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Fake Markets, and Real Estate Agent Selection

Anil Dash wrote a post on Medium I’d highly recommend reading. Tech and the Fake Market tactic.

Graphic via https://www.propublica.org

Is there a fake market in real estate agent selection?

That first requires understanding what constitutes a fake market:

Consumers can’t trust the information they’re being provided to make a purchasing decision.

A single opaque algorithm defines which buyers are matched with which sellers.

Sellers have no control over their own pricing or profit margins.

Regulators see the genuine short-term consumer benefit but don’t realize the long-term harms that can arise.

I think it’s clear buyers don’t know what buyers don’t know. I generally don’t trust reviews/ratings since I know anyone with a brain and/or money can, and does, game them.

It’s unclear how and why specific agents show up during real estate searches.

As a new agent or broker, if you want business — and don’t have an existing sphere ready to buy/sell — there’s no doubt you’re going to pay a (hefty) tax. Either to Zillow for Premiere Agent, 25-40% referral fees for leads, or a sizable investment into a tech platform such as Boomtown & marketing spend to drive traffic.

Or, you could spend months / years building your sphere (not likely to make much money in the first few years). You could also spend years building organic SEO, and still be left in the dust.

If you do none of those things, you’ll twiddle your thumbs until you go broke / hungry and are forced to try another profession.

Success comes down to eyes on brand. Big, established players have revenue to afford to pay the tax. New entrants can’t.

You should also take note of the thinking from Rob’s most recent post:

What is interesting, however, is if Opendoor is going to sneak in a seller-financing backdoor to its mortgage platform. That is, imagine the process/flow here. You’re a buyer, you go to Opendoor, find a house and decide to buy it. You then connect to Opendoor Mortgage, who shops your deal to lenders. But, one of the options is, “Would you like to close in seven days? We can finance your purchase directly!”

Yup, that sounds a little bit like…a fake market.

Will someone turn their mousetrap into a “fake market” for real estate agents? The “best“, being the one who pays the platform the highest commission/fee? Or, are we already there?

Is selecting a real estate agent a fake market? What say you?

About Drew Meyers

Founder of Geek Estate Blog. Zillow Alum. Travel addict & co-founder of Horizon. Product & Marketing for 360modern. Social entrepreneurship & microfinance advocate. Fan of Red Hot Chili Peppers and Kiva.

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