By York Baur, CEO MoxiWorks
As we close out the second quarter of 2020, there remains a lot of uncertainty in the still very prevalent COVID-19 world. Looking back on the last few months though, the real estate industry has pivoted more rapidly than most expected.
We’ve been analyzing the market data closely, waiting to see if there’s another shoe to drop. But, through this whole experience, even when we were at the peak of new COVID-19 cases, we continued to see agents staying in touch with their spheres and people buying and selling homes across the country. This gave us confidence that no matter what happens, homes will continue to transact.
And, while we’re not out of the woods yet, with several cities and states beginning to see another rise in cases, I’m still bullish about the recovery of our industry as we enter the second half of 2020.
The current landscape
We believe in being transparent and honest with our fellow Moxians and have been reviewing market data with the company every week during our company-wide town hall meetings. We want to make sure our entire company has insight into how the real estate market is doing, and what we can be doing to help. While we still believe that no one can truly predict the outcome of this pandemic, there is a lot of data trending into the recovery, some of which is even surpassing data from the same time last year.
Pending Home Sales
In NAR’s most recent report (June 29, 2020) pending home sales spiked 44.3% in May compared to April. This is the highest month-over-month gain since NAR started their Pending Home Sales Index (PHSI) series in January 2001.
Our own data shows this same trend. We have over 95% of the US home sale footprint in our systems, allowing us to do additional analysis. For instance, inventory continues to be highly constrained – just take a look at what’s happened over the last year in the chart below – the normal Spring listing season was skipped this year due to the pandemic, and national inventory has been compressed substantially.
Given this low inventory combined with surprisingly good closings, the result is steady prices with even some upward pressure in certain markets. This is particularly true in tech-driven housing markets like San Francisco (grey line in the chart below) and Seattle (blue line), where pricing has been pushed up substantially due to lack of inventory.
Listings & Solds
We’re seeing a continued trend up and to the right for new listings and solds in a given week, which is a great sign of the beginning of recovery. Overall, the year-over-year gap has narrowed, which is a hopeful sign of recovery. It’s also worth noting that following the massive dip at the start of the pandemic, the shape of both curves is following last years – another sign of some return to normalcy in the market.
National vs. Regional Data
One quick note on the data we’ve been reviewing. Because we are a national SaaS company, we tend to focus in on the national housing data, but I know it’s not always enough to just look at the national data, often it’s more pressing to pay close attention to the regional data on listings, pricing and solds. Mike DelPrete has created The Real Estate Market Tracker so you can do a deeper analysis of your regional data. I’m a big fan of Mike’s work – he’s worth following for his insights and analysis.
Leading Indicator: Agent Activity Remains Strong
Everything I’ve shown you in the paragraphs above are lagging indicators, in other words, stuff that’s already happened. It’s easy to fall into the trap of looking at lagging indicators like these and trying to predict the future, but that’s a mistake. Instead, we need to find leading indicators – activities that precede and lead to the outcomes shown above.
For us at MoxiWorks, the leading indicator we look at most closely is agent activity in our products. Our technology has always been about sphere-centricity, helping agents be good with the people they already know and to help them stay in flow with their sphere of influence. In spite of the industry’s obsession with leads, the reality is that the agents that command the vast majority of the transactions have their sphere of influence to thank as their primary source of business. Therefore, when agents use our CRM, presentation tool, and other products to interact with their sphere of influence, it’s a very accurate predictor of future business.
One of the best of these leading indicators for us comes from MoxiPresent, MoxiWorks’ presentation product. While it’s a general-purpose tool for presenting to consumers in many different ways, a primary use is for presenting seller presentations, or CMAs. Our historical analysis of this data shows that it’s a great predictor of new listing inventory 60 days from when the listing presentation is delivered to the homeowner.
At the end of June, the volume of MoxiPresent listing presentations created is almost the same as last year. So, while total inventory will take a while to even out, we’ve historically been able to predict the highs and lows of future transactions based on the number of MoxiPresent presentations being created. As you can see in the pink line in the chart below, seller presentations have recovered to last year’s levels after a severe dip at the beginning of the pandemic. This implies that there will be a rebound in new listing inventory in the coming 60 days – a great sign that there’s some relief for the tight inventory situation coming soon.
Additionally, when we look at product usage across all of our products year over year almost everything is increasing week over week and year over year even as we embark on month four of this global pandemic and uncertainty. All positive signs.
Where we go from here
When this all started at the beginning of March, we shared the three principles we planned to live by which were to: be optimistic, be supportive, be productive.
We’ve seen so much creativity, ingenuity, and positivity from the real estate industry and we are looking forward to seeing how the industry continues to hold steady, push forward and help our economy recovery in the months to come.
By Tiana Baur
We’ve said it before and we’ll say it again, Zestimates are the bane of being in the real estate business. They’re the unfortunate misfire in a consumer lead industry and that bell can’t be un-wrung. When reports came out that a Zestimate for a home was 700 percent off, it wasn’t surprising; we have learned to expect it.
The thing is, data integrity will be an issue for the foreseeable future. You can get upset about that fact or you can see the data for what it is really is: a starting point. That’s what Zestimates are. No more, no less. The world of real estate might not be able to pretend they have ceased to exist, but as consumers, we can all be smarter about the information they provide to us.
Pick up the phone and call your agent.
Some fun facts for you: The median error rate of Zestimates is five percent. That may sound menial as a percentage, but when computed with the median home sales prices, it can be tens of thousands of dollars lost to the bottom line, and that’s if you’re lucky. According to the Washington Post, “Zestimates are within 5 percent of the sale price 53.9 percent of the time, within 10 percent 75.6 percent of the time and within 20 percent 89.7 percent of the time, Zillow claims.” And people wonder why agents bristle when this topic is brought up.
Agents, of course, have access to information that no algorithm can. Zestimates can’t know what makes a home and neighborhood awesome. So, wouldn’t it be nice to find out what your home is really worth? A thoughtful, agent expertise-driven valuation is the only way to truly understand what your home is worth.
Pick up the phone and call your agent.
It’s not a revolutionary idea, just one that is way undervalued and underutilized. As you can imagine, MoxiWorks CEO, York Baur, had some words on the topic this morning, saying, “We have more than 100,000 agents that can provide you with a thoughtful hand-built evaluation for your home. If you don’t have access to one of those 100,000 agents, find someone that does.” He went on to say that, “As a man of tech, I don’t say this lightly: there is no replacement for hyper-local knowledge that your agent, your trusted advisor can give you. No algorithm will ever replace that vital, human piece of the puzzle.”
That home evaluation tool is called Moxi Present and you’ve likely seen a presentation built on it before. There were over 300,000 Moxi Present interactive presentations that went out in 2017. They showcase what the Zestimate was on all selected comparable properties to your current listing versus what they actually sold for. Want more info?
Pick up the phone and call your agent.
By Tiana Baur
Data is the currency you will need in order to exist in the very, very near future. The real estate industry won’t be able to stick their heads in the sand on this one, especially since the majority of industries are already embracing data with open arms. Brokerage data is quickly becoming the soul of the brokerage business that keeps its heart beating and its legs moving.
Why this is happening
The thing many don’t realize, is that data isn’t just a list of numbers. Data is what integration is literally made of. Data = integration. Ever wonder how you could log in to your brokerage’s intranet and have everything you need right there? The answer: Data.
Everything is moving to the cloud. Data gets stored and managed in the cloud. Much of it gets stored and managed by Amazon Web Services. Their data saw revenues soar to over $12.2B in 2016. Salesforce, another data management platform, generated $6.67B in fiscal 2016 revenue. Last quarter, Microsoft’s commercial cloud business exceeded a $10B annual run rate. The company is still projecting this number to hit $20B by 2018.
Data is taking over the world and brokerages have no choice but to hop on the bandwagon. The future of the brokerage depends on how they manage their data.
Data is useless if it doesn’t work flawlessly together and isn’t stored in a shared environment. Picture your brokerage data like an ecosystem. Remember those miniature ecosystems built in a plastic bottle that every generation has to make in their elementary science class?
An ecosystem is a collection of complimentary applications all working together, sharing data, that make the whole greater than the sum of its parts.
Any computer you’ve ever used in the modern age has its own ecosystem. Whether it’s that Epson printer you’re using or the many applications you go through in a day like Skype, QuickBooks, or Adobe, everything works together as soon as you install it. If you don’t like an application, you delete it and get another one. It’s as simple as that.
Our open platform is where your brokerage apps get their data. The three core data sources of a brokerage data exchange are:
- Property data
- Brokerage and agent data
- Consumer data
How to cope
Whether you’re climbing 29,035 feet up Mt. Everest, the tallest point on earth, or looking to grow your brokerage – preparation is key. A solid data exchange plan isn’t something that can happen for a brokerage overnight, unless they choose to get advice and help from the experts.
For instance, many might say that a brokerage platform only needs to have those three data points working seamlessly together. But that’s just not true. When it comes to a truly open platform, they should also have integration with the cloud environment with Microsoft and Google and an open API allowing other technologies to integrate. API is what allows the integration to happen.
Moral of the story: educate yourself, so you can future-proof your brokerage today for what’s to come.
Looking to the future
This isn’t meant to scare brokerages, it’s meant to warn them. While many things in the future are uncertain and we can’t know for sure exactly what will happen and when, we do know that data will be the star of that show. Whether it’s Amazon, Netflix, or the brokerage down the street, businesses will survive and thrive with the data they have and the way they each choose to use it. The conqueror of data will be the conqueror of business and vice versa.
Our entire existence at Moxi Works is built on the goal to make brokerages more profitable by making their agents more productive. Agent recruiting and retention will always exist and while it does, we’ll exist to make it easier for the brokerage to do just that. If this all sounds super overwhelming and you have a slight headache, it’s probably time to pick up the phone and call someone that can advise you and simplify this major step to provide your brokerage with a solid future. Hint: Moxi Works is chalk full of advisors.
The difference between closed and open platforms exposed
By Mike McHenry, VP of Channels and Partnerships, Moxi Works
- A platform is like a power strip; it lets you plug and unplug tools
- An open platform differentiates a broker’s tool set, aiding recruiting and retention
- The difference between a closed and open platform is monumental
A “Platform” is whatever you want it to be
Platforms have existed in technology for ages. Most industries have already adopted them, but it’s a relatively new idea for a residential brokerage. I’ve noticed that the word “platform” is being thrown around heavily right now – it’s the 2017 buzz word and because of that, it’s starting to lose its meaning.
Some of these vendors that are calling themselves “platforms,” however, don’t actually do what they should and because of that, you’ll need to know what to look for. There are five basic services that a proper platform should have and offer:
- Property data that can be shared across all tools eliminating redundant entry
- Brokerage and agent data that’s up to date
- Consumer data so technology can help agents manage their SOI
- Integration with both Microsoft and Google cloud environment to easily and securely share data across tech companies
- An API (it allows other tech companies to integrate and share common data)
Let’s also put some rumors to rest. Just because you use a platform doesn’t mean you need to embrace the entire platform. It would be insane for a single brokerage to use every single one of our 30 integrated partners. A platform is whatever you want it to be for your brokerage.
Also, Security isn’t an inherent problem in open platforms just because a system is open, doesn’t mean it’s insecure. YouTube for instance, is an open platform site. No one is afraid to use it.
Closed vs. Open Platforms
I have to shed light on how important the distinction between a closed vs. open platform is. Many vendors that call themselves “platforms” are just products that sit on a database with no API – meaning they have no way to communicate effectively with one another. Here are some examples:
Open platform: Microsoft Windows. Windows is an operating system that allows you to download whatever you want, whether that’s QuickBooks for your taxes or Adobe Photoshop, and delete the apps you no longer want or use. If apple is more your speed, think iPhone and the AppStore.
Closed platform: Video game consoles. If you buy a game for Xbox and you get a Sony PlayStation, you have to buy your games all over again. The choice is not up to you if you ever decide to switch.
As a broker, this means with a closed platform you have to go with whatever tools the vendor chose to work with OR the vendor built it all themselves and can’t afford to evolve it over time at the same speed as competitors. Either way, it can be a disastrous future for a brokerage.
The reality is, no one can be great at everything. An open platform allows a brokerage to get all of the best tools out there, have them work together, and can change tools at will – hassle free.
Open Platform Benefits
If you’re a broker and you’ve already invested in some tech solutions over the past three or four years like a digital transaction tool, gifting, or lead partners, you don’t have to change them to get on an open platform; you integrate them and preserve your investment in agent training. That’s why an open platform is so dominant: the power and tools stay in the brokerages hands. They help companies retain the tools they love and find replacements for the ones they aren’t jiving with.
If you choose a platform provider for those benefits today, that provider can help you flawlessly transition as new tools come online in the future. At the end of the day that’s what everyone wants right? No headaches and a shorter list of items for a brokerage to worry about.
If those are not good enough reasons to use an open platform, then how about this: money. Maintenance and support are cheaper on an open platform because it leverages the entire community that makes up the cloud. Development time also decreases. Boeing doesn’t make aircrafts, they assemble them.
What’s an Ecosystem?
This is another term used in the platform realm. An ecosystem is a collection of complimentary applications all working together, sharing data, that make the whole greater than the sum of the parts. Each platform has its own ecosystem that makes up the cloud.
Again, think of your iPhone. You can have all of your applications together so that the device becomes an indispensable business tool. You get to pick à la carte whatever applications you need and don’t have to worry about how they work together. If you find later you don’t like an application, you can delete it and install a different one.
Why a Brokerage Should Care
It’s no secret that the pace of change for real estate technology is accelerating. We know that there are hundreds of companies making technology for residential real estate, which makes for thousands of applications available for use today.
What this means to a brokerage owner is that there’s no way to predict which companies and applications are going to succeed or even to envision what technologies will come into the market in the future.
Having a platform and ecosystem of applications that run on it is the key to agent productivity and retention. If you don’t think that having a complete integrated technology platform and applications to offer your agents is important, talk to a broker that just lost an agent to Compass.
If you choose the right platform, you’re going to get most of the benefits that Upstream promises for your brokerage today and will future-proof your brokerage for what’s to come in the future.