The Tiger Over the Hill: Real Estate in the Age of Elance


In 1993, Bill Chee gave the (in)famous “Lion Over the Hill” speech in which he sounded the alarm at tech companies coming in and destroying the MLS. Of course, with the benefit of hindsight, we know either that Lion never came over the hill, because it was far too steep to climb for outsiders, or that Realtors hunted it down in the dark of night and killed it dead. But it might be the most famous speeches by a NAR president ever.

Well, a couple of months ago, I saw that NAR had released a big study on international buyers, saying:

We live in a global marketplace. While all real estate is local, not all property buyers are. A significant share of home purchases are made by people whose primary residence is outside of the U.S. Find out which are the top five countries of origin for foreign buyers of U.S. homes, and how these buyers are using the services of REALTORS®.

Now, I’ve heard this mantra at various real estate conferences for a few years. International is on every big broker’s mind. Look at the RE/MAX S-1 filing, for example, as well as how much Realogy likes to talk about their global footprint, etc., of agents across the world proudly wearing the Coldwell Banker or Century 21 brand. I know KW is eager to expand abroad as well.

I have nothing whatsoever against international expansion, against working with international buyers, and so on. But two recent seemingly unconnected events got me thinking about this.

As NAR says, we live in a global marketplace.

Why are we assuming that this “global marketplace” is limited to properties?

Unconnected Event #1: Google Helpout

So the first random event is that I see this on Facebook:

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Paul Hagey, in case you didn’t know, is a staff writer for Inman News. So he’s going to be writing a story on Google Helpouts, a pay-for-service using live video (Google Hangouts, likely) that Google is looking to launch.

The agents responding to that post have a variety of opinions, which is not at all unusual for that group, or for that matter, for real estate agents in general. But the overall theme is, “Bah, it’ll never work, because there’s no consumer demand for it.”

Meanwhile, the gents at 1000watt have looked at Google Helpout and written a lamentation about how brokerages are dropping the ye olde ball:

It’s hard to know exactly how Google will reinvent this notion of getting help on demand, but it begs the question: why aren’t more real estate brokers doing this themselves on their own websites?

Whether it’s video or pure text content, there’s a general lack of good decision support content for real estate and mortgages on the web. For all the buzz about “content marketing” these days, there’s virtually no good plain language answers to core questions.

They have a point. But they’re missing the forest for the trees. So, if they see the tiger stalking through the undergrowth, I’m not hearing the warnings.

Unconnected Event #2: I Discover Elance

Completely unconnected to the above, last week I discovered Elance. Not because of anything more exotic than the fact that I wanted to hire someone to go through some spreadsheets and do simple data entry and some double checking.

Well, that went so well that I looked into hiring a virtual assistant — something that many real estate agents already know about, but I never felt I had any particular reason to need one. But with a lot of travel coming up, which results in a mountain of expense reports, receipts, and so on, I thought I’d give it a shot.


All I can say today is, “Where have you been my whole life, Elance?” Holy crap. My VA, who hails from Sri Lanka, is totally, 100% on the job. He’s already copied/pasted my entire blog from the very first post for a project I’m working on. In two days. At the cost of roughly $4/hour.

Since then, I’ve learned about Fiverr, oDesk, and a whole suite of these freelancing websites. This is not an unproven thing. The whole “personal outsourcing” deal is relatively new, although one guy got his 15 minutes of fame because he outsourced his own job as a Verizon developer to someone in China.

The thing that struck me is that the whole virtual assistant phenomenon is a commonly known thing in real estate. Brokers and agents routinely use VA’s to do everything from MLS data entry to making marketing flyers or doing email blast campaigns or what-have-you.

I got curious.

So Rob Goes Asking Questions…

Naturally, when I get curious, I go asking questions. To my favorite Facebook group. Here was my question, with some answers to boot:

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At least in NY and MA, there is no requirement that a person be a resident of the states of NY and MA. For that matter, there is no requirement that a licensee be a resident of the United States. Furthermore, the local MLS/Association has no geographic membership requirement.


So why couldn’t this lady get her NY/MA real estate license and join the relevant Association/MLS?

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The answer appears to be, there’s no reason why she couldn’t get licensed in many of our states, and no reason why she couldn’t become a member of the Association and the MLS.

She’s not only a real estate broker, but a lawyer and a CPA. She brokers sales and rentals and takes care of the documentation relative to them. (In case you’re scoffing that she’s a Filpino lawyer, not an American one… check out this story out about American lawyers outsourcing legal work to… the Phillipines.)

Kathy B. above will charge you $27 per hour for her services. Even if I assume generously that a transaction will take 40 billable hours of work to do, we’re talking $1,080 total. The median home price in the US is $215,000 — 3% of that, representing buy-side, is $6,450. Yeah, that’s a gap alright. And that’s for the median home price, not for the $1.6M condos in Boston Back Bay….

What Can Be Outsourced?

So one might naturally ask, if someone in the Philippines can be licensed in the states, and do the work for 1/6 of the cost, what parts of the whole real estate experience can be outsourced?

Well, we already know that the entirety of marketing can be outsourced, save one. Real estate agents are already using VA’s to conduct every single marketing campaign they do, except for meeting up with past clients, or going door-knocking in their farms.

We also know that the entire transaction from offer to close can be outsourced, because real estate agents already outsource it to transaction coordinators and escrow companies.

We know that post-closing relationship management can be outsourced, because real estate agents already outsource it to admin staff or to companies like Happy Grasshopper.

We know that showing homes can be outsourced, because real estate agents already outsource it to showing agents. In fact, here’s a video from a couple of actual real estate professionals, Richard and Lori Ballen, explaining how to find and hire showing agents:

By the way, Lori Ballen isn’t just some speaker or trainer. She’s a mega agent in the Las Vegas area, with her husband Richard. These are people who know of what they speak, and have lived it.


It might be easier to ask the reverse question:

What CAN’T be outsourced in real estate?

I know the top answer from a whole range of real estate professionals will be something along the lines of “advice and counsel” and “local expertise”. Close behind would be “negotiation”.

More On Advice and Local Expertise

Of course, that’s the point at which most real estate agents nod their head in agreement and say, with deep satisfaction, “That’s right. We’re not salespeople, but advisors, on the most important transaction of a family’s life. And no one can replace our local expertise.”

Thing is… what advice are we talking about here? More precisely, what advice are we talking about that cannot be delivered via telephone or email? Or Google Helpout?

Staging advice? I suppose. But one can hire stagers directly, and the last two times I’ve sold my house, I hired the stager directly (although through a referral by the listing agent) and paid for the staging expenses myself.

Financial advice? Heh, good luck with that, given that the real estate agent is trained from the very start of her career not to offer financial advice, but to tell the client, “speak to your financial advisor”. The same goes for legal advice. Despite the fact that many of the challenges that a consumer faces is legal in nature, and that the real estate agent’s training encompasses a bewildering variety of laws and regulations, the real estate agent is trained not to offer legal advice. Instead, she is told to refer the client to a lawyer.

Certainly not tax advice. Engineering advice? No, not that. Mortgage advice? No — you’ll be referred to the agent’s favorite mortgage guy.

Pricing advice? Ah, yes, well, here we have something that the real estate agent specializes in. I do think that strategic pricing is incredibly valuable.

Trouble is… the vast majority of real estate agents do pricing by simply pulling comps. And we’re not talking about some really sophisticated comps analysis, like a commercial broker might do. We’re talking about logging into the MLS, going into something like CloudCMA, hitting a few buttons and voila, pricing opinion! I mean, CloudCMA literally tells you, “Create stunning reports in just minutes.”

Seems to me that someone in the Philippines could also create that same stunning report in just minutes. Then deliver all the advice in the world over the phone or Google Helpout.

And the sad reality is that for far too many real estate agents, local expertise means very little beyond being able to login to the MLS and pulling CloudCMA reports. Most of the time, you can’t blame those agents. They might be new, so have no idea what’s going on. They might have done three transactions in the past 12 months, which means they haven’t done enough business to really know what’s going on with on-the-street buyer trends.

Sure, they’ve been to some local restaurants, and they’ll blog about that. But they haven’t attended city council meetings to know what’s happening with development, or paid attention to zoning board decisions, or whatever else might be happening of real importance to housing and homeownership.

As for negotiations, I’ll grant that skilled negotiators do make a difference. I’ve worked with a couple of agents who are experts at that game, and they have made a huge difference. But you know, as far as I know, they never negotiated the deal in a conference room with the other agent. They did it over the phone.

Kathy B. could negotiate over the phone too, you know? There’s this program called Skype that makes it eminently possible.

The Elance Brokerage

So I’m wondering why an “Elance Brokerage” is impossible. We live in a global marketplace, after all.

Why couldn’t Kathy B. get her MA broker’s license, hire a legion of showing agents, find a bunch of transaction coordinators out of the Philippines, hire top-notch marketing people out of the Philippines, setup hundreds of IDX websites to get leads out the ying-yang, run every transaction via DotLoop or Docusign (so it’s entirely paperless with zero need to show up at some physical office location)… and do it for $27/hour?

Redfin talks about refunding part of the buy-side commission. Kathy B. could refund the entire amount, since she got paid her $27/hour.

True, she’s probably not gonna get a lot of listings, since that requires building relationships and showing up to see the house and doing listing presentations. That’s fine. There are thousands upon thousands of buyer specialists in the U.S. today who do nothing but farm IDX and Zillow and Trulia and and have large email databases. Think that can’t happen from the Philippines? Or Estonia?

For that matter, why couldn’t a brokerage company do this? Instead of routing broker leads to some agent on a 70/30 split, the brokerage could route the lead to Kathy B. and her legion of marketers and transaction coordinators in the Philippines, pay them $30/hr, and keep the entirety of the buy-side commission. Even after paying some showing agent $50 per trip driving buyers around, that brokerage would probably net far higher than “mainstream brokerages” do.

Now throw Google Helpout on top of that. Yeah, live video help from your REALTOR (remember, she’s joined the local Association) in the Philippines over Google Hangout on your 4G iPhone 5 as you’re walking through the house with the taxi driver door opener Showing Agent.

The Tiger Over the Hill

This seems not only possible, but likely to me. A matter of when, not if.

BPO (Business Process Outsourcing) and LPO (Legal Process Outsourcing) are big multi-billion dollar industries today. Why not real estate brokerage?

The ever-present fear in real estate has been that the agent, as a middleman, would be disintermediated. I think that fear is overblown, by a lot. Consumers do want professional help when dealing with buying/selling houses.

But consumers also like keeping money in their pockets. If outsourced solutions can provide a good-enough replacement for US-based services, then the consumer would absolutely go for it. The scary thing about the Elance phenomenon is just how cheap the lower-value services are overseas, and just how good they are. Building cutting edge mobile apps? Maybe keep that here and hire the best of the best in Silicon Valley. Putting up a WordPress blog? Um, the guy from Estonia can do that very well indeed, and for $250.

I’ve written earlier this year that as technology advances, survivors have to keep climbing the value chain:

The same holds true in real estate. Doing low-value, repeatable, commoditized activities isn’t going to get you far. “I will search Zillow for you!” isn’t a strong selling point. But providing the high-value, difficult to automate services (whatever you think that is) remains valuable still. As yet, there isn’t a software system that can automate negotiations, for example.

In the age of Elance and Google Helpout, the above is absolutely true. Because even the difficult-to-automate services can be performed by low-wage high-skill workers hungry for opportunity around the entire world. A lot of them are far better trained and far more educated than the average American worker.

We live in a global marketplace. Not just for properties, but for services.

The real local experts, the experienced agents who actually know the inside scoop that can’t be found on CMA reports, the men and women who have the pulse of the buyer and seller because they do so many deals that they’re on top of the market as it changes and shifts, they’ll not only survive but thrive in this new age. The people who know that Mr. Jones across the street is a WWII veteran, and which English teacher at the middle school is excellent and which one is terrible, they’ll be just fine if not better. Because they’re real local experts who know things no algorithm can crunch and no bright young lawyer in Sri Lanka can know. They climb the value chain.

Everyone else? There’s a tiger coming over the hill. While you were busy bitching about syndication, the global marketplace is coming to your backyard.

The most important question for any service provider today has to be this one:

What is it that I do that cannot be outsourced overseas?

Think on it.


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Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

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