real estate data owned by the data creator.” $1300 monthly paid to ARMLS to share the data provided. long way down the road, ownership in the hands of the people
  • Blockchain can subdivide ownership

Published by Sarah Perkins

Sarah has been with Lawyers Title of Arizona since 2004. As an award-winning sales executive, Sarah's role is to bring transactions to Lawyers Title. To do this, she focuses on supporting her clients and helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today's home buyers and sellers.

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