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The New Wave of Real Estate innovation

Date:July 31, 2006 | Author:Spencer Rascoff | Category:Real Estate Industry

Glenn Cohen, CEO of Expert Realty, gave a very interesting presentation last week at Inman Connect. He reviewed the history of the evolving brokerage business model over the last 30 years. Afterwards, he joined Brad Inman on stage and offered commentary on the elevator pitches of a half-dozen entrepeneurs. And it was at that point that Glenn made what I think was one of the most interesting comments of the conference: most of the innovation in the real estate industry right now is about liberating data (e.g., Zillow, Trulia, Propsmart, etc), whereas most of the innovation five years ago was about alternative brokerage models (e.g, Zip Realty, Foxtons, discount MLS providers).

It made me wonder where the next wave of innovation will come from five years from now. Waddayathink?

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Responses (10)

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Jeff Corbett 7:28 AM - Aug 1,2006

“And it was at that point that Glenn made what I think was one of the most interesting comments of the conference: most of the innovation in the real estate industry right now is about liberating data (e.g., Zillow, Trulia, Propsmart, etc)…”

Transparency in what was proprietary and veiled information coupled with the proper technology to bridge consumer access has become the new business model for the antiquated real estate service industries.
Kudos to Zillow, Redfin, Trulia, Propsmart and theXbroker for being able to promote consumer advocacy using this information age business model!

Jeff
Nick Pang 5:08 PM - Aug 1,2006

with home values readily accessible (mobile, web), real estate investments & foreclosures will be the next area for innovation. how about a real-time return-on-investment index for each investment property using Zindex and other info? you can almost automate buy/sell decisions

just a thought…
Name 11:22 PM - Aug 1,2006

Shouldn’t the natural extension be putting the buyers and sellers directly into contact with each other?
Derek Rey 7:32 AM - Aug 2,2006

Innovation is taking place as we speak (at least i hope). The liberation of data is bypassing a somewhat esoteric system that gave value to brokers regardless of actual service. Just having the inventory was enough value for someone to use an agent. Real estate will always be service industry but I dont see the full service brokerage model staying intact. Sell and buy side agents will become a dichotomy due to the different skill set requirements and I expect to see the commodity approach (RedFin) over and over on the buyside. The sellside is different. Tremendous intellectual property stored within the mind of the realtor will always be valuable and by combing this capital with competent marketing skills, there will always be significant value.

All in all, the changes in the industry will be positive. A cleansing of incompentcy will take place due to bull to bear market movements in addition to percieved consumer value. The discounts plays will continue, but a strong negotiator/advisor will always be in high demand in this industry.

**appologies for spelling, blackberry no bueno**
Greg Tracy 1:26 PM - Aug 2,2006

“Shouldn’t the natural extension be putting the buyers and sellers directly into contact with each other?”

Yes-

This is what BlueRoof.com does. When someone makes an offer online that offer goes directly to the owner (if the property is FSBO) and then the owner responds and the response is sent directly back to the buyer. Once acceptance occurs, the offer is sent to a BlueRoof agent who helps coordinate the paperwork.

With innovation new processes will continue to allow greater ease and access for the consumer.
Spencer 4:19 PM - Aug 3,2006

Wow, a lot of great comments and some interesting business ideas. I wonder if the VCs are watching…
max mason 10:17 AM - Jul 22,2008

Derek Wrote

“Sell and buy side agents will become a dichotomy due to the different skill set requirements and I expect to see the commodity approach (RedFin) over and over on the buyside. The sellside is different. Tremendous intellectual property stored within the mind of the realtor will always be valuable and by combing this capital with competent marketing skills, there will always be significant value.”

Surely youhave it the wrong way round ? Why is the listing side more erosion resistent to commodification ? Isn’t the main gripe with the industry that fees are too high relative to service (particularly for listing realtors in sellers markets).

It’s not a stretch of an imagination to know that the buyers agent is called on more emotionally, physically and intellectually by their clients-in comparison to the listing agent. That’s why agents sleep walk to the industry mantra about how you must ‘list to exist’ and ‘get listings’ etc.

Why ?it’s less work ! The result is that few agent’s have explored the huge potential in serving ONLY the buyers market in an innovative way..

If buyers agent de-commodify and add value to the type, range, depth and packaging of the information the offer, this side of the business will remain more resistant to commodifcation than the list side. Surely ?
Evan 8:00 AM - Sep 22,2008

I’m a design student, I have no real training in real-estate but I know why I have been repelled by anything remotely related. There is a disconnect at every turn. It’s as if the entire industry of buying and selling is a mish-mash of private services that have no relation to one another. Like incompatible parts marketing themselves in an already faulty system.

This is a very ugly industry from a customer experience point of view. First-time buyers must feel like they are creating the Frankenstein monster, trying to combine all the information in a tangible way, avoiding ridiculous fees, and then after all of this trying desperately to visualizing the home before making the decision to cross it off the ‘visit open house’ list. We all don’t have as much time to visit homes like the brokers do. Our new jobs won’t permit us the time off work to home shop, and you could spend hours after all of the logical decisions, trying to figure out if your grandmothers heirloom antique dresser will fit up the stairs. Visualization technology will be the next innovation, it always has. The camera obscura taught painters how to paint. Google Earth and the like, could teach sellers how to sell, and buyers how to buy.
max mason 9:10 AM - Oct 22,2008

but what i can’t figure is if the industry is so in need of a change and the customer is apparently so unhappy, why do 95% of all transaction take place using full service brokerage ? what is the consumer telling us there ?

surely it’s not that they HAVE to use full service brokerage…because anyone can buy and sell privately right ? I bought privately

is it that they lack the skills, time, energy and market data to do it themselves ?

what do you think ?
Trevor Mealham 9:16 AM - Jan 4,2009

Innovations are happening. The web is a fantastic tool, but. We run a mls in England: http://www.inea.co.uk. Times are a changing and the financial model for agents is expensive, so on the back of inea we have created a solution for bring web listed properties back into the “Real” world. RemoteAgent is a digital window solution that can be placed anywhere, so if the agent is at home, or in a traditional office with busy slow roads to get to potential satellite office displays, then maybe RemoteAgent could provide a solution.