Reinventing Real Estate
Tech-driven startups seek to redefine the traditional way of doing business.
Any time of day, real estate agent Kent Corey can step into eXp Realty’s virtual world. He can learn how to grow his home sales, access important documents, and use marketing and customer relationship management tools to connect with customers. Rather than heading into an office or waiting for in-person technical support,
he does it all from his home. “We literally have no bricks-and-mortar buildings,” says Corey, an agent-broker. “They have an online campus where I can go any time of the day and get training. I can learn something. I can talk to tech support about my computer issues. It’s really, really cool.”
The cool factor may be an attraction, but Corey has seen results. As of the summer, Corey says he had sold 20 homes in 2018, compared with eight to 10 homes in 2017. “My real estate took off so much when I started with the company,” he says.
He’s joined a movement of companies with new concepts that are challenging the industry’s status quo. These startups present opportunities for agents and brokers seeking new ways to grow their businesses. They tout tech tools with bells and whistles that appeal to how consumers want to buy and sell homes today and, as the companies say, make the process faster and more personalized.
“They’re using technology in slightly different ways to make this process of buying and selling real estate easier and less intimidating. At the core of what they’re doing, they’ve identified the part of the process that really creates value,” says H. Shelton Weeks, chair of the Department of Economics and Finance and Lucas Professor of Real Estate at Florida Gulf Coast University. “They’ve identified a niche, a value-creating niche that they can exploit through whatever technology platform they’re using.”
Innovation, imagination and integration are common elements among startups and emerging concepts, but some real estate veterans say newcomers really need to “wow” them to entice them to move to those companies as they enter the Southwest Florida market.
“There’s always some organization that wants to appear to be moving as quickly as technology is. I’ve seen that happen,” says Craig Jones, a broker associate with Premier Sotheby’s International Realty in Naples. The agents who move tend to be those who want to be on the forefront of emerging technology.
When agents are working virtually, they want the systems to work quickly, accurately and thoroughly and be easy for them and their clients to access. The differentiation among companies is all about the gizmos.
“I have yet to see someone who is doing something so vastly different that I’m kind of raising my head and going, ‘Wow, how did they figure that out?’” Jones says. “I don’t think there’s something new there in terms of marketing techniques or marketing tools. I don’t think I see different things in terms of training. I see some slickness.”
Companies such as eXp Realty and Compass recently have established a presence in Southwest Florida, working with feet-on-the-ground agents and acting as a competitive threat to traditional real estate brokerages.
Compass, which was founded in 2012, announced in late 2017 that it had raised $775 million in total capital in an effort to build the world’s largest real estate technology platform. The company, which uses in-house agents and data analytics, describes itself as a real estate technology company. Its mission is “to help everyone find their place in the world.”
Naples joins The Hamptons on Long Island, New York; Aspen, Colorado; and Seattle among the 30 regions where Compass said it operated around the U.S. As of the fall, the company operated more than 90 offices.
Properties in Naples listed on the Compass website include a $3.5 million, four-bedroom home in The Moorings. “It’s brand-new construction with a modern tropical flair and a truly incredible backyard living area,” says real estate adviser Niklas Ahola.
Ahola first heard about Compass in San Francisco at an Inman Connect conference, an industry event. “They were creating this big splash, and it really intrigued me because the industry has kind of failed to progress in certain ways,” he says. “It really caught my eye. Years passed, and I find out they just opened a shop in Naples.”
Several months ago, Ahola joined Compass’ second Florida location. He says he’s been impressed with the culture, which he describes as friendly, dedicated and ethical, as well as with the constant education and tech tools.
“Since getting here, it’s actually much better than I even imagined,” he says.
He expected to have three sales over $1 million in nine months, which he credits in part to Compass’ name recognition due to stories in the media and high- profile acquisitions, such as the deal with the San Francisco-based Pacific Union International, that was announced in August. Pacific, one of the largest residential real estate brokerages in the country, will be renamed Compass. Prior to that, the company was valued at $2.2 billion in 2017 by SoftBank Vision Fund, which gave $450 million of the $775 million in capital it raised last year.
“Compass is all over the national news right now,” Ahola says. “Not only wealthy homebuyers, but all homebuyers, may catch a glimpse of it on TV, on the news or on the internet. They know of it, and they know of what they’re doing.”
The high-tech touch starts with the agent workspace, which Ahola likens to a Facebook page with an easy-to-use interface. From the page, he can access ways to create social media posts, print collateral, such as mailers and postcards, share market insights and collaborate with clients. “You can do everything a Realtor needs to do, minus going outside and showing property, in front of your computer, which is wild,” says Ahola.
More than half of buyers found the home they purchased on the internet, but at the same time, 87 percent of buyers purchased their home through a real estate agent or broker, according to the National Association of Realtors’ 2017 Profile of Home Buyers and Sellers. That’s why it’s not unusual for Ahola and his clients to view listings when in different parts of the country, but he says they can chat in real time when looking at a property using one of Compass’ tools. “They call it the ‘Pinterest of real estate,’” he says, using a descriptor also used by Forbes magazine in a story about the company. “Historically, Realtors are running around using 10 different platforms or 10 different things,” he says.
Ahola says Compass’ tools frees up agents to work with buyers and sellers.
“I click a button and I can email 500 people a really, really nice digital email that was made for me already with the best content and the best layout,” Ahola says. “It just takes a load off my plate as an agent so that I can serve the client better and communicate with them better. Everything is set for the agents.”
Jones recognizes the pop-up companies are trying to help agents get more adept at social media. “I think it’s very important that brokerages themselves help their agents get good at social media,” she says. “Good brokerages are helping their agents do that because it helps preserve the brand. And for a place like Sotheby’s the brand is everything. The companies that are helping their agents prepare their social media plan in context with all the other marketing they do, that’s a real plus.”
She adds that a company can offer all of the bells and whistles of a spectacular digital marketing plan, but if they don’t teach agents how to use it and show clients it’s a valuable tool, it means nothing. “The one that wins is the one that teaches their agents how to use it,” she says. “At the end of the day, it’s the client that needs to be served.”
NEWCOMERS EMBRACE NEW CONCEPT
Working via the cloud appealed to Jeff McDermed as he entered the real estate profession and chose eXp after interviewing with other firms with a local office. Launched in 2009, eXp World Holdings—the holding company for eXp Realty—went public in 2013. The Bellingham, Washington-based company operates in 49 states, the District of Columbia and Canada, with more than 13,000 agents. Corey touts eXp’s growth, with what he says are more than 2,000 agents in Florida, and that as a cloud-based brokerage, it provides agents access to tools 24 hours a day, seven days a week.
“I totally viewed it as something new and different. I was excited about it,” says McDermed, a Naples real estate agent.
When he joined in January, the onboarding was easy, he says. Agents, who use avatars, also can log onto eXp World to attend trainings or access resources virtually. He picked his avatar in the system, which has a 3-D immersive virtual office with a rooftop space and training in an amphitheater.
“Everything is online. Everything is virtual,” McDermed says. “I can access all of my stuff from my phone.”
He liked the appeal of not having to go to an office, and the cloud-based setup hasn’t caused him to feel disconected, he says. He can ask questions of agents from around the country and meet with local eXp agents. He generates his own leads and conducts his own meetings with customers, but he was paired with a more experienced eXp agent in a mentoring capacity.
Corey, a Realtor in Southwest Florida since 2009, says he joined eXp last November after another agent “sponsored,” or brought him into the company. The model uses a revenue share system where agents can earn up to 3.5 percent gross commission on transactions conducted by those they sponsor, according to eXp. The funds are company dollars that don’t lower the agent’s commission, and it has no franchise fees, royalty fees or desk fees, the company notes on its website.
The typical commission for selling a residential property in the area is 6 percent; sometimes the rate dips to 5 percent for higher-priced homes, Jones says. And those usually are split 50-50 between the listing and buyer’s agent. “The challenge is that you get what you pay for,” she says.
“I try to bring on Realtors, too, because it’s beneficial to me,” says Corey, who also serves as a certified eXp Realty mentor. In that role, he connects with agents new to eXp through online meetings and even lets them shadow him on listing presentations or meetings with buyers.
From the start of 2018 to the summer, eXp noted that its number of agents had grown by 85 percent. The company reported 2017 revenue of $156.1 million, up 188 percent from 2016.
HIGH-TECH BUYING AND SELLING
“Until relatively recently, people were still buying homes in much the same way that their parents purchased homes—call an agent and make an appointment to go see some homes,” says Weeks, the FGCU professor. “For a lot of folks, the most recent home they bought, that process had changed a lot because they would look at listings on the internet. That was the big innovation.”
But he says technology and consumers’ acceptance of the technology have changed. Some emerging companies have focused on making selling more convenient for consumers who want a quick result or who may dread the process. It’s a twist on direct selling with an online platform and tech tools, but not traditional house flipping.
Weeks says the all-encompassing ventures are most surprising to him. “It’s very aggressive,” he says. “If they can pull it off, it can be the home run.”
NOT LOCATION, LOCATION, LOCATION
Brick-and-mortar locations are less important to clients, agents such as Jones finds, than in the past. What’s more important is that they can reach agents immediately, access information easily and exchange documents seamlessly. The company name on the sign also remains important—with a caveat. Jones says the Sotheby’s name registers on potential customers faces, maybe because it’s well-known auction house or because of its reputation for luxury real estate. People are proud to see the Sotheby’s sign in front of their house, while “others will want the Compass sign because it currently has the sort of new hip-hop panache,” she says. But once they see that sign, she adds that what matters is the personal relationship and whether or not the agent can bring buyers to a property.
Corey hopes to hit a professional home run with more sales in 2018, such as a $1.5 million property in Naples. He connected with that seller, an investor, via a Craigslist ad that he sent using eXp’s lead-generating tools. Instead of spending an estimated $3,000 a month on various tech tools and services, he says he pays a $50-a-month tech fee to eXp for those resources. Among other activities, the systems automatically capture potential customers’ information online and sends emails and text messages.
“It just makes it much easier,” he says. “Instead of having to sit there and type for 20 minutes, it’s the push of the button.”
Corey compares the likes of eXp to consumers’ shift from Blockbuster to Netflix. He’s found that the access to information, documents, training and support online has freed up his workday to create listing presentations and work with customers.
“The biggest thing for me with this company is that it gives me time,” he says. “It’s the way of the future.”