Do Relationships Still Matter in the Age of iBuyers?
Brokers discuss what it takes to compete with the convenience of instant offers.
November 9, 2019
iBuyers and other disruptive forces in real estate have been effective at simplifying and mainstreaming the transaction process online. But these advancements also can make consumers feel isolated from the helping hands of a real estate professional. Does this portend that the future of real estate will become more transactional than relational?
That was the underlying question Friday at the RISMedia Power Broker Forum during the REALTORS® Conference & Expo in San Francisco. Panelists at the forum discussed how real estate professionals can compete with institutions such as iBuyers and their brand of instant offers. NextHome, Inc., CEO James Dwiggins said he doesn’t believe the industry is paying enough attention to how much consumers value convenience.
“There are a lot of people who don’t want to put their house on the market for 60 days,” Dwiggins explained. Though instant offers typically are less profitable for home sellers, many may find value in such a hassle-free transaction. “Generationally, a lot of people don’t look at the value of money” in the way we expect them to, said Dwiggins.
When envisioning the future of real estate, panelists at the forum agreed that agents should consider iBuyers their competitor and must be better prepared to show their value to consumers at every listing presentation. The panelists also warned attendees to expect that iBuyers will further cut into their profit margins with ancillary services like title and mortgage.
Chris Kelly, president and CEO of Ebby Halliday Companies, said that for most homeowners, their home’s equity is the largest percentage of wealth they have. Instead of talking about the act of selling a home, Kelly said, the industry should double down on their role as “wealth protectors.” Sellers can earn as much as $20,000 more working with an agent rather than an iBuyer, Kelly added. That extra profit, if invested wisely, could grow to “$100,000 or more over time.”
Dwiggins agreed, saying that the industry’s response to iBuyers should be “no different than when we were fighting the Zestimate. We should be using it as the starting point for our conversations with sellers.”
Vanessa Bergmark, owner and CEO of Red Oak Realty, said real estate professionals can win business with confidence and a focus on their core services. “You have to know who you are,” Bergmark said. “You can’t say you’re like the Ritz, but you’re also the pawn shop next door. It can’t be, ‘We’ll sell your gun for cheap and also take care of grandma’s diamond.’” For Bergmark’s Bay Area-based brokerage, this means having data that Silicon Valley customers value and keeping services focused on helping buyers and sellers rather than expanding into title insurance and financing.
However, JP Piccinini, founder and broker of JP and Associates, REALTORS®, said his brokerage has embraced iBuyers. He explained that the iBuyer model goes hand-in-hand with his firm’s two core values: productivity and service. Piccinini believes iBuyers help agents avoid the tedious tasks that have long overwhelmed them, such as “running across town to get a signature or holding open houses every weekend.”
Moreover, Piccinini said the popularity of iBuyers reflects an industry shift from relationships to transactions. “In the next ten years, the new breed of agents are going to be transactional,” he said. “Homes are going to be consumer goods,” and the process of buying and selling real estate will be similar to buying and selling a car.
Dwiggins disagreed, saying he believes that brokerages can succeed by rebuilding their business model around the customer relationship. Likewise, Bergmark said her primary goal is “to create a sustainable company that takes care of the community I serve.” Kelly said his brokerage is focused on diversity and inclusion in its clientele. “We want to be a real estate home for everyone who lives in our market,” Kelly said.