Big brains. Big rounds. Big balance sheets.
A tornado of money and ambition building on the plains.
It’s producing a strange vibe in the industry — a combination of fatalism, dismissiveness and mortal fear. Some people are down in the root cellar with fresh water and last year’s canning. Some people are upstairs having tea in the parlor as the house rattles and creaks in the building wind.
It’s hard to parse. But I guess that’s the nature of times where things without precedent happen in rapid succession.
If this tornado rips right down Main Street –- if, for example, iBuyers take a big bite out of the market –- it will drive the industry into an intense Darwinian era. We’ll shift to survival of the fittest from sustenance of the sub-professional.
That sounds rough. But it’s healthy, really. Because things as they are look pretty suspect if you step back and look at them honestly:
A brokerage loses money on high-producing pros, but makes money on any minimum viable agent capable of stumbling into a couple deals a year?
Six hundred MLSs stay afloat thanks to the dues of 500,000+ Realtors that do no deals?
The NAR touts a code of ethics and spends millions “building the Realtor brand” while numbly countenancing an army of brand destroyers?
“Cooperation and compensation,” the sacred compact of the American residential real estate market, frequently means a good agent covering the ass of a scandalously bad agent?
C’mon. Really? This just makes no sense. And we’ve always known it makes no sense.
As I said at the beginning of the year, I believe the vast majority of the 5 million-plus transactions that will happen in 2019 will be done the “traditional” way. But I also believe that our contradictions and weaknesses as an industry will be tested as never before.
In any event, if I’m a great agent or broker, I’m standing in the front yard, holding onto a tree, screaming my welcome into the teeth of the tornado: “Bring it on!”
One thing about all this money, particularly that which is being directed at teeing up buyers with cash offers, is that it’s something of a band-aid solution. VC, PE or corporate debt is being used to airlift people over the bramble that is the mortgage origination process.
The cash offers play gets the job done, and maybe it’s all we need if you’re comfortable with that sort of capital concentration. But the real prize, in my mind, is rewiring the underlying process. I’d love to see a billion or two thrown at that.
The headline “Remine lays off two thirds of sales staff” could easily be misinterpreted. I’ve been impressed by Leo, Mark, Jonathan and team since they hit the scene less than three years ago. These people are smart. They have money. And they’re determined to rock some boats in the MLS software space. A company to watch.
Two more companies to watch: Nest Realty and Side. These are slightly under-the-radar players rethinking the role of the franchisor and broker in ways that look pretty darn good given the current state of the industry (see above).
Some good color on why iBuying is taking hold in Phoenix from the Redfin Blog.
“This platform is almost four years old, and you can’t point me to one single killer app” — a good reality check on voice computing from Bloomberg Businessweek. It seems we’re not quite ready to do anything but the most simple things with voice-controlled software, at least for now. Interesting context as we watch more companies place their bets on voice in real estate.
Enjoy the weekend.
[Disclosure: Nest Realty is a 1000watt client.]