This is the age of disruption, and real estate agents are about to cop it.
There’s an ad for one of the big banks doing the rounds at the moment. I’m not going to name names, but it’s the blue one.
(Think branding and advertising don’t influence you?)
This bank just just launched a new app that gives you an estimate of a property’s value.
I’m surprised they could sell this as a feature. A dozen different websites offer similar estimates for free, but I guess if you’re new to the whole property game, you might believe that only this bank can offer that service.
What’s interesting though is the way they set up the commercial. Here we have Mr and Mrs Average trying to talk to a real estate agent. They want to know how much its worth, and he’s a total weasel – umming and ahhing. But then, pow, they pull out the app and now they have the upper hand.
A triumph for ordinary citizens everywhere.
(Try pulling that kind of business on a real estate agent this Saturday and see how many shocked looks you get. See how many just laugh in your face.)
But what I find interesting is the way the real estate agent is portrayed. It’s almost a trope – a smarmy, weasel, shiny-suit shyster.
Hit the streets and there’s not a lot of love for real estate agents. In Roy Morgan’s “Image of Professions” survey, real estate agents are continually seen as the least ethical and honest, down the bottom of the list with advertising people and car salesmen.
Most people won’t be sorry to see them go.
But they’re being shown the door. Disruption to the industry is coming.
This is one of the few cases where disruption has taken a lot longer to take hold than I thought. Personally, I’m still surprised real estate agents exist.
For a few years now we’ve had platforms on the market that help DIY home sellers do it themselves. Things like Buy My Place and For Sale By Owner.
And they’ve been growing steadily, but the take up hasn’t been amazing.
But that might be all about to change. Because last week PurpleBricks launched.
PurpleBricks is just like every other DIY platform, although they’re a little more hybrid – giving you access to real estate ‘experts’ to help you along the way. But the difference is that they’ve got pockets. Deep, deep pockets.
Because they’ve come fresh from a successful UK launch. And when I say successful, I mean successful. They went from zero to the third largest real estate agency in the country, in just two years.
Think about that for a sec. Imagine you wanted to build a real estate empire to take on McGrath and LJ Hooker. How long would that take you in a bricks and mortar world?
Think about the dynamics in play that mean you could go toe to toe with the big boys in just two years. Or float out of nowhere with a market value of more than $500m!
This is the age of disruption. And real estate agents are about to be disrupted in a big way.
PurpleBricks launched with 50 experts last week, but they have plans in place to recruit a further 250. They have a marketing budget of $17.2m.
And like all stories of disruption, this is a story of technological change. Most real estate work has gone on line. Even the papers are struggling. If you’re waiting til Saturday to find out what properties are on the market, you could be too late.
And agents used to be able to offer local expertise and market knowledge, but even that’s online now. As our bank reminds us, there’s an app for that.
And by trimming the fat associated with shop fronts and so on, and letting sellers do their own inspections and negotiations, there’s a lot of money to be saved.
Personally I will be a little sorry to see them go. I’ve got good relationships with a few real estate agents, and they’ve given me an inside running into some of the best deals I’ve had.
That said, I would rather negotiate directly with the seller any day of the week. Then you can really get creative with solutions that are win-win for everyone. I’ve sometimes found it tricky to bring agents to the table on that one (partly because they’re only incentivised by sale price).
So for me, it’s kind of exciting. It really opens up the field for what it might be possible to achieve in negotiations.
But make no mistake. Disruption has landed.
What opportunities do you see this opening up for you?