Friday Flash: Feelings

Howard Hanna Real Estate Services bought Realty USA this week, continuing a tear of significant acquisitions. The company is now the third largest real estate brokerage in the nation, with over 9,000 sales associates.

A few things:

  1. The Hannas (it’s a family company) are very smart real estate people. They know what they’re doing, and carry forth an energy and aggressiveness I admire. I would not expect their momentum to wane.
  2. Consolidation like this begets consolidation. Over the past 15 years there were two big doors to knock on if you were looking to sell your real estate company: NRT and HomeServices of America. Now there are three. I think this is a good thing. The strong need to get stronger these days.
  3. The countertrend here is what I call the “small is beautiful” movement – the proliferation of boutiques and teams that are essentially brokerages-within-brokerages, sitting like Russian nesting dolls within their larger host. This isn’t going to wane either. So, mega and micro brokerages are rocking and rolling. Those in the middle face the most uncertainty. There are numerous mid-sized companies that do not align with this observation, but that’s how I see things at a high level right now.

Zillow CEO Spencer Rascoff bought a huge house in Los Angeles, far away from the company’s Seattle headquarters.

Is he getting ready to move on from Zillow? Is this a concession made to get him to stay? I have no idea, and don’t think it matters much anyway.

But I do know this: Spencer is really rich. So are lots of other people at Zillow. And even if you don’t have the fact that you bought a $20 million dollar home covered in the media like Spencer did, I suppose it’s hard to be discreet about your wealth when you’re an executive at a high-growth public company.

Everyone sees the details, including those who fear, resent or compete with you. It’s grist for the mill, fuel for the fire or whatever metaphor of aggravation you prefer.

Spencer is fantastically wealthy while the median agent income remains at around $45,000 and many brokers are straining for the kind of earnings they once enjoyed routinely. Many I know would argue that he and others made this money “off of” the industry.

A recipe for resentment.

Right or wrong, accurate or inaccurate, I believe this sort of feeling has worsened the 10-year tension between Zillow and the real estate industry. Emotion sometimes gets the best of us.

I’m hoping that as Zillow becomes increasingly accepted as simply a fact of modern real estate life these sorts of reactions will give way to a more analytical assessment of its value or threat to the real estate industry.

Because wherever Spencer goes, I don’t think his company is going anywhere.

Pokemon Go.

I have no thoughts on this.

The real estate tech startups just keep coming. We work with some, but make it part of our job to talk with and understand most.

The large majority are self-funded or friends-and-family-stage companies. Only a small subset have secured VC funding, and of those a still smaller number have significant revenue.

It’s just damn tough to sell stuff to Realtors.

On the other hand, there are plenty of real estate brokerages, franchisors and real estate services companies that could use fresh talent, tech, or at least a story to tell.

The startups need access; the real estate companies need innovation. Why aren’t there more deals?

Realogy bought Zip, invested in Estately, and actively cultivates the startup community through its FWD initiative. NAR has its Reach incubator and venture fund.

Still, there should be more of this.

I think part of the problem is the age-old industry mindset of thinking of tech companies as “vendors”, just like the sign rider company or E&O carrier, or as entities to which a hunting license can be sold through an affiliate or preferred partner program. The checks are nice, but these deals are rarely strategic.

Seems like it’s time for a deeper kind of engagement. All sides stand to win.

Facebook launched its bot platform 90 days ago. There are now 11,000 bots deployed on it. A lawyer chatbot has successfully overturned 160,000 parking tickets in London and New York in just a year and a half.

I can see a lean, mean real estate team model supported by bots in the not-too-distant future. Feels right in the sweet spot for this kind of tech.

Pay attention: there’s a lot happening very quickly here.

Enjoy the weekend.

[Disclosure: 1000watt has performed services for Howard Hanna, Realogy, and HomeServices of America.]