Adapted from E.B. Solomont
The role of the traditional brokerage is actually going to go away entirely,” he said. “The role of the brokerage in the future is to supercharge the business of these incredibly large and complex [teams].”
Compass, founded by Robert Reffkin and Ori Allon, has created a single platform with tools for agents to share listings, create show sheets, analyze comps and manage deal flow.
But the firm has a leg up because it’s building the infrastructure of a tech-focused firm from scratch — rather than wedging upgrades into an existing infrastructure. And its deep-pocketed investors have given it the equivalent of a blank check.
On the data and tech fronts, traditional firms are playing catch-up with mixed results. And it’s coming at a steep cost at a time when profits from residential sales are waning.
“Now the game is, ‘Does your business produce enough cash flow to invest in what you need?’” said Real Trends’ Murray. “A normal person would say, ‘No.’ The key is, how much tech do you really need?”
Nobody knows for sure, but traditional firms aren’t taking chances. Instead, they’re spending tens — and hundreds — of millions of dollars on tech.
Last year, Keller Williams created a $1 billion tech fund, and it recently introduced a voice assistant called Kelle, which follows commands like “Kelle, call my buyer.”
Realogy spends $200 million a year on tech, according to CEO Ryan Schneider, who has outlined an ambitious path to develop new products.
According to Elliman Chairman Howard Lorber, brokerages that don’t invest in tech are toast.
“Do I lose sleep that I’ll be put out of business by a real estate tech company? No, I don’t,” Lorber said. “Technology is a tool, and if you’re a real estate company not investing in both the agent and technology, you probably won’t make it.”
Elliman is, however, being more strategic about its tech expenditures: Last fall, it scrapped its in-house listing system and struck a deal with StreetEasy to build it a custom system. And it’s getting ready to launch an “app store” this spring where agents can customize a dashboard of apps from roughly 20 vendors like Compit, BoardPackager and Edge.
“Technology is expensive,” Lorber said, noting that some competitors are trying to excel in both tech and real estate. “I don’t know how realistic that is to make it work, or how you can even be that competitive on both of those areas at the same time.”
Dozens of real estate-focused tech startups are banking on Lorber’s theory that traditional firms are going to outsource their tech upgrades and pay handsomely to do so.
For example, the venture-backed startup Perchwell — which gives agents a single platform for managing listings, compiling research and collaborating with clients — has picked off major clients from rival RealPlus, including Sotheby’s, Stribling and CORE.
Brooklyn-based VirtualAPT — whose clients include agents at Elliman and Stribling — has a proprietary robot that does 360-degree digital property tours.