What goes up, must come down. That appears to be the case today with stock values and employee counts of tech-fueled anything that might have boomed during the pandemic.
In the world of residential real estate, look no further than Redfin and Compass. Both platforms, known for their greater use of online marketing than more traditional brokerages, announced layoffs earlier this summer. RE/MAX announced plans earlier this summer to cut 17 percent of its staff. Most of those positions were expected to come from the brokerage’s booj platform, a customer relationship management tool for brokers and agents.
Does this mean the world of real estate, often seen as slow to adopt technological innovation, thwarted disruption and will remain business as usual? Not quite.
But it will likely mean an era of cost-benefit analysis on what technology works best as the real estate industry moves beyond pandemic boom times.
In-House? Or Outsourced?
“The disruptors have been kind of disrupted. But at the end of the day, we’re human. At the end of the day, it’s a very emotional and important part of us, of our family, and our portfolio,” said Marilyn Wilson Lund, founding partner at real estate consulting firm WAV Group. “You want trusted humans. I think what technology can do is it can simplify things. It can make it more transparent.”
What makes the cut compared to what is more easily dispensable in the realm of real estate tech? RE/MAX’s booj layoffs might indicate customer relationship management services aren’t valued, but the company still plans to offer them via outsourcing them on kvCORE, a platform offered by tech provider Inside Real Estate – meaning RE/MAX doesn’t have to make the hefty capital investment in developing its own technology arm.
There is still very much a place for technology in the real estate industry. But maybe the brokerages themselves don’t go to all the trouble of research and development.
Customer relationship management software, which can provide everything from market statistics to other datasets needed to help manage client relations, is still very important to brokers, Lund said. Other offerings in what she calls “customer-for-life technologies” help maintain client relationships.
The platform Milestone connects brokers and homeowners while also serving as a type of homeowner management software (think: a reminder to do repairs or keeping equipment manuals all within reach) between buying and selling. It also means a reliable source – the real estate agent – is the conduit between the homeowner and, say, a repair tech versus the uncertainty around various customer review sites.
“It gives the client a chance to continue to lean on the real estate agent who, frankly, is well connected in the community,” Lund said.
Still a Key Recruiting Tool
Brokerages taking selective, curated approach to technology doesn’t necessarily mean there is going to be a massive tech and disruption era of reckoning for the real estate industry. Both Compass and Redfin continue to be major forces to reckon with in the markets they serve.
Compass CEO Robert Refkin even said last week he thinks the tech his brokerage offers agents will be enough of a “competitive moat” it can stop paying out cash and stock to agents who affiliate with it. The brave talk, however, comes as Compass is awash in red ink from a slowing national real estate market.
Still, there might be uncertainty around the legacy of how much technology – and the hefty resources they require if developed and managed in-house – a real estate firm needs to keep around as a recruiting tool.
“Technology is obviously extremely important in the real estate industry. Many companies made it their end-all, be-all, and it worked for the time when the market was absolutely insane,” said Larry Rideout, chairman and founder of Gibson Sotheby’s International Realty. “But now that the market is somewhat stabilized, I guess everybody’s probably going to shift. The relationship in the business becomes more important.”
The world appears to be moving beyond the pandemic and getting back to more in-person business dealings, even if the housing market takes a dip amid higher interest rates than during the first years of the pandemic.
That means less willingness to vie for a deed against multiple competing offers, sight unseen, and more of a return to traditional wheeling and dealing and reliance on personal relationships.
Those from more traditional brokerages see that as a recruiting tool.
“We feel like our company can withstand this stuff. For us, it’s an opportunity to be a flight to safety for people who are out of places that are maybe flash-in-the-pan-type operations, or those that can’t sustain the model that they promised their agents,” said Al Becker, the chief operating officer and executive vice president at brokerage firm Jack Conway & Co.