What goes up must come down. That seems to be the case today with stock market values and the number of employees fueled by technology, all of which could have exploded 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 brokers, have announced layoffs earlier this summer. RE/MAX announced earlier this summer its intention to cut 17% of its staff. Most of those posts were to come from the brokerage’s booj platform, a customer relationship management tool for brokers and agents.
Does this mean that the real estate world, often seen as slow to embrace technological innovation, has weathered the disruption and will remain as it was? Not enough.
But it will likely mean an era of cost-benefit analysis on which technology works best as the real estate industry moves past pandemic boom times.
Internally? Or outsourced?
“The disruptors were kind of disturbed. But at the end of the day, we are human. Ultimately, it’s a very emotional and important part of us, our family and our wallet,” said Marilyn Wilson Lund, founding partner of real estate advisory firm WAV Group. “You want trusted humans. I think what technology can do is it can simplify things. This can make it more transparent.
What makes the difference compared to what is more easily dispensable in the field of real estate technology? RE/MAX’s booj layoffs could indicate that customer relationship management services aren’t valued, but the company still plans to offer them by outsourcing them to kvCORE, a platform offered by tech provider Inside Real Estate. – which means RE/MAX doesn’t have to make the large capital investment in developing its own tech arm.
There is still a lot of room for technology in the real estate sector. But maybe the brokerages themselves don’t bother to do research and development.
Customer relationship management software, which can provide everything from market statistics to other data sets needed to help manage customer relationships, is still very important to brokers, Lund said. Other offerings in what it calls “customer technologies for life” help maintain customer relationships.
The Milestone platform connects brokers and owners while also serving as a type of owner management software (think: a reminder to make repairs or keep equipment manuals handy) between purchase and sale. It also means that a reliable source – the real estate agent – is the link between the owner and, for example, a repair technician in relation to the uncertainty surrounding various customer review sites.
“It gives the client a chance to continue to rely on the realtor who, frankly, is well connected in the community,” Lund said.
Still a key recruiting tool
Brokers taking a selective and organized approach to technology does not necessarily mean there will be a massive era of technology and disruption for the real estate industry. Compass and Redfin continue to be major forces to be reckoned with in the markets they serve.
Compass CEO Robert Refkin even said last week that he thought the technology offered to agents by his brokerage would be enough to constitute a “competitive moat.” he can stop paying money and shares to agents who are affiliated with it. The brave speech, however, comes as Compass is awash in red ink over a slowing national housing market.
Still, there could be legacy uncertainty about how much technology — and the considerable resources it requires if developed and managed in-house — a real estate company needs to retain as a recruiting tool.
“Technology is obviously extremely important in the real estate industry. Many companies made it their ultimate goal, and it worked when the market was absolutely crazy,” said Larry Rideout, president and founder of Gibson Sotheby’s International Realty. “But now that the market is somewhat stabilized, I guess everyone will probably change. The relationship in the company becomes more important.
The world appears to be moving beyond the pandemic and returning to more in-person business transactions, even as the housing market plunges amid higher interest rates than in the early years of the pandemic.
This means less willingness to compete for an act against multiple competing offers, on sight, and more of a return to traditional rotation and transactions and trust in personal relationships.
Those at more traditional brokerages see it as a recruiting tool.
“We think our business 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 who can’t maintain the pattern they promised their agents,” said Al Becker, chief operating officer and executive vice president of brokerage firm Jack Conway & Co.