A decade ago, at the early stages of the venture capital boom that fueled the unicorn startup craze, my cofounder Michael and I began working late nights in a dinky office, our ambitions both limitless and naive. As a practicing real estate agent at the time, I knew that the industry was ripe for innovation, and we were determined to be at the forefront. That was the genesis of RealScout.
Of course, the challenges in the years ahead, unpredictable and daunting, tested our resilience and patience. Naturally, it’s this path behind us, littered with failures big and small, that led us to where we are today. But this retrospective isn’t about how “despite all odds, we persevered and succeeded.” It’s about how 10 years on, where we ended up — and where we’re going — is so much more meaningful and valuable than where we ever dreamed we’d be.
And it’s about how grateful we are to everyone for helping us get here. Here are the stories of three people, among countless many, that helped define what RealScout is today.
Adriana Plut, Customer #1
Not long after we started our long nights in the tiny office, local Silicon Valley agent Adriana Plut unexpectedly became RealScout customer #1. It was unexpected because we met Adriana well before we had the operations ready to take on customers. Yet, during an early prototype feedback session, Adriana pulled out her checkbook (literally!) to ask how she could sign up. She saw, ahead of everyone else, that taking responsibility for her clients’ online experience was critical to her business, and she took a chance on a couple of unknown entrepreneurs. That vote of confidence was the validation we needed to complete the v1 product; that product, which to this day, is at the core of every RealScout user’s experience.
Brad Inman, Community Builder
Another game-changing opportunity was given to us by none other than Brad Inman, who let us pitch our platform during the “New Kids on the Block” segment at Inman Connect. RealScout back then was a hyperlocal solution for only a small portion of the SF Bay Area, with years of work ahead of us to become a national solution relevant for the broader Inman audience. Yet Brad saw something in RealScout and gave us a chance to introduce ourselves to the industry. That was the start of many meaningful relationships with members of the Inman community and it instilled in us the importance of delivering thoughtful, informative content when speaking to the real estate audience. As young entrepreneurs, these words (and Brad’s continued support) fueled us in times of uncertainty.
Phil Cantrell, Early Buyer Graph Champion
Third was Phil Cantrell, a fiercely independent thinker who founded Benchmark Realty in Nashville and grew it into a powerhouse that inspires brokerages across the country. Phil is not known for chasing trends and jumping on bandwagons, so we were absolutely thrilled when he embraced the importance of the Buyer Graph initiatives back in April of 2019. Buyer Graph initiatives allow brokerages and their agents to share anonymized demand data on RealScout, providing market transparency for agents and clients. It was Phil’s confidence in this model that led to the success of the Nashville Buyer Graph and the other 18 Buyer Graphs (and counting) around the country.
Adriana, Brad, and Phil were just three of many in the real estate industry who listened to us, resonated with our vision, and took a chance on us. As entrepreneurs — but also simply as people passionate about an idea — there is no better, no more meaningful show of support.
If there is one thing we did right over the years to garner this support, it’s that we stuck, almost stubbornly, to our mission: to be the technology that strengthens, not weakens, the relationship between real estate professionals and their clients.
10 years ago, our human-centric approach was seen as contrarian among the broader tech community. Today, despite all the technological and financial innovation, buying or selling a home has proven to be an inherently human exercise that requires a human relationship to anchor its success. And it can be empowered by a thoughtful, complementary technology solution. RealScout aims to be that solution.
Our team, and the future of RealScout
The story, of course, isn’t complete without addressing our team. Over the years, we’ve been lucky to have many incredibly talented people contribute to the company; but, it’s when we took the company fully-remote in 2017 that we unlocked our full potential.
Our team today is a genuinely remarkable group of highly talented individuals of all backgrounds, focused on fulfilling our mission. The simple truth is that shared success with this group of people is motivation enough.
So what’s next? Naturally, we will continue to push the envelope developing tools for brokerages, teams, and agents to help nurture and convert their clients. We’ve been consistently upgrading our platform over the years, and this will only accelerate. In fact, we’re getting close to announcing key features that expand our customers’ ability to nurture and convert a broader audience of real estate consumers.
We’ll also continue to champion an open ecosystem for real estate tech, working with various stakeholders to make sure that every user gets the experience and control they deserve. The industry has come a long way in just the last few years, and I think there’s a lot more that vendors like us can do for the good of the ecosystem.
Most importantly, we’ll continue to be the real estate tech company that empowers, not disrupts people. As seen in the anecdotes above, we are at our best when working closely with and for our customers. You can count on us to listen to you, understand your goals, and make changes to solve the most important problems you face.
10 years on, we feel a strong sense of belonging in this community and, as a result, a profound sense of responsibility.
Our aspirations as young entrepreneurs weren’t ignoble or misguided; but, where we are today far surpasses our expectations of 10 years ago. It’s a true blessing.
Thank you for walking with us the first 10 years. Here’s to 10 more!
Long & Foster Real Estate and Intero Real Estate Services’ decision to work with open-architecture tech MoxiWorks and RealScout pays dividends
Long & Foster Real Estate and Intero Real Estate Services have partnered with technology companies committed to an open ecosystem.
Technology is too often a headache for real estate brokerages, rife with buyer’s remorse, implementation disasters, and chronic low agent and consumer adoption. This directly contradicts the purpose of introducing new technology platforms to a business, yet it’s a story that’s far too common.
Two brokerages, Long & Foster Real Estate, a dominant brokerage in the Mid-Atlantic and Northeast, and Intero Real Estate Services, a similarly market-leading brokerage in the San Francisco Bay Area, avoided these issues, in part, by partnering with technology companies committed to an open ecosystem.
An open tech platform is one that champions the idea that relevant software platforms should work seamlessly with one another, and data should move freely as the customer wants. A closed tech platform, either in the name of an “all-inclusive” approach or even competitive considerations, creates barriers that prevent seamless feature integrations and data transportability.
Strategically, both Long & Foster and Intero Real Estate Services recognized the value of open ecosystems, and they have made technology procurement decisions accordingly. No two tech companies better represent the success of this strategy than MoxiWorks, the leading real estate technology system with the first and only true open network platform, and RealScout, the leading solution for brokerages and agents to generate more business from their “sphere of influence.”
Both MoxiWorks and RealScout have designed their platforms from the bottom-up to enable integrations with 3rd party technologies and transportability of customer-owned data.
Customers that adopt either MoxiWorks or RealScout, and especially those who have adopted both solutions, have reaped the benefits of partnering with open platforms.
1. Simple, minimally disruptive implementation
Although some heavy-lifting is inevitable, open platforms like MoxiWorks and RealScout are best equipped to provide a seamless transition for both admins and users alike. When Long & Foster adopted MoxiWorks, MoxiWorks’ dedicated account management team developed a customized plan for implementation and training, leading to a smooth and successful onboarding process. Later, when Long & Foster adopted RealScout, thanks to the open 2-way integration between the 2 vendors, implementation was as simple as setting up a roster sync between MoxiWorks and RealScout, which automatically provisioned accounts, set-up basic profiles, and provided for automated maintenance of the accounts.
The positive effects of an easy implementation can be seen in overall cost reductions, higher adoption, and better user account management through integrated tools.
2. Increased user value from feature interoperability
Like most markets, agents at Intero generate a vast majority of their business via their “sphere of influence.” Engaging this audience is a multi-faceted effort that requires both CRM functionality as well as client collaboration functionality. Although all-inclusive solutions exist, MoxiWorks and RealScout are best-in-class solutions in their respective category. Thanks to their open platforms, instead of compromising on a particular solution, Intero could simply use both.
With MoxiEngage as the central source of client records, agents can easily SSO into RealScout to collaborate and convert their agents, knowing that incremental data is synced back into MoxiEngage. This seamless experience not only increases productivity for agents, it means clients receive more consistent and attentive customer service.
3. Opportunities created by data transportability
It’s no secret that every agent, team and even office have their own operational playbook, and especially for a brokerage as large and diverse as Long & Foster, there is no one-size-fits-all solution. One of the core benefits of an open-platform approach is the ability for it to accommodate a variety of lead-sources, marketing tools, and reporting outputs.
For Long & Foster, this means that MoxiWorks and RealScout, either directly or by pass-through, are connected with systems as diverse as: Zillow Connect, Realtor.com, Spacio, Buyside, ActivePipe, and more. This ability to accommodate a diversity of tools allows brokerages to empower their agents without reducing flexibility.
4. Inherent future-proofing
One of the key concerns many brokerages have about technology procurement is the speed with which technology becomes outdated. Even the most cutting-edge systems, without constant iterations, can get left behind by more innovative companies.
The benefit of partnering with open platforms is that by integrating with innovative 3rd parties, brokerages can ensure that they aren’t getting left behind. Users, data, and workflows can be adapted to work with the latest tools, without completely abandoning legacy systems. Furthermore, since open platform companies can’t rely on high switching costs for customer loyalty, they continue to compete on innovation and value-delivery, as evidenced by both MoxiWorks’ and RealScout’s rapidly evolving offerings.
“Being an all-inclusive solution is never going to truly give a brokerage everything they need,” said York Baur, CEO of Moxiworks. “This is why we decided early on that having a platform that lets our customers plug in the best solutions would be the ultimate route to success for each brokerage’s unique needs. RealScout is a great example of a great long-term partner that continues to help us fulfill the promise of this open platform strategy.”
RealScout Co-Founder and President Andrew Flachner added, “we share a strong conviction with MoxiWorks that brokerages should have meaningful control over their tech tools and data. While a walled-garden architecture might offer control, only when users and data can move freely between various platforms of choice, does control generate value. Our partnership with MoxiWorks exemplifies how brokerages are empowering their agents, clients and themselves by building strategic value around their sphere of influence and data.”
The benefits discussed above are some of the most basic ones that brokerages, agents and clients experience by partnering with open tech platforms. By rejecting the notion that software generates long-term value by locking-in their customers, open platforms empower their customers by embracing a diverse set of tools, users, and the opportunities they create.
By rejecting the notion that software generates long-term value by locking-in their customers, open platforms empower their customers by embracing a diverse set of tools, users, and the opportunities they create.
For these reasons, Long & Foster and Intero’s decision to build their technology offering around MoxiWorks and RealScout was not only a tactical win driven by the immediate benefits of the two solutions, but a strategic one that will continue to pay dividends in the future as the platforms continue to integrate and innovate, through open, transparent partnerships.
Or, is it welcome to DC, RealScout? Either way, we are excited to share the launch of the DC Buyer Graph today, with 10 leading real estate brokerages in the capital area. This initiative helps member brokerages take control of the customer search experience while providing market transparency in the face of changing market conditions.
The DC Buyer Graph founding members include Century 21 New Millennium, City Chic Real Estate, Keller Williams Metro Center, Long & Foster Real Estate, McEnearney Associates, Realty ONE Group Capital, RE/MAX Realty Group/100, RLAH Real Estate, TTR Sotheby’s International Realty, and Washington Fine Properties.
“Since day one, deepening the relationships between brokerage, agents and consumers, has been the mission of RealScout, “ said Andrew Flachner, President and Co-Founder of RealScout. “Now, more than ever, it’s important to double-down on relationship-based strategies because many real estate portals and iBuyer platforms are starting to compete with the traditional brokerage model. For years, RealScout has helped brokerages strengthen their network via high-engagement buyer tools, and more recently with seller tools powered by the Buyer Graph.”
With the addition of the DC Buyer Graph, the initiatives now cover a dozen regions, including major metropolitan areas like Boston, San Francisco, Philadelphia, Los Angeles, and Denver. In the Capital Region, which is part of the Bright MLS footprint, participating brokers will be able to glean data across Washington DC, Maryland, and Virginia, which is particularly helpful as area buyers have numerous neighborhood options and may cross state or district lines to find the perfect home.
“In these rapidly changing times, CENTURY 21 New Millennium was looking for a partner who would be able to provide our agents with a competitive advantage, and, most importantly, our clients with an extremely powerful added benefit to our value proposition. RealScout is most definitely that partner,” said Todd Hetherington, CEO of CENTURY 21 New Millennium.
Since this summer, RealScout has been debuting new features that make the Buyer Graph even more valuable to agents, brokers, and consumers. Utilizing pooled and anonymized buyer activity, Buyer Graph data shows where buyer attention is most concentrated, and how it’s evolved over time. The data also shows what impact small adjustments to list price have on the volume of buyer-matches, among other listing-specific insights. As market conditions change day-by-day, these tools can help listing agents engage their seller clients, produce highly relevant listing presentations, and craft well-informed pricing (and price adjustment) strategies.
“Knowing who the buyers are, where they are and what they’re looking for—all information that’s part of RealScout’s Buyer Graph—is invaluable for our agents and a strong value proposition to their sellers,” said Boomer Foster, president of Long & Foster Real Estate. “As one of the anchoring members of the DC Buyer Graph initiative, Long & Foster will be able to offer customers significant visibility into real-time buyer behavior – which is so important during this time when buyer demand is surging in the DC area.”
“The Buyer Graph puts real-time information at our fingertips in an unprecedented way. With the MLS we’ve always had insight into the supply side of the equation: listings. Now we have a powerful tool on the demand side – what buyers are actually searching for,” said David Howell, EVP/CIO of McEnearney Associates Real Estate. “It makes our agents better and, even more importantly, equips our clients with information they need to make sound decisions in a rapidly changing market. It’s no wonder we’ve had very wide and rapid adoption among our Associates.”
RealScout’s award-winning home search platform, which was recognized recently as one of the top resources for real estate agents (Source: RISMedia), enables high-touch collaboration with buyer clients during a time when agents can’t be physically present for much of the clients’ home search. The insights generated from this buyer activity is securely anonymized and repackaged to power the DC Buyer Graph alongside twelve other regional Buyer Graph initiatives.
The DC Buyer Graph, like all Buyer Graphs, is open to any brokerage. Broader participation in a Buyer Graph improves market transparency and benefits real estate consumers by powering even more data-driven decision-making. In markets where Buyer Graphs are not yet formed or announced, brokerages can opt to anchor a brand-new initiative with peers in their market. To join an existing Buyer Graph or to inquire about starting a new Buyer Graph, contact buyergraph@realscout.com. Learn more at learn.realscout.com/buyergraph.
“On Thursday, March 12th, we were huddled in our Melrose office for a scheduled office meeting. The energy around the room was different. News of COVID-19 had started to heat up and become more real. By the end of the day, announcements came of school closings and a possible closing of the registry of deeds. It was at that point that we began putting a communication plan in place. By Monday morning, we had closed our offices and were hosting “daily relentless focus” Zoom meetings with our agents, keeping them informed and providing them with guidelines on how to serve their clients in the safest possible way.” Christine George, President of Marketing and Business Development, Leading Edge Real Estate
Providing inspirational leadership during good times is easy. Creating a company culture that is sustainable during times of crisis–that’s not something that real estate companies typically focus on. When the pandemic hit, Leading Edge Real Estate was ready. They had already built out agent support systems, articulated everything from their value proposition, and nurtured a company culture of community and inclusion. The leadership team quickly wrapped their arms around their agents, virtually, and hit the ground running to make sure everyone would survive and thrive.
Resolve Forged Through Past Experience
Long before COVID-19’s impact, Leading Edge was laying the groundwork for handling any tough situation that might develop. An independent brokerage with 11 offices in Massachusetts, the company maintains a clarity of mindset around values and purpose. The leadership team does constant work on thinking ahead, educating agents and finding new ways of doing business. They are structured as a high-touch organization, allowing them to help agents adapt to changing market conditions and business practices.
Saturday Social: Spotlighting Agents
Experience forged the crisis management plans at Leading Edge. Past challenges spawned well-articulated systems for agent outreach, messaging, and mobilization. Agents had been trained and prepared to look immediately to the company’s leadership to provide information and guide them. And the leadership team is a true team that works harmoniously to best serve the agents and light the way forward.
Charting a Path Through a Pandemic
The company took decisive action for COVID-19 on March 23rd. They published an open letter announcing everything was moving virtual, and they closed their offices. No in person meetings, open houses, or private showings would take place. The leadership team shifted their communications and education plan to match the new business practices they were putting into place for the agents. In fact, they make time each day to call agents directly, checking in on them and offering advice and assistance.
“The steady leadership of Steve, Paul, Eileen and Linda during this difficult time has been critical to my ability to continue working, and thriving, during the COVID-19 pandemic. It has been incredible to see them in action throughout these rapidly changing circumstances. They have quickly and repeatedly reinvented our business practices, and provided us with up to the minute market data and new tools we need to continue to serve our clients during this continually evolving crisis.” Martha Brown, Leading Edge Agent
Tools and Training for Virtual Transactions
The company immediately empowered agents to sell virtually. Leading Edge provided tools and training for virtual open houses, virtual staging, and wireless funds transfer. A photography partner even has a ‘robot camera’ to create contact-free professional photography, 3D tours, and floor plans. Leading Edge agents had everything they needed to be able to list homes with minimal in-person contact, and easily transact with sight-unseen buyers.
Leading Edge agents are also able use RealScout’s buyer graph tools for up-to-the-minute data on buyer demand and market insights. Since historical market data can’t be exclusively relied on to make sense of the current real estate environment, finding new methods of looking at market data is important. The collaborative search tools are critical when agents and buyers are working together virtually.
Nurturing the Work/Life Balance
Leading Edge Real Estate views their agents as their clients. The company’s core values center around seeing each of them as a whole person–not just a real estate agent. Leading Edge baked in work/life balance. The relationship between Leading Edge and the agents goes far beyond real estate, and helping them weather any hardship.
“At Leading Edge, everything we do, we do in the spirit of serving our agents and clients. We believe that happy, healthy agents are productive agents. So when it comes to support and education, we take a holistic approach. Even before COVID-19, we were providing self-care practices through yoga and meditation, group walks, gratitude journaling, etc. We’ve also built a strong sense of community by supporting one another’s personal successes through our weekly Saturday Social posts on social media and through discussions in our private Facebook group. We understand that without life there is no work so taking care of oneself and family is a critical component to professional success.” Christine George
One of their recent morning standup calls included their ongoing group yoga practice. Except this time, they came together on Zoom for a videoconference. The brokerage has the same sense of community, but are just using different methods to nurture it.
Poised to Thrive
“In extraordinary times when many agents and brokerages are paralyzed, Leading Edge rises, innovates and unifies. Stepping up once again, our leadership delivers value nothing short of what could be considered life or at least sanity-saving. Naturally, they’ve led in terms of navigating the business amidst the pandemic via forging new policy, innovative technology and pivoting strategies. But their impact on each and every agent on a personal level, redefines culture and community in the workplace. The bond forged within the company is now stronger and deeper than ever, because of their tireless efforts. As a result, we’ve never been in a better position to thrive personally and professionally.” Bill Butler, Leading Edge Agent
With real estate now operating as a primarily virtual business, there’s no way to know if the traditional, ‘normal’ methods will return. But Leading Edge equipped the whole company to remain in front of any future disruptions, empowering their agents to succeed and thrive in any environment.
There are moments in history where huge business opportunities are suddenly unlocked. Like the gold rush, these opportunities create fierce competition, rapid innovation, and new winners and losers.
A new gold rush is emerging in residential real estate, but the resource in this case isn’t a precious metal, it’s buyer data.
“A new gold rush is emerging in residential real estate, but the resource in this case isn’t a precious metal, it’s buyer data.”
So… what is buyer data, and why is it so valuable?
Simply put, buyer data is information about real estate demand in a particular market. How many homebuyers are seriously looking in a given zip code? How many beds and baths are in demand at what price point? What styles or features are popular right now?
The power of this information is staggering, and even more so if you are a listing-centric broker.
Let’s say you’re looking to differentiate against your competitors during listing presentations. Your competitors are using historical transactions as a highly flawed proxy for explaining property prices and demand. But with access to your buyer data, analyzed with the right tools, you can provide homeowners with a real-time list of buyers that are relevant to their property – an incredibly powerful value proposition to your clients.
“With access to your buyer data you can provide homeowners with a real-time list of buyers that are relevant to their property.”
Read More about Differentiated Listing Presentations Here (link to #005 – Once it’s published)]
Or take the practice of marketing listings to agents through e-flyers. Today, listing agents are haphazardly sending out e-flyers to random buyer agents – a recipe for low conversion. With buyer data, listing agents can target their communications only to buyer agents with qualified home buyers, making the listing agent’s marketing far more relevant and personalized. This not only saves money and effort, but will lead to more fruitful business conversations.
This, and many other benefits, are why there’s a rush to grab this buyer data.
Consumer portals like Zillow and Trulia, as well as alt-brokerages like Redfin and Compass have built robust consumer home search tools to attract and collect data from consumers. Others like Buyside have begun to aggregate buyer data from various 3rd party sources as well.
Traditional brokerages and agents have fallen behind, despite the fact that often the buyer data belongs to brokerages and agents to begin with.
“Traditional brokerages and agents have fallen behind, despite the fact that the buyer data belongs to brokerages and agents to begin with.”
The important thing to remember is that – like the gold rush – this is a land-grab. Every one of your clients that aren’t conducting their home search on a broker controlled platform – is a client that is leaking their buyer data to a 3rd party.
Read More about how Brokers are Losing the Battle for Buyer Data Here.
Platforms like RealScout help brokers stop this leaking, and enables brokers to take advantage of buyer data for increased profitability.
Now is the time for brokers and agents like you to full-heartedly enter the gold rush for buyer-data, and assert your position as the center of the real estate transaction. After all, your long-term wealth may depend on it.
About RealScout
RealScout (www.realscout.com) is the brokerage and agent-branded home search platform that empowers agents and their clients to find the right home faster. RealScout supports the competitive needs of brokerages and agents by helping them work in concert with their clients throughout their property hunt. Homebuyers receive exclusive personalized property matches based on their specific lifestyle and feature preferences. Agents have visibility into buyer activities to best meet evolving client preferences, boosting client loyalty and facilitating informed, data-driven decisions that generate more offers in less time.
In previous articles, I’ve talked about how buyer data is leading to a gold rush in the real estate industry, and how buyer data is revolutionizing how we do business.
A common observation in both is that brokerages and traditional real estate professionals are behind the curve in this buyer data land grab. Losing this battle means that brokerages and agents could lose control over their transaction supply and demand, thus weakening their position in the ecosystem.
So let’s explore the 3 reasons why brokerages are at a disadvantage today:
1. Brokerages don’t control where buyers search for homes
The most fundamental problem is that traditional real estate brokerages don’t control where their buyers are searching for homes. As NAR Surveys show year after year, real estate consumers are digital natives, conducting a majority of their home search and decision-making online or on mobile.
Real estate brands however, don’t control these digital channels. Most of the time, consumers are looking for homes either on a portal site like Zillow or Realtor.com, alt-brokerage websites like Redfin or Movoto, or on their local MLS website.
The problem is straightforward. None of these channels are controlled by brokerages, thus all the valuable information a buyer generates about their purchase behavior either gets lost, or worse, it gets collected by a competitor.
“Valuable information a buyer generates about their purchase behavior either gets lost, or worse, it gets collected by a competitor.”
Brokers and agents therefore, need to find a home search platform that they control, and importantly, one that consumers will choose to use.
2. Brokerages don’t know how to collect buyer data
Even for forward-thinking real estate brands with a strong home search experience, many don’t know how to collect actionable insights from their buyer’s search behavior.
This isn’t the brokerages fault, however. Extracting actionable data from user-behavior is a highly technical and arduous task that requires dedicated engineers and data scientists. While some of the largest brands may be able to field a team of experts, most brokerages would be hard-pressed to make that commitment.
“Extracting actionable data from user-behavior is a technical and arduous task that requires dedicated engineers and data scientists.”
Of course, the same non-brokerage technology players mentioned above are also fielding expert teams to make sense of buyer data. Unfortunately, not many of these companies are opening this capability to brokerage customers.
3. Even with buyer data collected, brokerages don’t know how to act on it
Leveraging buyer data for real estate business is still a cutting-edge discipline, and most companies don’t have the infrastructure or tools to take advantage of the opportunity.
Let’s examine the most basic use-case: marketing a listing. It’s common at brokerage sales meetings for listing agents to stand up and describe their new listing, asking whether their colleagues have relevant buyers. This is perhaps one of the most inefficient forms of listing marketing, and buyer data can transform this experience.
If a brokerage 1) captured their buyers, 2) collected the buyer data, and 3) had the right tools, listing agents can actively identify buyer agents within their brokerage that match their listing. So instead of standing up during a poorly attended sales meeting, they can send a personalized message to the most relevant buyer agents, no matter which office they belong to. While straightforward, the effectiveness is night and day.
Obviously, there are hundreds of other ways that a brokerage can take advantage of buyer data, ranging from business intelligence, marketing, and recruiting, but each requires technical work and a product know-how to execute.
“There are hundreds of ways to take advantage of buyer data, ranging from business intelligence, marketing, and recruiting.”
There are extremely few solutions in the marketplace that will help brokerages fight back in this battle for buyer data. Platforms like RealScout are some of the only solutions that effectively solve all 3 problems for brokerages.
While real estate brands may have gotten a late start in the battle for buyer data, with the right mindset, technology, and long-term partners, there’s still time for a decisive comeback.
About RealScout
RealScout (www.realscout.com) is the brokerage and agent-branded home search platform that empowers agents and their clients to find the right home faster. RealScout supports the competitive needs of brokerages and agents by helping them work in concert with their clients throughout their property hunt. Homebuyers receive exclusive personalized property matches based on their specific lifestyle and feature preferences. Agents have visibility into buyer activities to best meet evolving client preferences, boosting client loyalty and facilitating informed, data-driven decisions that generate more offers in less time.
• Threats to the broker-centric model from alt-brokerages, portals are real and growing.
• But brokers have under-appreciated, underutilized assets that can be used to fight back.
• On top of historical and legal advantages, network and data mark a significant opportunity.
–
January is a time for predictions for the year ahead — and this year, strangely, I’ve noticed a sense of pessimism surrounding the broker-centric model of real estate.
To many, it seems as if the end of brokers is near. Yet as I spend time with brokerage executives and study technology trends, I come to a completely different conclusion. The doom and gloom is unwarranted.
Here’s why: Threats to the brokerage-centric model are, of course, real and growing, but the rhetoric that brokers are not in control of their future viability ignores the distinct and powerful advantages brokers have against their specific and systematic competitors.
By leveraging these advantages and assets, in 2020 and beyond, brokers can, and will, reassert their position as the center of the real estate industry.
In 2020 and beyond, brokers can, and will, reassert their position as the center of the real estate industry.
Unwarranted pessimism?
Let’s take a quick look at the trends threatening the brokerage value proposition. The first to come to mind is the brute-force strategy for capital-rich companies (such as Compass) to flood the agent recruiting market with cash. Regardless of this model’s long-term sustainability, it’s broken traditional agent recruiting paradigms and raises some fundamental questions about broker value propositions.
Another area of disruption is broker-provided technology and marketing infrastructure. Portals are aggressive in providing increasingly valuable agent tools for “free,” not only eroding the value of broker-provided technology and marketing tools in the eyes of agents, but also affecting consumer perception of real estate brands.
Will the day come when being a “Zillow Premier Agent” is as valuable as being a “Coldwell Banker agent”?
Alternative model brokerages (or alt-brokerages) also threaten incumbents, with companies like Redfin and Opendoor going after consumer attention directly. Clearly, these companies have only made a small dent in the overall market, but as they gain further economies of scale and network effects, their impact will only grow.
These pressures on agent recruiting, broker-provided tools, and consumer attention threaten the brokerage status quo and is driving the surge of pessimism.
This pattern goes beyond opinion and rhetoric, however. It’s no coincidence that the frequency and magnitude of venture capital funding into disruptive real estate technology has accelerated in recent years.
Smelling blood, investors have placed bets on companies that seek to slash and burn the current real estate model. Compass and Opendoor have raised over $200 million and $300 million, respectively, and a flood of early stage startups like SideDoor, Reali and Open Listings have entered the market as well.
Taken together, one can’t be blamed for worrying about broker obsolescence.
I, for one, reject this narrative.
Untapped broker assets
I am a cautious optimist. Yes, the broker-centric model is facing serious threats in the industry, and I don’t mean to diminish their importance.
On the other hand, journalists, venture capitalists and even brokers themselves have undervalued the fundamental strengths that brokers have — to not only stave off existential threats, but to also find new opportunities ahead.
Most obviously, the broker is still, and will continue to be, the legal and transactional center of real estate.
This is not a trivial advantage.
Executional experience in risk-management, regulatory maneuvering and financial strategy — especially in a hyper-local industry — are not things that alt-brokerages or tech startups can garner in just a few years, no matter how much cash they try to throw at the problem.
The cultural and personal aspects of the broker-centric model can’t be ignored, either. Brokerages are meaningful sources of agent training, collaboration and community — they are central to how agents run their business.
Consumers clearly value and discriminate by brokerage brand, services and relationships, as seen in the dominance of traditional and local brands dominating most marketplaces.
The most under-appreciated and underutilized asset in a broker’s arsenal is the network and data.
The most under-appreciated and underutilized asset in a broker’s arsenal is the network and data.
The concept of a broker’s network isn’t anything new — it’s the collective spheres of influence of a broker’s agents. A broker with a large, high-quality network has an powerful platform to leverage for their business, and importantly, it’s a network that by definition, cannot be replicated elsewhere.
This network is the moat that protects brokers who choose to make it a strategic focus.
As a byproduct of this network, brokers have exclusive access to an incredibly valuable data-set of real estate listings, consumers and transactions, all of which are ready to be tapped for growth.
By managing and leveraging their existing network and data asset, they can drive transactions, win listings and even recruit more agents. This is the massive opportunity for brokers to solidify their footing at the center of the real estate universe.
By managing and leveraging their existing network and data asset, they can drive transactions, win listings and even recruit more agents. This is the massive opportunity for brokers to solidify their footing at the center of the real estate universe.
There is a nuance when it comes to network and data, however. Too often, brokers don’t have the capacity to capture the network, extract the data and fully utilize it to their advantage. It’s like sitting on a diamond mine; without the necessary mining machinery, it’s little more than a pile of rocks.
It’s second-nature for brokerage executives to know exactly how many listings their agents won in the last month, but seldom do they know how many active buyers are affiliated with their agents at any given point. This blind spot, among others, keeps brokers from realizing the true value of their network and regaining their strategic edge in the market.
Year of the broker
As with any advantage, these aren’t evergreen. Regulations change, consumer sentiment evolves, and brokerage market share shifts. Yet in my view, in the near future and certainly in 2020, these advantages and assets are still robust and are ready to be extracted.
With the right strategy, partners and tools, brokers can, and have an obligation to, take control over their own destiny — not defensively, but by playing offense against their threats, making the most of the opportunities ahead. The broker head-start is still huge, especially in their network, and I’m optimistic.
2020 is the year of the broker, and it’s just the beginning of a bright future.
In most industries, one or two companies emerge as category winners after they reach enough market share to unlock massive, new competitive advantages that the rest of the market can’t replicate. I call these advantages superpowers.
In the residential real estate market, this process of market share domination is at an early stage now with the aggressive rise of venture capital-backed brokerage models.
For real estate brokerages to compete effectively in this changing market, it’s critical to understand how this process is playing out in real time — who the key players are, what superpowers they’re developing, and the steps you can take to develop superpowers of your own. That is my purpose with this article.
Before we focus in on real estate, let’s take a general look at the market forces at play and how they tend to work out.
Reaching the Tipping Point to Unlock Competitive Superpowers
To reach a position of dominance and compounding growth, companies must first reach a tipping point in market share which enables two critical superpowers:
Superpower #1: With enough market share, companies can literally make the market because they control so much of it.
Superpower #2: Dominant market share also enables a company to leverage data to differentiate and dominate.
How do companies reach the initial market-share tipping point, and how can they utilize these superpowers when they do? Two companies in other industries can give us a blueprint: Airbnb in the alternative accommodation market and Google — specifically, Google Assistant — in the AI arena.
Superpower #1: How Airbnb Grew Market-Making Might
Airbnb is a great example of the market-making superpower. Founded in 2008 by two 27-year-olds struggling to pay their rent, the room-renting service simultaneously revolutionized the hotel, vacation rental, and long-term rental markets while proving the viability of a new type of “sharing economy”.
By just about any measure, Airbnb reached the tipping point long ago and now dominates the alternative accommodation market:
Morningstar calls the competitive superpowers derived from Airbnb’s 250 million monthly visitors and 5 million listings “network effect advantages,” and predicts they will drive superior growth in Airbnb’s core alternative accommodations market relative to its competitors (16.6% growth for Airbnb vs. 9.4% for competitors over the next 5 years). This will raise Airbnb’s market share to 45% in 2022 versus 30% in 2017.
Airbnb has clearly achieved the Minimum Viable Liquidity needed to reach the tipping point and make the market.
Minimum Viable Liquidity = the amount of supply and demand that you have to control to be able to make the market by yourself.
But that’s today. As an early-stage company, Airbnb’s dominance was by no means assured. Growth was slow at first, and the company commanded a sliver of market share compared to competitors.
On the contrary, Craigslist had a massive user base in those early years. Further, Craigslist was the place where people who wanted alternative accommodations (besides hotel rooms) looked for listings—which is Airbnb’s exact target market. So, Airbnb performed what has now become a legendary growth tactic by creating a bot that automated posts on Craigslist, unbeknownst to Craigslist and contrary to its terms of service. The ploy worked, helping Airbnb quickly grow its listings and users at almost no cost on its rapid rise to the tipping point.
Superpower #2: How Google Assistant Dominates through Data
While Airbnb is a great example of Superpower #1 (the ability to make the market), Google Assistant is a great example of Superpower #2 (the ability to differentiate and dominate through data).
Survey after survey finds that Google Assistant is the smartest and most helpful of all voice assistants. How did it get so smart?
Artificial intelligence is driven by data. To reach the data-domination tipping point, you need to amass a Minimum Viable Data Set.
Minimum Viable Data Set = the amount and quality of data that you need to kickstart a learning loop.
Learning loop = a positive feedback system that is self-reinforcing.
A learning loop enables you to provide significantly better services to customers than the competition, thus gaining more customers faster, thus improving your ability still more to provide better services, and thus gain still more customers, and so on in a powerfully self-fueling loop.
There’s no question that Google Assistant has far more than the Minimum Viable Data Set today. Because Android is the world’s largest mobile operating system, Google can learn from its 1 billion users. This is double the amount from just last May, and more than 10x the number of devices that Amazon Alexa is on.
Google, however, didn’t start out at the top of the heap. How did the company reach the Minimum Viable Data Set to gain the data-domination superpower?
This is the story of another legendary growth tactic. Google launched a toll-free telephone service called 1-800-GOOG-411 in 2007, which provided a business directory based on speech recognition. It also enabled Google to quickly build a large phoneme database from users’ voice queries, and these billions of utterances, in all their human variance, would then train Google algorithms to understand us better and enable Google engineers to refine the company’s speech recognition engine to the point of a competitive superpower. Having amassed all the voice samples it needed, Google discontinued the service in 2010.
To reach the tipping point and achieve a minimum viable data set, Google even used physical billboards to promote their free 411 service, which it later admitted was a data collection scheme to train the Google Assistant.
The Ripeness of the Residential Real Estate Market
Now, with the examples of Airbnb and Google Assistant fresh in mind, let’s turn to the residential real estate market.
The real estate industry hasn’t yet encountered a company that’s captured enough market share to reach the market share tipping point. One key reason is that the MLS has leveled the listing data playing field so that no one has been able to gain a competitive advantage with data. In other words, supply side is visible to everyone.
The demand side, on the other hand, has been largely invisible, because consumer behavior is either not captured by the brokerage community (see below)–or, when it is, it remains proprietary.
Though no brokerage has reached the tipping point yet, there are clear signs that at least one company is on its way. If those signs bear out, explosive growth could be on the horizon. And, once that happens, competitors will find it nearly impossible to catch up.
Let’s look at three quick case studies of growth strategies being deployed in the market right now in the race to the tipping point.
Case Study #1: Here Comes Compass
Compass has traded capital for rapid growth, raising a reported $1.2 billion and a valuation of $4.4 billion. With these resources at its disposal and not shy about losing money for the moment, Compass has been catalyzing growth by offering significant sign-on bonuses, investing deeply in technology, and doubling down on M&A.
Many observers have a hard time understanding how any brokerage can invest so aggressively, often complaining that “it’s not sustainable” – “it makes no sense” – “it’s not a profitable way to do business”.
It does make sense, however, if you consider the superpowers that a company gains by reaching the tipping point first and thus becoming a single, dominant company that can 1) grow by making the market and 2) differentiate and dominate through data.
For Compass, San Francisco is ground zero for this strategy, where the firm has about 36% of the market. Compass has expanded its local footprint quickly through acquisition, the latest being the March acquisition of Alain Pinel with its1,300 agents and $12.2 billion in 2017 sales volume—the third such acquisition in 8 months. According to Compass, the company is not only the biggest brokerage in the Bay Area, “it is now the largest residential brokerage in the country by sales volume, growing from $15 billion to more than $35 billion between January 2018 and January 2019.”
Compass has realized that market share makes their brokering power bigger. With more listings and more buyers, they can bolster your exclusive “coming soon,” “off-market,” and “in-house” transactions that the competition can’t match, creating a “FOMO” (“fear of missing out”) effect in both customers and agents.
If you’re a consumer or an agent looking at the screen below from compass.com, which shows Compass’ exclusive off-market and coming soon listings, how could you not work with Compass?
These tactics fuel the incentives for buyers to work with Compass because Compass has the exclusive listings. And that means sellers have to work with Compass because they have all the active buyers working with their brokerage. And finally, agents will have to work with Compass because that’s where the action is. Boosting agent recruitment then brings in more listings and buyers, fueling that superpower growth loop.
If you want access to the market, you now have to go to the company who has the greatest ability to make the market, and that, in San Francisco, is clearly Compass.
Case Study #2: Independents Are Joining Forces
Now, the big question is: How can smaller brokerages, who don’t have the same level of financial resources as their venture capital-backed peers, compete effectively? To answer this question, let’s shift our focus across the country from San Francisco to a very different market: Miami.
Miami presents a very different picture from San Francisco. No individual brokerage has more than 10% of the market. So what’s the right growth tactic in this case?
As we’ve seen, Airbnb used the Craigslist growth tactic and Google used the GOOG-411 growth tactic to propel their company/service to the tipping point. The most practical growth tactic for smaller market players is to pool their network and data with others in their market to get to the minimum levels much faster. You — in concert with other firms in your market — already have the market share. That’s your advantage. You just have to take advantage of that advantage.
In Miami, if indies pooled their networks, they’d have over 20% of the market in combination, well on their way to the tipping point. Thus, Miami is ripe for the growth tactic of aggregation.
Turning to San Diego, one of the hottest real estate markets in the country, we see the potential for yet a third strategy in the race toward the tipping point—a franchisor aligning its brands to unleash superpowers.
Worldwide, Realogy-affiliated brands have some 300,000 independent sales associates in over 16,300 offices across 113 countries and territories. In San Diego, Realogy’s brands together have about 25% market share, approaching the level of Compass in San Francisco or the aggregate sum of market share of independents in San Diego.
Who Will Gain the Competitive Superpowers First?
We’ve looked at three growth strategies currently battling in real estate. But how will you know when you’ve reached the tipping point for market-making and data dominance?
To know when you’ve achieved the Minimum Viable Liquidity that unlocks the market making superpower, two key things have to happen:
Clients/agents feel you have enough in-house buyers and exclusive listings to switch to your brokerage.
Sold prices for proprietary listings are comparable to those sold on the open market.
How will you know when you’ve reached the tipping point for data domination—i.e., amassed the Minimum Viable Data Set that can fuel this competitive superpower?
Here, absolute numbers matter more than market share. You don’t need to have visibility into 100% of the market; instead, you can sample it. If you have hundreds of buyers and sellers, that provides useful anecdotal data. But you need thousands of buyers and sellers for sufficient statistical rigor to be able to demonstrate differentiation.
So, What Is Your Strategy?
Markets are being revolutionized everywhere you look. The residential real estate market is next. Or rather, it is now. Now is the time to act.
You can watch it happen, as big players make their moves to rapidly acquire agents and brokers, companies, and market share to become dominant players.
Or, you can make it happen by joining forces with other brokerages. When brokerages come together in new ways, they can unlock value for agents and consumers that no new entrant into the market is capable of.
In the first interview of its kind since the IPO, Redfin CEO Glenn Kelman will field questions from YOU — live on September 20th from Redfin HQ in Seattle and moderated by RealScout President Andrew Flachner.
This exclusive Facebook Live event will be on Wednesday, September 20 at 4pm Eastern, 1pm Pacific. Click here to RSVP.
Have a question for Redfin? Tell us now using #AskRedfinCEO
