I spent last week in New York at the Inman Connect real estate conference, which I try to attend at least every couple of years. It’s an event that brings together professionals from the big real estate brands we all know and love (well, okay, we might not love all of them), like Zillow, Realtor.com, etc. with established and start-up real estate technology companies, a few reality TV celebs, and agents and brokers from across the country. There’s a lot to take in, and frankly a lot of it is fluff, but it does give me a chance to see what’s going on in my industry outside of Cambridgeville…
Here are some of the major themes that ran through this year’s event:
There was a big focus on making real estate data more readily available to lay-people, and I am a big believer than the more insight a person has into real estate processes, property values, inventory, and trends in their local market, the more comfortable they are going to be making a purchase or hiring the right agent to list their home.
The downside to data, of course, is that it is of little value without context and can be downright misleading when interpreted by algorithms that come up with an inaccurate result — the classic example being Zillow’s home valuation Zestimator.
But one aspect of the transparency push that is pretty interesting is the idea of having an open bidding home-buying process. For example, one of the founders of Uber has entered the real estate fray with Haus — an online platform, currently available in California, that enables sellers and their agents to open up the offer submission process to expose all offers to everyone involved.
That’s right: all buyers and their agents who are submitting an offer have full access to the price and terms of all the other offers in the mix. Sellers can accept an offer at any time, but until they do, buyers can make any changes they want to improve their offer’s competitiveness.
I can definitely see the appeal, as buyers are often going into multiple-offer situations totally blind and feel that when they are asked for “best-and-final,” they are just bidding against themselves. On the other hand, if there’s a large pool of offers with buyers changing their terms every five minutes, it seems it could cause MORE anxiety for those in the pool, and more frenzy and price inflation, rather than less.
On the flip side, this type of open bidding could also reduce the final sale price sellers get for their homes — for example, if a buyer who may have otherwise offered $1.3 million for a home sees that the highest offer is only $1.25 M and realizes they don’t have to come in that high to get the house. And maybe that’s actually good for the market, but it’s not necessarily in a seller’s best interest.
Seems like a case of “be careful what you wish for,” but I’m looking forward to seeing how it will be received by Californians.
Big trend #2 is *Big Data.* We all know by know that there is a ton of data floating around on the Internet on all of us — our FB posts, our browsing and shopping history, our phone and email contacts, our LinkedIn profiles, where we’ve been and where we’ve tried to go. And there are lots of companies out there leveraging this data to track what you’re doing and predict what you will do next.
For example, there were several companies at Inman Connect offering technology that can take an agent’s database, match their contacts with everything out there on the web, and predict which of these people are likely to buy or sell a home in the next six months. For buyers, a company called Doss has created a Siri-like desktop app for real estate, mining MLS data, public records, and who knows what else to answer any question you may want to ask about a house, local property values, etc.
If the idea of Big Brother freaks you out, be freaked.
Cooperation with Agents
After years of companies like Redfin and Zillow trying to “disrupt” the traditional real estate model with the apparent goal of devaluing agents if not removing them entirely from the process, I noticed a very strong theme this year of recognition that agents are not going away any time soon. “Research has shown that real estate is not a DIY experience,” was how one speaker that for the life of me, I can’t remember, put it.
One example of a “disruptive” company designed to work with agents, is Opendoor, which allows homeowners to sell their homes “and skip the hassle of repairs, showings and months of uncertainty.” Basically the company is a technology-based house flipper, which purchases homes at a “fair price” (as determined by some sort of Zestimate-like algorithm), does some quick fixes and cosmetic improvements, and turns around and lists the home for sale at a higher price. Buyers or their agents (they made a point to emphasize this) can then offer on the “after” homes and buy them through the same website.
The company is currently operating in Phoenix and Dallas, with plans to expand to ten markets in the near term. But I’m guessing they won’t be coming to Cambridge or Somerville anytime soon — first of all, our housing stock is too varied to be accurately priced by an algorithm. Second, Opendoor only deals in homes built after 1950 and worth between $125 – $500k. Those two criteria pretty much rule out 99% of our inventory. Third, I haven’t met too many homeowners willing to pay an 8% fee while potentially leaving a lot of money on the table by not exposing their home to the greater market.
Only time will tell how all these trends will play out, so we’ll just have to wait and see. In the meantime, I will leave you something I found super interesting — I quant NY — Ben Wellington’s very cool blog that mines public data for NYC to come up with some amazing findings. Kinda makes me want to be a data scientist.
And, btw, if you ever have the chance to see Diana Nyad speak (she was the keynote), definitely go — what an amazing testament to the power of human will!