These past few months have seen several high-profile partnerships announced—from Realogy and Amazon, to Redfin and Opendoor, to Keller Williams and Offerpad—and it feels like this is just the beginning of a trend that’s going to take an even stronger hold over the next year.
At first glance, it could just be that these are simply new branding opportunities where two like-minded companies (who aren’t in direct competition with each other) get together to promote their services. Those in the real estate industry have been building partnerships for decades, so this is nothing new. But what I sense taking place now is representative of something bigger. We’ve reached the point where real estate tech firms have maxed out their niches, and now, they need to find a way to go wide. A deeper shift is taking place, and this is what will direct the course of the next phase of our industry.
Since it’s a quantum leap to go from appealing to a core audience to one that’s broad and widespread, companies have to find a way to make the jump in a strategic way (unless they can afford to spend millions on extensive ad campaigns). The fastest, most cost-efficient way to do that is to join forces with someone else and tap into the fertile ground of each other’s respective audiences. That’s what is taking place right before our eyes. It isn’t just partnerships as branding. It’s partnerships as seismic shifts in where our focus is going to be.
While it’s true that the need to expand is an outside pressure bearing down on all these real estate companies, there are also interior forces in place that will help make this happen.
This couldn’t have happened 10 years ago, or even five. Realogy launched in 2005, Redfin launched in 2004, and though Amazon began in 1994, the company didn’t have a strong foothold until a number of years later after expanding beyond books and videos. (For those who are curious, Zillow got its start in 2006.)
Only now, after the tech start-ups have gained a solid footing in the market with operational systems deeply in place, can they even begin to think about reaching across the aisle and working with other organizations. Sometimes those groups will be at equal levels of development, but it’s just as likely that an established company can bring on the energy of a young start-up—especially in cases where they provide a niche product or service, such as with Redfin partnering with five-year-old Opendoor.
We’re now about 15 years into the growth of these tech companies, and they’re starting to reach saturation point for the trajectory they set out to achieve from the beginning. While on the one hand that’s a good thing, as it means they’ve been successful in their goals, it also means we’re gearing up for another re-direct inside real estate. Whether it’s two established companies working together or a young company partnering with one that already has a footprint, the question is no longer which tech firm will pull ahead of the rest, but which partnership will provide the greatest amount of impact so that both sides rise to the next level.