In 1997, when I first entered this business, “disintermediation” was a hot topic.
Property listings had just gone online. Expedia had launched the previous year and was already upending the travel business. Many believed Realtors were next.
At the time, there were 716,000 Realtors in America.
Today, there are 1,563,000 Realtors in America.
Whoops.
An asymmetrical fight for the future
As I write this, there is one Realtor for every 165 adult Americans (by comparison, there’s 1 physician for every 262 adult Americans, and one lawyer for every 250).
According to the NAR, the average homeowner stays in their home 13 years.
This means that practically everyone knows a bunch of Realtors, but that peoples’ engagement with the world of real estate is widely episodic. This creates a diffusion — a kind of amorphous, confused, often irrational web of relationships, really — that makes transformative change exceedingly difficult to effect.
The net of this? In the most important ways, how people buy and sell homes, and how Realtors get paid, has mostly stayed the same since 1997. Billions in funding, very bright business brains, a revolution in technology — these have all swept over the real estate landscape only to mostly, over time, recede, leaving the basic structures intact.
The effort to disrupt real estate over the past quarter-century has been like an engine of gears without teeth: There’s a lot of spinning, but very little forward drive.
Disruption with benefits (for Realtors)
Yes, in the past few years, iBuyers pioneered a new way to sell that “disrupts” the traditional model. But according to Zillow, as of March, they accounted for just 1.3% of existing home sales.
Power Buyers, companies that front cash, or create the effect of cash, for homebuyers who want to buy before they sell, or compete in a white-hot market, ascended over the past 2 years at a rate that seems unlikely to persist in a slowing market where buyers find it less imperative pay a premium for such a service.
Importantly, both iBuyers and Power Buyers vigorously pursue Realtor referrals and/or partnerships.
Zillow, the most powerful brand in the history of housing, launched with a “power to the people” ethos aimed at wresting control over real estate information from Realtors. Today, over 75% of its revenue comes from these folks.
Hearts, minds and dollars
My point with all this: Realtors still own the keys to the homebuyer and seller kingdom. If you’re a lender, you’ve known this forever. If you’re in Proptech, you’ve come to learn or accept it.
But here’s the thing: Very few have mastered the art of winning Realtors’ hearts, minds and dollars. Many tech companies use the most tired, officious, and not infrequently insulting approaches. They fall on deaf ears. Most lender marketing to Realtors exhibits a shallow understanding of the needs of today’s practitioner and is executed poorly.
At my company, 1000watt, we help companies and brands create connections with real estate consumers and the Realtors who serve them. We’ve seen what doesn’t work, helped create what does, and understand fully the sprawling complexity of this market.
Will there be 1.5 million Realtors 25 years hence? I don’t know. But I am quite sure that, today, Realtors endure at the center of the residential real estate world.
Brian Boero is the co-founder and CEO of 1000watt, a real estate brand and strategy agency.