Real estate is changing. Technology is impacting the behavior of buyers and sellers, making it necessary for brokerages to evolve to serve their customers better. We’re taking an in-depth look at how tech is influencing the industry and how NYC’s leading real estate brokerages are adapting.
Nowadays, the first thing most buyers do is to go online and search, and over 50% of buyers end up finding their home online. Long gone are the days of buyers hiring a realtor to search the MLS or RLS for listings to show them. Buyers expect access to information and listings quickly, and modern brokerages like Compass are adapting with features like Compass Coming Soon. This is an excellent play by the folks at Compass as it incentivizes buyers to search for properties on their site over a portal like Streeteasy or Zillow.
Meanwhile, Corcoran (and parent Realogy) have announced a whole bunch of new initiatives and Elliman… “is not a tech company” according to COO Scott Durkin.
Before we dig in, let’s take a step back a couple of years, prior to Zillow acquiring Streeteasy and changing the way lead-generation works by selling buyer leads to third-party agents. Back then brokers relied almost exclusively on Streeteasy to generate buyer leads, and all those leads were distributed to listing agents. When it comes to tech, it’s fair to say that Elliman was the king of New York at the time. They had the most web-traffic, the biggest brand (even bigger than Streeteasy in Google’s eyes/for SEO purposes), and were heavily investing in tech. Corcoran lagged behind, and Compass was the new kid on the block. So what’s happened since then?
The emergence of Compass
Compass has taken NYC by storm and largely delivered on their promise to use tech to help both consumers and agents. They’ve built a recognizable brand in the span of a few short years and already have the most search traffic. They’re actually on track to have more traffic than Corcoran and Elliman combined soon. They have the best website, the best features, the best search experience for consumers, and the best developers and tech team of any NYC brokerage. They also put far more of a focus on serving agents than any other brokerage thanks to CEO Robert Reffkin’s view that Compass’ customers are its agents.
While Compass certainly looks poised to take over NYC, there are still some struggles. The company has no clear path to profitability, has struggled when it comes to new development sales, and at the end of the day, is still just a real estate brokerage. Being the brokerage with the best tech is not enough, and Compass needs to put more of a focus on lead generation and competing with portals like Streeteasy.
Realogy is feeling the heat
With a stock price that has been tumbling and a business that is under pressure from all sides, Corcoran’s parent company, Realogy has been hard at work trying to reassert itself through new partnerships and initiatives. Competition in the brokerage business is fierce, especially so when you need to defend yourself from all sides. Small and mid-sized firms can act quickly, and offer new value propositions to attract customers and agents while larger firms like Compass that have positioned themselves as tech leaders are a more attractive landing place for the industry’s top tech talent. This has put a lot of pressure on more traditional firms like Corcoran, but with leadership aware of the situation, we’ve seen a strong effort to fight back.
For Corcoran, this started with an improved website with enhanced and revamped content which delivers a better experience for customers, to their recently announced lead generation campaigns on Facebook. It remains to be seen how effective their Facebook ads campaign will be, but the investment in their website is paying off. The Corcoran website has achieved moderate growth in organic traffic and even overtaken Elliman (who has seen their traffic numbers crumble). Even more exciting for consumers is Realogy’s newly announced partnership with Amazon, dubbed TurnKey, which offers buyers rewards of up to $5,000. While the program is not currently available in NYC, it has been reported that Corcoran plans to participate once Turnkey comes to the big apple. While it’s clear that Realogy and Corcoran are feeling the heat, it’s also clear that they’re ready to rise the occasion.
“We’re not a tech company.”
Oh Elliman, what on earth are you thinking? You’ve gone from being in a dominant position to looking like you’re well on your way to becoming extinct. You had a digital brand that rivaled Streeteasy. You could have driven millions of visitors to your website each month. You could have joined with NYC’s other leading firms to resist Streeteasy’s changes a few years back. But alas, you’re not a tech company. You’re just a brokerage that sells homes and nothing more. Why worry about anything else when you can just pay your way out. Little do you know that getting in bed with Streeteasy is nothing short of paying for your own funeral.
So can things turn around at Elliman or is it too late? I don’t think it’s too late by any means, but I’m not hopeful as I doubt the old boys club that runs the show has the self-awareness to recognize their own folly. When agents talk about their broker being a “dinosaur” I used to imagine what that person might look like- now I just see Howard Lorber.
So what happens next?
If you’re a consumer, the brokerage tech wars are great. You have more choice than ever before, and tech has largely evened the playing field. Nowadays, it’s possible for even small and midsize brokerage firms who invest in tech to offer similar marketing and search tools to the big guys. Brokerage fees may also come down as the competition grows fiercer, something that Realogy has already embraced with their partnership with Amazon.
If you’re an agent, the real question you should be asking is, “What is my broker doing for me?”. Do you want to be working at a company who puts you first, one that is introducing new initiatives to help you better serve your customers, or do you prefer to give up a big chunk of your commission to a brokerage that is content with sitting on its hands and getting by on its century-old brand and billionaire owner’s connections since it’s “not a tech company”?