Real estate has historically been regarded as a complex and challenging industry for many consumers. In the past, people had no way or ability to buy or sell their house without professional assistance. There wasn’t necessarily a desire for those things either, but times are changing. Modern consumers are more educated and proficient in new technology, giving them leverage in any potential purchase and fostering a greater sense of independence than they previously enjoyed. Through due diligence and online research, homebuyers and sellers now take cues from industry-leading organizations, experts and experienced consumers to inform every purchase. A richer understanding of the industry and a greater sense of a home’s value now put consumers squarely in the driver’s seat.
Organizations and experienced real estate minds have taken notice. Some are now providing consumers with more options to fit their needs and give them the control they are seeking. When change occurs in a business market and old standards are replaced (often with the implementation of new technologies), the consumer is the winner. Real estate is the latest example.
Technology has radically reshaped virtually every industry. Until recently, this technological transformation largely missed the world of real estate. Only in the past five years have individuals and organizations begun to offer consumers more choices that satisfy their needs, speak to them in a way they now expect, and give them the control they’ve become accustomed to. Recognizing this wave of consumer-driven real estate, these new organizations are pioneering a different model that more closely addresses and adapts to the needs of their customers.
Real estate is changing quickly. It’s not to say iBuyers will completely replace agents and the traditional methodâ€”I’m not suggesting that this is a zero-sum game. In order to build upon the innovative solutions that benefit consumers, all parties may need to leave room for creative collaboration, or at least coexistence. The industry will likely get to a point where the roles of a traditional real estate agent and brokerage are different from what they have beenâ€”they’ve already begun to shift with evolving demands from homeowners and buyers.
In turn, whether consumers use these platforms or not, the existence of iBuyers improves the general consumer experience by requiring more from traditional real estate. Similar to what has happened in the automobile industryâ€”where new tech-enabled companies entered with novel offerings to make car buying better for consumersâ€”the traditional auto industry has responded, and dealers now offer more enticing benefits to consumers who continue to purchase with them. Those who work with these new companies benefit from a smoother experience that offers more flexibility and automation than traditionally available. Consumers who continue to buy the other way also benefit as the traditional industry improves and provides new solutions to keep pace.
A successful and healthy business industry is transparent and shaped by the consumer. If the consumer wants to sell and buy homes on their mobile device or computer, they need to have that option. But as with any evolution of industry, there are those who cling to the traditional mindset and dismiss the change. In real estate, some have attempted to disparage these new consumer avenues as a passing trend, but the evidence this movement has lasting implications is overwhelming. Proptech companies, real estate tech businesses, iBuyers will thrive because these models meet the new demands of a growing body of consumers. Perhaps the most convincing indications that this is a lasting change are the rapid growth of these new companies, rampant consumer adoption, and major business model shifts by prominent industry leaders.
We are in the beginning stages of this new movement and proptech companies are meeting the demand. According to industry analyst Mike DelPrete, iBuyers in 2018 accounted for 0.2 percent of all U.S. real estate transactions and 6 percent of the market in the biggest iBuyer locale, Phoenix. Objectively, it is a small fraction of marketshare, but this has been an option for less than five years. Companies are reaching new markets for the first time, and many people are just now being exposed to the terms “iBuyer” and “proptech.” As consumer awareness of this technology grows, it’ll be more widely adopted.
Real estate is evolving, and as a ubiquitous industry that plays a significant role in our economy and is directly involved in the lives of many American consumers, this tech-enabled nicheâ€”although often misrepresentedâ€”is garnering attention beyond its current footprint. This shift and the conflicting conversation around it could foreshadow the industry segment’s potential and perhaps future prominence in the real estate industry, as well as added value to consumers of traditional real estate along the way.
As chief marketing officer at Offerpad, Darrin Shamo is a key architect of the Offerpad brand, elevating the organization’s position as a high-touch company that delivers the best customer experience in the industry. Previous experience includes marketing leadership at DoorDash, Zappos (Amazon), and Coupang.