A select group of influential real estate professionals gathered in April in the desert of Palm Springs for the 2019 edition of Inman Disconnect. They wrestled with the pressing real estate issues of the day. They worked earnestly to figure out where the real estate market, the industry and the consumer experience are headed. The group comprised a diverse collection of professionals from all segments of the industry.
For three days, they cast aside their self-interests, avoided protectionism and imagined what might unfold in the next five years.
The big takeaway is that there are two fundamental ways of looking at the real estate future: bright or dark. This group resolved that the future was promising because consumers were taking charge.
Here are the predictions from Disconnect 2019:
Changes are afoot that will create a ‘consumer model’ for real estate
In the next five years, buying and selling a home will become easier. Exciting new housing types, ready and affordable financing and transparency will create a vibrant and exciting marketplace.
Whether it’s due to innovation, customer care or a response to new pressure from disruptors, the industry is moving rapidly to a “consumer model” of delivering services.
The market, trends and consumer choice
No one knows how long the economic boom will last, but housing conditions should remain strong if wages rise, unemployment remains low and companies continue to expand. The real estate market should remain healthy for the next couple of years, as low interest rates and pent-up demand lead to a more dynamic housing market.
With greater transparency, buyers and sellers will have more confidence in the market. New ways of buying and selling will emerge, attracting more ready-to-act consumers to the market. Innovation in financing, new housing types and a more efficient buying and selling process will make homeownership more attainable.
The swifter transaction is on its way
On demand, certainty and seamless transactions will become the new standard. A smoother transaction will attract more qualified and eager buyers and willing sellers.
Enabled by technology, the process will be easier, less intimidating and more inviting to the consumer. Mortgage, title and escrow will be entirely digital and will be seamlessly integrated into the process of buying and selling, lowering transaction costs.
This all adds up to a friendlier real estate experience, matching the exuberance that new buyers enjoy nestling into a new home.
Achieving the “consumer model” will require changes to the duties of agents so they are not conflicted and better aligned with the nuances of iBuyers and instant offer models.
Shifting roles and new business models
The quality of agent services will improve. The number of agents will decline. Those who thrive will work off big platforms and perform a range of services. They will be rated and ranked by the consumer, adding to a more transparent marketplace. Rating services will be reformed to better capture true consumer opinions of performance.
Franchises will become agent support networks. Broker-owners will dump poor-performing agents. Many brokerages will adjust their business models to deliver an on-demand experience for the consumer.
The broker cooperation model will weaken, but the consumer will still have many choices — and in some cases, more.
IBuyers, on-demand services and consumer-direct models will take market share. More technology companies will build their businesses around the emerging on-demand marketplace.
Court cases will erode the independent contractor model, and more agents will become employees, raising the bar on agent performance.
Partnerships, M&A and consolidation accelerate
Many large and medium-sized broker-owners will merge, become more virtual and focus on their agents’ financial well-being, performance and productivity.
New opportunities created by the real estate metamorphosis are attracting a record number of venture and private equity investors who seek the rewards of a disrupted industry.
Consolidation will continue for large broker-owners and even franchises. Big tech companies — some combination of Amazon, Facebook, Microsoft, Airbnb or Google — will enter the real estate business in earnest in the next five years, giving the consumer more choices.
An open technology and data market will replace the closed system that operated for the past 100 years.
Lawsuits and the Department of Justice will shine brightly on any attempt to thwart tech and business model innovation.
The expansive role of platforms
A few select platforms that scale — for both iBuyers and tech brokers — will catch on. Consumers will be drawn to these transparent tech-enabled platforms that offer multiple applications streamlining the buying and selling process.
The platforms will compete for consumer attention based on services and access to the most qualified and able real estate professionals.
They will also offer integrated services for agents and for consumers, including title insurance, mortgage loans and closing services.
The tools to render virtual showings, smart contracts and instant offers will operate off these platforms.
Data ownership fights will be less raucous
Tech companies, platforms, brokerages and franchises will continue to fight over data ownership. But who gets access to what information will be guided by fundamental principles including fair use, consumer privacy, open access and quality of the data.
The contentious nature of data control will not subside, but standards, cooperation and putting the customer first could drive resolution on many of the divisive issues.
In an ideal world, “data control” jargon should be replaced by language like “data that serves the consumer.”
A single listing database is on the horizon
A national homelisting database will emerge in the coming years. Reformed MLS organizations will play an important role, regulating local agent behavior. But they will no longer serve merely as technology shops for organizing local listing data with national vendors.
Firms like Zillow, CoreLogic and a few other firms have already organized local data into de facto national databases. These proprietary databases will foster competition as firms compete for the data, giving agents more choices and driving down the costs.
Open APIs will accelerate this outcome.
MLS organizations that do not merge will need to be lean, incorruptible and focused on agent services and ethics.
Roadblocks, detours and objections
- Housing affordability will continue to haunt a market that does not work for everyone.
- Local and national attempts to block innovation will hurt progress toward creating a better consumer experience.
- Concentrated power among a handful of national companies could weaken the value of local professional services that help consumers realize homeownership.
- Companies that try to control everything themselves — the data, the process and consumers — will thwart new forms of cooperation.
- Until a new system is devised, the broker cooperation tradition should not be carelessly abandoned. While it is a closed system, it is the foundation of a marketplace that makes it possible for buyers to instantly see 95 percent of the listings in any given local market.
- Pocket listings and other industry bad habits will continue to compromise the consumer experience.