I’ve actually been working on this post for quite a while now, but just haven’t found the right thing to tie into to make it work. Thanks to the shitstorm surrounding Zillow’s Instant Offers that has happened over the past two weeks, I owe them a bit of gratitude for helping me finish this up. The problem, up to this point, has been trying to put into words a philosophy that can be seen differently through any number of lenses without providing solid context. The aforementioned surge of paranoia about the perceived inevitability of the Zillow takeover of all things real estate has helped put some perspective in place to make the point.
To Answer The Question
Since I brought it up, no, I don’t believe that Zillow Instant Offers poses a very real threat to Realtors. No, I don’t think that Zillow has any intention of becoming a real estate broker and taking over the industry. I believe that Instant Offers is, plain and simply, a big name in the business reacting to a threat from smaller companies like Opendoor. That’s it. I’ll get to that later. That said, I would argue, given the way the platform is set up, that there is real opportunity with Instant Offers for agents that aren’t wasting time complaining about it.
The Real Problem
What the agents bitching about Zillow should be looking at, in my opinion, is why it’s happening, not who is doing it. The real problem is that the home selling and buying processes are arcane, intrusive, and, frankly, a giant pain in the ass. So, in walks an opportunity to take the time, stress, and hassle out of the equation and people like it. Is anyone really surprised? I mean, not to get all dramatic here, but it’s not a hard argument to make that our buyers and/or sellers often end up feeling like a victim by the time they get to the closing table.
For sellers, they have someone come into their house and tell them a bunch of stuff to fix. Then they have to keep it extra clean so a bunch of strangers can trample through at the time of their choosing. Then they usually have to negotiate offers. Then they get a professional inspector, that they don’t choose and have no oversight of, who comes in and tell them a bunch of stuff to fix. Then another professional, also not of their choosing, comes in and tells them if their home is really worth what the market clearly thinks it is. Then they finally, maybe, if another professional, that they also have no oversight of, hasn’t either lied or screwed something up, get to close. Oh, and they get to pay a bunch of money for this pleasure.
For buyers, they usually start looking online, often at sites that have significantly flawed data, yes, like Zillow (there, are you happy now?) for a home. Then someone tells them to go get a financial colonoscopy to make sure they can actually buy it. Don’t even get me started on how flawed the financial world is, specifically as it relates to “credit worthiness”. Then they get dragged around to look at a bunch of homes that usually results in that same feeling you get when your blind date doesn’t look anything like her online dating profile picture. Then they get to negotiate an offer, pay for the inspection, negotiate some more, pay for an appraisal, and possibly have to either negotiate some more or walk away after coming out of pocket for all of these things. Then, maybe, if the professionals they hired did their job, get to close.
Yep, can’t imagine why someone would want to avoid that, can you?
Disruption is Coming
When Barack Obama received the Democratic nomination for President of the United States, there was no such thing as an iPhone. Let that sink in for a second. Now, today, you go through separation anxiety if the damn thing is in the other room for five minutes. The world is changing quickly around us. Uber is quickly killing the cab and black car industries, without owning a single vehicle. Airbnb is the largest hotel operator in the world, without owning real estate. Cable companies are clinging on for dear life because of streaming media. Newspapers are closing left and right because of our need for everything on-demand. Expedia, and others like it, killed travel agents. The list goes on and continues to grow industry by industry. If you don’t believe that change is coming to real estate, please keep believing the way you do so I can take your clients when you aren’t in business anymore. Disruption is coming, and you should be ready, open-minded, and willing to identify where it might be coming from and take advantage.
Do For, Not To
So, because I’ve been waiting a really long time to get to the point these days, here it is. The industries I listed above all have one thing in common (except, maybe, newspapers, but I can make the argument both ways). They are all true service industries. I say “true” because they don’t actually sell a tangible product. Realtors like to fancy themselves as a service industry, but the truth of the matter is that we sell a tangible, consumer good. For most professionals in the industry, service may be what sets them apart from their competitors, but their consumer is still purchasing a brick and mortar product.
How, and when, we begin to see disruption in the consumer goods industry is still to be seen. We are seeing disruption in how the products are delivered, but not really in the products themselves, except in the electronics industry. Companies like Amazon, HelloFresh, and Shipt are dramatically changing the way we take possession of the things we buy, but aren’t fundamentally changing the actual products. I would argue that Zillow Instant Offers and Opendoor are in the same category. They are changing the delivery mechanism, but not the product.
I believe that it is the responsibility of the Realtors in the market, the real professionals, to drive the change needed in this industry on behalf of our consumers and clients. In the scenarios above describing the home buying and selling processes, nearly every step of the way, the client has something being done to them. It is time to change the thinking of the industry to a do for, not to mentality. Yes, of course I mean in the way you service your client. You should already be doing that. More importantly, though, is that we make the process a do for, not to process. Opendoor and Instant Offers are doing that for the people willing to accept their terms. If we want to have a say in how this goes down, then we need to stop running in fear of a make-believe enemy, stop the industry infighting over who controls data, and have a real discussion, with our clients involved, on how to make this process something that people actually want to be a part of when buying and selling real estate. Think about it, we would be the very first industry that didn’t have disruption done to them, but took it upon themselves to do it for them and their end-user!
And, as a side note for anyone in association leadership that might be reading this, no, we don’t need 17 committees and Presidential Advisory Groups to get this done.