I don’t even want to imagine what looking for a house was like in the 80s. Over the last few years, Zillow, Trulia, Redfin and others have done a lot to make more information available to those who want to buy and sell their homes. Today, I can easily get an alert on my phone when a house comes on the market. Indeed, I’ll probably know about it long before our real estate agent does. In a competitive market, that can be a big advantage over less tech savvy buyers. It’s just as easy to look at comparable and figure out if a price has any wiggle room for negotiations or if a house is badly overpriced for its neighborhood.
That’s all great – and I really can’t imagine what house hunting would be like without Redfin’s mobile app, for example. It seems, however, that this is about as far as real estate startups go. With their IPOs, Zillow and Trulia have obviously shown that you can build a very successful startup in the real estate information world – though it’s worth noting that both of them have lately put a lot of emphasis on rentals, too. In their current form, however, most real estate startups remain squarely within the confines of providing users with more information and traditional agents with leads. That’s great, but there’s so much more startups could to do shake up the real estate market.
Redfin, too, is rumored to be looking at an IPO, but unlike most of its competitors, the Seattle-based company describes itself as “technology-powered real estate brokerage” and as such, it has the advantage of being able to give its users just about the same kind of information an agent would get from a local Multiple Listing Service. Even though many users probably look at Redfin as a direct competitor to Zillow, the company actually works with local agents to let you schedule tours of houses and walk you through the buying process. In the end, though, Redfin’s website is basically a sophisticated lead generation tools for its agents and while the company clearly has traction in the relatively limited number of markets it operates in, it won’t put your local Century 21, Prudential or Windermere office out of business anytime soon.
So where is the real disruption in real estate? Startups are taking on commercial real estate and apartment rentals all the time, but when it comes to private properties, we’re still basically stuck with the same sales model today as somebody who bought a house in the 60s. We’re still working with agents and pay them fees (directly as least as sellers – and indirectly as buyers), even though we often know more about a house and neighborhood then they do. They do, however, have the key to the house we want to see and unless there’s an open house, there is basically no other way to get into a place that’s for sale.
Real estate transactions are big and complicated (and you can bet your agent will often remind you that it’s the biggest financial decision you’ll ever make), but where is the startup that tries to change this or at least tries to make some aspects easier and more transparent? Sure, it’s a well-regulated industry with plenty of (local) quirks, but the same could be said for taxis and it looks like some companies have been able to change that landscape pretty effectively. If Airbnb can rent out houses, there sure must be a way to at least make home showings easier in the age of Lockitron (once it starts shipping) and internet-connected surveillance.
Don’t get me wrong – there are plenty of good real estate agents out there, but I can’t help but think that in the long run, real estate agents will go the way of travel agents. There will also be a need for a few good ones that can help you out in special circumstances and some people will always want to rely on them instead of handling things themselves. It took some ambitious startups to change how we book our travel today and it’ll take even more ambitious startups to change real estate as we know it.
There is a huge opportunity here, however, and I’m looking forward to seeing somebody try to really shake things up.
Photo credit: Images_of_Money