This is going to be a slightly different kind of a Quick Take. I stopped by the RE/MAX R4 Convention, and then took off to speak at the OREA REality conference in Niagara Falls, so frankly, I did not have a lot of time for writing.
Instead, I wanted to share some quick takes kind of initial thoughts on stuff, that will likely find their way into a post sometime soon.
I did manage to publish the Q4 RE/MAX earnings report post… like, just 5 minutes ago. So you are likely to have received that email notification at about the same time this one comes into your Inbox. But just in case, do check it out.
So Inman is reporting that Greg Schwartz said at R4 that the iBuyer race is down to Opendoor and Zillow. I happen to agree with Greg, especially since Greg also said that the future of funding is securitization. I haven’t spoken to Greg about that, but since I’ve been saying iBuyer is a mortgage play since 2014 when Opendoor launched… like the Geto Boys said, damn it feels good to be a gangsta.
I did tweet out a thought, which I’ll share with you: iBuying will be a two-horse race, until one of the Titans enter the picture. Think Quicken, JP Morgan Chase, Bank of America. None of those guys are going to willingly concede enormous chunks of their mortgage lending business.
This is a non-news… except for two things.
One, John Daugherty was one of the oldest and most respected local brands in Houston real estate, and one of the dominant luxury market players for decades. That did not save John Daugherty from the realities of the brokerage business.
Two, expect to see many more of these filings in the years ahead. I think most of the traditional brokerages are like Daugherty, teetering on the edge. Their choices are (1) get acquired, or (2) bankruptcy. It’s death either way.
In yet another sign that Redfin is converging towards Realogy and HomeServices of America, instead of towards Zillow and Opendoor, Redfin launches a “luxury division” by introducing Redfin Premier.
I’m scratching my head a bit on this one. Redfin always aimed to be Walmart of real estate with every day low prices. Now it wants to appeal to luxury sellers with the same value proposition? I mean… I guess millionaires like saving $15K, but Glenn Kelman is quoted as saying that luxury sellers will save anywhere from $15K to $20K, which is enough money to buy a new car.
Not any new car someone with a $1m+ house wants to buy. It’s like Kelman hasn’t been new car shopping in a while.
Whatever, it’s an odd appeal for a value-brand like Redfin to try. We’ll see when they talk in Q2.
Bonus: Quick Thoughts
Since I was traveling so much, I didn’t really have time to read up on the news. So instead, let me offer you some un-researched quick thoughts from R4 and from the OREA event. These are just one man’s perceptions and observations, so feel free to ignore them.
I tweeted out after the OREA event that the word of the decade is “disbrokeration.” Now, to be sure, some of that was influenced by what I saw and heard from Zillow and Redfin, as well as what I saw and heard at R4. But a lot of it came from listening to brokers and agents on the ground.
At this point, in 2020, I can’t think of anybody who thinks that brokerages remain relevant who isn’t actually paid to continue thinking that brokerages remain relevant. There are only two things that producing agents bring up time and again as to the relevance of the brokerage: (1) it’s required by law, and (2) liability insurance.
#1 is literally clerical, since an agent can actually hire a broker-in-charge (and I know teams that have done this). #2 is the sign of the times. One top producing team owner from Canada told me that he would leave his brokerage/brand instantly if the annual cost of that affiliation ever exceeded what it would cost him to buy his own liability insurance coverage. That’s not the first time I’ve heard that.
Even more, the sheer number of people who came up to me after my presentations thanking me, telling me how refreshing it was to hear the truth, etc. was just staggering. That does happen from time to time, but not as much as happened last week in Niagara Falls. One man cornered me at the bar afterwards and told me, “Great presentation, son; terrifying but great nonetheless.” He is the broker-owner of an independent brokerage, you see.
Overlay that on what I saw at R4 — thousands of REALTORS walking around looking at scarves, handbags, yard signs, all kinds of vendors promising them all kinds of stuff. One image sticks with me: the longest line I ran across was the one offering free headshot photographs. There had to be at least a hundred people waiting patiently on that line.
Two things about that. One, what kind of a real estate agent doesn’t already have professional headshots? Two, most of the people in line were not dressed for business; they were in Las Vegas for a brand conference, after all. They were dressed for comfort, for taking notes, and for sitting for long periods of time. Yet, they were lined up for headshots.
These are RE/MAX agents: the most productive in all of real estate on a per-agent basis.
Makes you think, doesn’t it?
What I now believe is that all of the rules of and for real estate are being rewritten, and most of the people in the industry have no idea that is happening. They are operating under the old rules (that was the theme of my RE/MAX writeup, and I suspect it will be one for my Realogy writeup), or just walking around unaware that the rules are being rewritten. Even among those who kind of see that the old rules are no longer in effect, many of them are fighting to retain the status quo instead of trying to figure out what the new rules are.
The carnage, when it comes, will be enormous, I fear.
I don’t know if all of the institutions we count on today in residential real estate in North America will survive the decade. A few will, I’m sure, but… it was truly surprising just how oblivious so many people are as to what is happening right in front of their faces.
I realize that sounds depressing, but it really isn’t. Status quo is depressing, because everyone knows who has the power, the wealth, and the status. Change is exciting, because it represents an opportunity to move up. The people who seize the opportunities today, set themselves up to be antifragile as chaos swirls around them, will end up winning bigger than they ever could have imagined. It will be creative destruction at its finest, but I’m looking forward to the creation rather than losing sleep over the destruction.
If you’re reading this, you’re VIP, which means you are also likely doing the same. Thank you for that. Let’s see what exciting opportunities exist as the old rules give way to the new.
While I will be home in Las Vegas, I will be presenting at the HomeSmart conference next week. I know the LeadingRE convention is also in town. If you’re in Sin City, drop me a line. Would love to say hello and buy you a cup of coffee or something.
Thank you all!