Industry

Friday Flash: Doom and Boom

Author
Brian Boero
No.
1164
Date
09/11/20

The view out my office window is Martian. 

Ash is falling like a light snow through a red-orange atmosphere to accumulate on the Teslas and Subarus of the greater Bay Area.  

There are no little green men. Yet. 

It was 103 degrees here two days ago. Another record. Today it’s cold because the cover of smoke has created an effect scientists say is similar to the “nuclear winter” we all had nightmares about during the Cold War. 

But – but! – our real estate market is booming. 

Our delayed spring selling season, stunted by the early-COVID freeze-up, is now fully in bloom. People are ditching condo COVID traps in San Francisco for homes with yards across the Bay. People in the homes with yards are moving to Tahoe because they are worried about civil unrest. People in Tahoe are moving to Nevada and Texas to escape fires and taxes. 

I talk to real estate people all over the country every day. They’re telling similar stories. 

But here’s the truth no one really wants to say out loud: upheaval seems to be kind of good for real estate.

Consider the following:

Zillow is projecting that nearly 2 million current renters could be turned into homeowners as the virtual workplace becomes the norm. 

Zillow also projects that 300 American cities could lose half their homes by 2100 if sea levels rise as climate scientists say they will. Zillow’s model predicts that 12.56% of all homes in Florida will be lost. 

That’s a lot of people buying and selling. That’s a lot of new homes that will need to be built. 

That’s a lot of pain, and a lot of commissions. 

You may think I’m crass for even stating this. But that’s my point. I think our industry is going to play an increasingly important but fraught role in the coming years that will require a degree of sensitivity and seriousness that is, to be delicate about it, demonstrated with some unevenness in the Realtor ranks right now.

Hunter Thompson said, “When the going gets weird, the weird turn pro.” Let’s hope our weird and wonderful industry rises to the occasion. 

Adwerx has rolled out an automated streaming TV ad solution. That’s right, agents can now place ads on streaming services like Hulu (and many others). It’s targeted by Zip code and sold on an exclusive basis. Ad templates are provided, so no videographer needed.  

This makes a lot of sense to me. It’s a new and growing platform, but also a place where people don’t expect to see a Realtor. Realtors go in your mailbox, on bus benches, and grocery belt dividers. But this is new. 

Smart. 

Companies and entrepreneurs entering real estate often launch with an argument, tacit or explicit, that real estate agents, and the commissions they charge, are a rip-off. We have seen this show a million times. Others avoid working that grievance, but embark with no appreciation for the relationship agents have with consumers. 

Most come around and find that agent religion.

Knock is a recent case in point. The company launched a few years ago as a cash offer/buy-before-you-sell company. They raised over $400 million in equity and debt. Agents weren’t part of the picture. 

A few weeks ago, the company announced that it was shifting its model with a new program, “Knock Home Swap.” Now, rather than fronting buyers cash to buy a home, they give them a fully approved mortgage originated by Knock and, if needed, a bridge loan to cover the down payment.

They have, in a sense, pivoted to being a mortgage company. 

And, like many mortgage companies, they’re looking to the agent and broker channel for customer acquisition. “Knock Certified Agents” can now present the buy-before-you-sell proposition to their seller clients, and – this is the genius part – offer those clients up to a $25,000 advance from Knock to spiff up their home for sale. 

It’s a strong and smart offering that recognizes the centrality of agents

“Disrupters” take note. 

Have a peaceful weekend.