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Real estate brokerages are teaming up with tech companies to win more clients and keep themselves at the center of the transaction as more disruptors enter the industry.
“Proptech”—the buzzword for real estate technology—has been steadily growing, with firms touting features from digitized closing solutions to artificial intelligence and data analytics tools. In the first half of 2019, investors poured a record $12.9 billion into real estate tech companies, CRETech reports. That already surpasses the total invested in 2017.
“Everyone wants to become a one-stop shop for the consumer,” says Mike DelPrete, a real estate tech strategist. “To succeed in the future, brokerages will need to be part of an end-to-end ecosystem. Over the next five years or so, if your brokerage is not part of one of these ecosystems you could be severely disadvantaged.”
Indeed, more brokerages are looking to offer clients additional services through business partnerships that range in size and scope. For example, Realogy recently teamed up with online retail giant Amazon for a buyer-agent match program, and several brokerages, both large and small, have aligned with iBuying firms to offer instant offers to home sellers. Plus, a growing number of real estate companies are partnering with firms to offer clients more concierge services. ERA Real Estate recently teamed with MooveGuru and Realogy’s Coldwell Banker has partnered with HomeAdvisor to offer programs that pay some of the upfront costs to sellers looking to spruce up their homes before they list.
DelPrete predicts more brokerages will seek out a variety of partnerships to expand the services they offer, but he doesn’t foresee that leading to one dominant real estate empire emerging from those who make the most alliances. There are enough partnerships to go around, he says. But more brokerages likely will look to compete by diversifying the services they offer to consumers, he says.
Taking on the Amazons
Amazon has long been teetering into real estate. The first rumors surfaced in 2017 when Amazon quietly released a landing webpage called “Hire a REALTOR®” with a “coming soon” message. The page quickly vanished shortly after the media started speculating on Amazon’s intent. More recently, DIY kit homes—small, prefabricated housing units—have become available on Amazon. The home kits, which have been selling out quickly through the site’s third-party retailers, include tiny standalone homes, from 100 square feet to 540-square-foot dwellings with 218-square-foot lofts. Amazon has also been touting more of its smart-home products and partnering with builders to gain momentum for their home products and services.
With more buyers heading online to start their house hunt, brokerages may be inclined to partner with online giants. In late July, Realogy and Amazon announced a program called TurnKey to match potential buyers to agents and then offer Amazon credits to customers who used the service to close on a home. Realogy—which includes Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, and ERA, among others—launched TurnKey in 15 U.S. cities so far. Consumers visit amazon.com/turnkey, respond to a series of questions, and then are matched to an agent affiliated with Realogy and the program. If the customer closes with that matched agent, they can receive $1,000 to $5,000 in fully installed smart-home products, like a Ring doorbell or Amazon Alexa, and Amazon Home Services, such as cleaning services or home improvement contractors. The amount varies based on the purchase price.
“You always have to be innovating to stay ahead,” Ryan Schneider, Realogy’s CEO, told CNBC about the Amazon partnership. “In a world that is awash with low-quality lead generation, where you can get real estate leads from millions of online websites, giving an agent and franchisees high-quality leads from a source like Amazon and Realogy together is a real differentiator that’s going to be very powerful for the group.”
Keeping the Agent at the Center
While it’s nothing new for brokerages to bring mortgage firms and title companies on board, some are now turning to iBuyers, too.
iBuyers offer home sellers instant cash offers—reportedly at fair market value—to bypass the traditional selling process. iBuyers allow sellers to choose their closing date and to close quickly on a home. The firm then relists the home publicly. Sellers usually pay a higher commission rate for the convenience.
Partnerships with iBuyers are becoming more common. In July, Redfin announced a partnership with Opendoor, allowing homeowners to get instant cash offers when selling, which expands the existing iBuying RedfinNow service into more cities. Then, in mid-August, Keller Williams partnered with the iBuyer firm Offerpad to expand its current instant offer program, Keller Offers. Company officials say the move was to keep the agent at the center of a transaction, even if sellers choose the fast-pass iBuying option over listing the home publicly on the MLS. Through the Keller Williams program, agents are able to submit a cash offer request on behalf of their clients to Offerpad. The agent then presents the instant offer to the seller, serving as their consultant in understanding their multiple selling options.
“With Keller Offers, consumers no longer have to pick between all the options available to sell a home without having an advocate advise them,” says Josh Team, president of Keller Williams. “We’re giving consumers the most choice available. And we believe an agent-driven consumer experience is best to deliver that choice.”
DelPrete expects more iBuying partnerships will form in the near future. “Brokerages are realizing iBuyers aren’t going away,” he says. “The Zillows and Opendoors have spent millions of dollars on advertising, and more consumers are being exposed to this new way of selling. They’re hearing these commercials about an instant sale and they wonder if it could help them.”
Not Just for the Giants
Such partnerships might seem to fit more readily with franchise giants or large brokerages, but independent brokerages are finding ways to team up, too. Partnerships on a smaller scale may be more doable with tech startups, such as those relating to move-in services, transaction management systems for digital closings, and lender alliances.
For example, Better Homes and Gardens Real Estate Metro Brokers in Atlanta recently partnered with Zavvie, an iBuyer aggregator, to offer Instant Move. Homeowners can compare various instant offers, from companies such as Opendoor, Zillow Offers, and Offerpad, all at once. The brokerage offers an estimate of how much sellers could potentially profit by putting their home on a market with a real estate agent side by side against instant offers, along with other fees and costs associated with each. Agents then guide the client through whichever method they choose.
“We treat instant offer companies just like any other buyers,” says Craig McClelland, vice president of BHGRE Metro Brokers. “In limited cases, an instant offer may be the best option for the seller. But in other cases, the convenience fees aren’t worth the lost equity. We pull together the information on the homeowner’s behalf, so they see the entire picture.”
Smaller to mid-sized brokerages might actually find it easier to form partnerships with tech firms, DelPrete says, because they have the advantage of speed. “They can do interesting innovative things because they tend to have less bureaucracy to go through. I see small to medium brokerages being able to roll out even more offerings,” he says. Also, smaller businesses can move faster since they aren’t public companies, thus offering more solutions to customers’ pain points.
“If you don’t have certain tools in your toolbox, customers will go elsewhere,” DelPrete says. “Agents need to find ways to stay at the center of a transaction and to stay relevant.”
