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The Coming Real Estate Market Disruption

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  • The Coming Real Estate Market Disruption

    I first wrote about this in January of this year:
    Now that Zillow Owns dotloop Why Do Buyers Need Agents?

    This is from May:
    (The comments are the most interesting part)

    Regardless of how Zillow spins this “pilot,” this is a very early experiment in transaction automation. It is coming, whether Zillow admits it or not, and whether it is Zillow or some other outfit that does it. In any case, I am sure that we will see numerous “tests," “pilots", and “experiments" over the next few years.
    ​​​​​​These new systems do not have to replace every agent working today. In order to radically disrupt the market they merely have to replace, what, say, 25 percent of the transactions. Capture half of the Millennials' (and younger) transactions? Remember, there are in fact still stock brokers and travel agents working today.

    ​​​​​​And have you noticed that while there are fewer stock brokers working today than forty years ago, there are many more investment advisors? I predict that the real estate market will follow a similar path. Regardless of how automated a platform becomes, it will still be a large transaction and most people will want some advice.

    Further I predict that like so many things, this disruption will happen very, very slowly, and then very fast. Clearly we are now in the slow stage, but when will the fast stage happen? Also, I will go out on a limb and predict that it will not be Zillow that gets it right. The company is either too confused, or more likely, too dishonest, to be an effective disruptor.

    ​​​​​​In any case, then what? Buyers and sellers will want advice, but perhaps not an agent. While this disruption will drive many agents into retirement, it does present an opportunity for those of us who see it coming and are nimble enough to prepare for it.

    ​​​​​​It certainly opens up some questions:

    ​​​​​​What is the definition of “agent?”
    Can one provide advice without being an agent?
    Also, can one be an agent and only provide advice?
    Is there a line where an agency agreement is necessary?
    How does one charge for this? And how much?
    Can one be a “consultant” and be paid at a closing?
    Would a real estate consultant even want to be paid at closing?
    Would a real estate consultant need a real estate license?

    ​​​​​​I have some of the answers. Well that is to say, I have opinions on some of these questions. You might as well. You might also have other questions to add to the list. I would like to hear them. The goal, I think, is to develop a business model which will survive in this coming period of disruption and thrive beyond it.

    ​​​​​​I know many agents, perhaps most, will dismiss this out of hand. That’s fine; they have nothing to add anyway. But I would be very interested in what others have to add to the discussion.

    ​​​​​​It would be nice to get out in front of this.
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