By Jessie Trapp, Marketing Coordinator & Tiana Baur, Marketing Manager
The May madness has quickly come and gone and we’re full speed ahead into the busy season. A lot happened in May. We said goodbye to Game of Thrones, hello to Pikachu, and started working on our summer bodies – but what happened in real estate? We have the scoop!
In case you missed it, here are the top five May 2019 real estate news stories to know:
1. “RE/MAX and Redfin end exclusive partnership after 2 months”
Like a summer romance, the partnership between RE/MAX and Redfin has ended almost as quickly as it started. What happened to this budding relationship, you ask? Redfin introduced a new tool that allows people without buyer’s agents to place offers online on Redfin-listed homes in Boston.
According to Inman, the RE/MAX CEO had this to say about it: “Given Redfin’s recent announcement regarding a program that would encourage buyers not to use agents on listings where the seller is represented by Redfin, we cannot continue with an official, corporate-level relationship at this time.” We’re with him on this one.
2. “CENTURY 21 Scheetz First-to-Market in Indiana to Offer Affordable Healthcare to Its Relentless Sales Professionals”
RISMedia recently published a Century 21 announcement that stated, “CENTURY 21 Scheetz has announced that it is offering affordable healthcare plans to help its 350-plus relentless sales professionals.” The plan was built specifically for real estate agents which includes 24/7/365 care, reduced healthcare costs by up to 50%, coverage for physician visits, and more.
3. “Airbnb will hand over data on 17K listings to New York City officials”
Airbnb and the Big Apple aren’t exactly getting along. In the aftermath of a subpoena that NYC issued back in February, Airbnb has finally agreed to give New York City officials data on 17,000 listings. According to Inman, “city officials specifically wanted information on Airbnb stays that lasted less than 30 days and involved entire apartments — a type of booking that is actually illegal in New York. The city also wanted data on certain Airbnb listings for private and shared rooms.”
To be continued.
4. “NAR Moves to Dismiss ‘Baseless’ Lawsuit, Hopes to Consolidate All Cases”
So, here’s the scoop: Allegedly, NAR conspired to inflate commissions by requiring all real estate agents to “make a blanket, non-negotiable offer of buyer broker compensation when listing a property on a Multiple Listing Service (MLS),” which also happens to violate federal antitrust laws. Queue lawsuit. NAR filed a motion to dismiss said lawsuit saying it was baseless and that the other side of the aisle didn’t know how real estate works. TBD on how this all plays out in court.
Read more about it here.
5. “The Amazon Effect: Prices Up, Listings Down Near Its New HQ2 in Virginia”
As pretty much every single person predicted and no one doubted, the real estate market has rapidly changed where Amazon is launching their new headquarters in Arlington, Virginia. In fact, home sales in this town have jumped 50% compared with the previous year, according to a recent realtor.com® report.
As Seattle natives, we know all too well about the “Amazon Effect.” Our advice to Arlingtoners is: get really comfortable with being in your car or on public transit and queue up those podcasts and audiobooks – you’re going to need them.
Thanks for reading and stay tuned for another #ICYMI next month!
P.S. If you’re into podcasts (and if you’re not, you should be) we have our very own! The latest episode of the REAL with MoxiWorks podcast featuring Greg Scott, VP of Branch Services at Long & Foster Real Estate, is out now. Have a listen!
By Tiana Baur
Chatbots and new tech are barreling towards the industry. Everything is moving to a cloud environment. And now, Compass is coming for your market share.
The CEO of Compass, Robert Reffkin, recently announced a 2020 by 2020 plan to the company. What does that mean, you ask? A plan to expand into 10 new markets in the U.S. by 2020, and to grab 20 percent of the market share in the 20 largest U.S. cities. Casual, right? The cities they’re expanding to are: Seattle, San Diego, Phoenix, Dallas, Austin, Houston, Atlanta, Charlotte, Philadelphia, and Chicago.
Compass has now raised a whopping $325 million in capital and their success feels imminent, especially since they’re already the #4 largest brokerage in NYC, #3 in DC, and #2 in Cambridge. Not only that, but their agent count is up 500% over the past two years, now at 2,000 agents and gaining more traction every day. They have the capital to buy agents with massive signing bonuses and the funds to invest in an entirely new CRM and targeted marketing tools designed just for their agents. By the end of this year, they are projected to do 16,000 transactions, $14 billion in sales volume and $350 million in revenue, annually.
An obvious question is: Will they have a durable and lasting impact? What happens to aggressive brokerages, such as Compass, when the value proposition of a big signing bonus isn’t attractive enough for agents to make the move? Meaning, what if their culture doesn’t align with what an agent wants out of their brokerage? Pockets are deep, but might never be deep enough for the many that love the brokerage they currently call home.
In the shadow of Compass’s other recent announcement that they’re also considering an IPO, lies a sad-looking Redfin, whose stock dropped over 5% that day. The waters are rough out there right now and it’s obvious many brokerages won’t make it out of the impending storm. The reality is, few are safe. Fewer are “too big to fail.” When tech and industry are changing at such a rapid rate, it’s impossible to predict the future of winners and losers. Whether Compass is successful or becomes another Redfin, remains to be seen.
Looking to future-proof your brokerage for these massive industry changes? This is a good starting point. An open platform allows your brokerage to combat the massive technology budget Compass has with your very own unique suite of tools, in an affordable way. 2018 is right around the corner – start it off on the right foot.
By Maddie Jostol
Redfin recently rolled out an initiative to drop their listing fees, significantly undercutting the average listing fee. The company tested the strategy in major markets, such as Washington D.C., Seattle, Chicago, Denver, and San Diego and, not surprisingly, saw a substantial increase in business. In many of these markets, the typical listing fees are around 2.5 percent, yet Redfin has lowered their fee to 1 or 1.5 percent. Redfin has claimed that their listing count has grown in every market where they’ve dropped their listing fee.
The new low-fee strategy is spreading into residential real estate, which is leaving many brokerages concerned about how they’ll compete. Lower listing fees will put pressure on your pricing, which is painful in an industry with already dwindling margins.
The pricing conversation
The first step is to coach your agents on how to handle the pricing conversation. While a low listing fee will, in theory, save the seller a decent chunk of change, in reality, it’s important for any consumer to look at the whole picture when making a decision. When agents educate their client, buyers and sellers better understand exactly what these low listing fees mean for them, and how they can shop around to ensure they get the experience they’re looking for.
Provide support to your office managers in coaching agents throughout your brokerage to have these conversations, putting your brokerages’ value proposition front and center, regardless of a high or low listing fee.
Focus on the sphere
An agent’s sphere of influence is their key to success in such a competitive market.
If the competitive factor is listing fees, get your agents to rely less on new, unfamiliar leads. Why? Those leads are more likely to shop based on price, whereas those leads who already have a relationship with your brokerage are more likely to shop based on familiarity and trust. When agents focus on maintaining their sphere of influence to encourage repeat and referral business, they no longer face the direct competition that they would with paid leads.
All Moxi Works tools are built to accompany a sphere selling methodology. We’ve seen that when agents have productivity tools that align with their sales goals and methodology, they find long-term success. If contacts are nurtured and relationships are upheld, the decision is no longer about a one percent listing fee difference – it’s about trust and professionalism.
There’s no doubt that Redfin will continue to find success due to their unique low fees, however, that doesn’t mean that price cutting is the only strategy. Work with your managers and agents to ensure they’re armed with the tools they need to remain competitive.
York Baur – CEO, Moxi Works
Redfin went public last week, raising well over $100M at a valuation of $1.5B. That’s what all the media is focused on, but what does it mean to you the brokerage owner?
The bad news is that you should be concerned. Redfin has deep pockets, deep technology, and now has access to the public markets to raise more capital as needed to grow further. They invest tens of millions of dollars in their technology annually, have a great website, and spend lots of time and money driving traffic to it. Like it or not, they’ll be a factor, and they’re going to put pressure on you to deliver better technology and a slicker experience for both your agents and their consumers.
The good news is that you have everything you need available to you to compete successfully. How can I be so sure? Because Seattle-based Windermere Real Estate has had Redfin operating in its home market of Seattle for 12 years with $200M of capital, and despite all the hype, tech and money, Redfin still has only 2.6% market share compared to Windermere’s 21%. Even more important, Windermere did 38% more transactions last year than 5 years ago in the tightest inventory market we’ve seen in a long time.
How can Windermere continue to dominate in the face of Redfin? And Zillow for that matter (also based in Seattle’s tech-centric market), supposedly siphoning away business by selling leads to the highest bidder? And how can you do what they’re doing? The answer is:
- Continue to focus on agent’s sphere of influence – the people that already know, like, and trust their agents. Sound obvious? It is, but I’ll bet you’re not doing it enough. We talk to brokerages across the country every day who are distracted by chasing a lead generation battle that they can’t win. How are you seriously going to compete with the billions of dollars of capital that Redfin, Zillow, and Realtor.com spend every year driving consumers to their sites? You can’t. Period. Lead gen will continue to be a small piece of your business, but that’s it – a small piece. The biggest piece of your business is the core business, which is transactions coming from consumers an agent already has a trust relationship with.
- Quit focusing on buyer leads. Every realtor and broker wants a seller, not a buyer if they have the choice. Redfin generates buyer leads. Zillow generates buyer leads. What’s the overwhelming source of seller leads? It’s an agent’s sphere. Control the inventory in your market by concentrating agents on their sphere, and you make money. There are only around five million homes transacted every year no matter how many buyer leads are generated – don’t you want to control the seller side of that equation?
- Control and centralize your data. Windermere decided years ago to put an open platform in place. It’s like a power strip where they can plug in all their agent tools and have them work together. How? By putting all their property data, agent and brokerage data, and consumer data in one place. Windermere currently has over 2.6M consumer names in that platform, allowing agents and the brokerage to market to those consumers to generate listings, using dozens of tools in various markets to do so. Do you have a centralized database of your agent’s contacts? What are you doing to help them stay in front of their sphere of influence?
- Quit creating islands of data and technology. Windermere has taken the platform concept to heart, and has solved the problems of tools that don’t work together, redundant data entry, and not being able to get a comprehensive view of their business. A technology platform allows them to save millions of dollars annually in office staff time, custom software development, and management overhead. This is in sharp contrast to most brokers, who don’t have a technology strategy. They buy the latest shiny technology object, and don’t even ask the question of how it works with the other technology they have now or might use in the future. Agents are demanding a better experience, and that means not having to start over from scratch with every new tool you provide them, upload their database for the 17th time, or having to rekey data.
- Training, coaching and sales discipline. Redfin has made much out of the fact that they hire agents and support staff as full-time employees, not contractors. But that’s not the big difference – we hire contractors in the tech world all the time, and they contribute just as much as our employees do. So what’s the difference? It’s not the person, it’s how they’re trained, coached, and held to a standard of how to do business. That means having a training program, providing good coaching (which means training your coaches), and having a technology (specifically a CRM system) that reinforces the sales discipline every day as agents do business. Windermere has trained over two-thirds of their agents in the Windermere sales discipline (heavily influenced by Larry Kendall’s Ninja Selling), puts an emphasis on managers doing agent coaching, and has built their discipline into their CRM to provide ongoing reinforcement.
With Redfin beating its chest on Wall Street, you need a response for your agents and your consumers – now. Do nothing and you’ll lose agents, because they won’t tolerate inaction. And don’t forget the Millennial agent who isn’t just comfortable with tech, they demand it as a necessary tool for doing business. But despite all the hype and money spent, Windermere did eight times as many transactions in the greater Seattle market last year than Redfin did. With performance like that, we’d all be well served to look at what they’re doing right.
Find out more about brokerage open platforms and how they work by clicking here.