Who Will Step Up and Disrupt the Real Estate Industry?
In the last decade we’ve seen countless so-called “disruptive” innovations emerge, bringing with them tremendous change.
New technologies continue to revolutionize our world, and along the way they inevitably render many industries obsolete. Just take a look at what digital content did to Blockbuster.
As another example, look no further than Uber, the 5-years-young transportation network that is revolutionizing the taxi industry. In its last round of funding, Uber raised a remarkable $1.2 billion on a pre-money valuation of $18 billion. Its estimated worth is today almost the equivalent of Hertz and Avis combined. Uber’s focus on fast and seamless transportation is helping to drive this company forward and the result is that it’s pushing traditional cab companies to keep up, or give up.
Just as Uber is changing the taxi industry, and web-based companies such as Airbnb are disrupting the hotel industry, the real estate industry is another industry that’s vulnerable to information-driven disruption.
Related: 'We're the Uber of X!'
It is very likely that the real estate industry will be one of the next industries to be hit by the changing tide of the digital age, here’s why:
A diminishing value proposition.
Diminishing value is something that’s been slowly creeping into the real estate industry for some time now. There’s less of a need for real estate agents who exist solely to provide consumers with information already available to them via Zillow. If it’s just about opening the doors for home showings, this is something that surely doesn’t warrant their 6 percent commission.
The need for real estate agents that don’t provide anything of true value is diminishing rapidly. This isn’t to say that real estate agents aren’t needed. They certainly are. Knowledgeable and professional agents offer a wealth of value. However, a differentiator that separates the wheat from the chaff is long overdue. This will allow the real estate agents who are worth their weight in gold to have a chance to shine.
Outdated methods: the way of the travel agent.
Many of today’s real estate agents still rely on outdated marketing methods and archaic business models. They think that hanging a sign on the window is the best way to draw in new business. And while these methods do still work -- to some degree -- the fact is that the first signs of change are in the air.
The younger crowd knows that the first place to go for information is the Internet, and companies are cropping up all over to accommodate this need. A quick online search will show you which properties are for sale in your area and what they are worth. Often, the consumer is privy to this information before the real estate agent.
An industry that’s ripe for change.
It’s time for a change. Take a look at the real estate industry, and you will see that this industry is one that has grown complacent. Even though technology and consumer acceptance have grown, with instant information access, and consumers becoming more comfortable with the idea of selling their own homes, the real estate industry has struggled to keep up with the changing tide. In short, this industry is waiting for the right innovation to come along and turn it on its head.
Who will step forward?
New, potentially disruptive technologies such as automated agent selection and virtual home staging are all happening. These innovations are not quite yet at the level to overtake the industry though.
Zillow’s planned acquisition of Trulia has everyone wondering whether this company has big things in store for the industry, but that remains to be seen.
What does this mean for the industry?
What does this all mean? Simple: that the smart entrepreneur who addresses the pain points in the real estate industry and asks the age-old question “is there a better way?” just might be able to come up with an idea -- or an app -- that will help to make life easier and better, and in the process, inject real change into the real estate industry.
While the full impact of the digital revolution on the real estate industry has yet to be seen, there is a strong movement towards empowering the consumer. With people being able to access the data that they need to make more informed decisions, it’s scaling back the need for the less informed middleman.
Smart real estate agents will embrace these technology advances and use them to survive, while others will woefully cling to their brochures and rolodexes, lamenting that the old ways are better because that’s the way that things have always been done. Unfortunately though, as history has shown time and again, nostalgia is rarely a good business model -- no matter what industry you are in.
What do you think? Is it time for the real estate industry to be disrupted? Which technological advances do you foresee in the near future? Share your thoughts in the comments sections below.
Brenton Hayden is the founder and chairman of the board of Renters Warehouse. A Harvard Business School and MIT Sloan School of Business graduate, Hayden leads a team of over 140 employees and franchises in 21 states with a portfolio of managed properties valued at just under $1 billion.