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An open letter to startups trying to disrupt the real estate industry

There are always new startups popping up offering lower commissions and buyer rebates hoping that they’re going to be the next big thing in real estate. To date none of these new companies except Redfin have disrupted the industry at all. Personally, I believe it’s because people love working with people and don’t want technology taking that away on the biggest purchase/sale of their life.

If a startup actually wants to disrupt the industry they have a lot to do

Stop taking the same approach the last 20 startups have taken to the “buy and sell homes online”. Most of these are started by very smart people who just have no experience in the real estate industry period. With most ideas, you want to create something inside your realm of knowledge. It’s easier to spot problems and innovate on them when you’ve dealt with them first hand.

Why does everyone want to get rid of agents?

Like previously mentioned, people like working with experts when it’s the biggest financial decision in their life. For at the very least of reasons, it’s nice to hold someone accountable instead of a website with no face.

Knowing this, if any startups want to disrupt the buying / selling of the real estate industry they should focus on figuring out how to utilize agents while building technology to compliment their skill set and make them more efficient.

I’ve yet to seen a startup market the home

This is another problem I see. These startups are taking the approach of having buyers go through their site and pick a home they want to buy. As a seller, I definitely don’t want that. I want to know that someone is doing everything they can to sell my house. Use every connection you’ve made in the past 10-20 years, have flyers dropped off everywhere, hold private brokers opens, open houses and everything else you can think of. People’s lively hoods and reputation depend on selling that home. That’s what you’re competing with.

 So what’s it going to take?

In my opinion it’s going to take working with agents and being able to hold a claim that listing on your website on average sells homes for higher prices with the lowest listing times. Reverse engineer that statement to figure out how to disrupt the industry but, until someone does that then I don’t see it happening anytime soon.

All I see right now is new startups popping up with the same idea that starts with less commission and no agent. That’s not innovation, that’s competing on price.

About Andrew Gale

Founder of FlyerCo focused on innovating real estate flyers.

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  • Really

    USA. Its your money you get to do what you want. Since when did you become the startup police.

    • Hey, I agree! Sorry if it came off otherwise. Was just trying to give some thought / opinion on a lot of these startups that are coming and failing. We see them constantly and they’re all revolved around the same idea.

  • Sanju Thomas

    Valid Points

  • Gabe Sanders

    I haven’t seen an online model that can compete with the local knowledge offered by good agents. Though, the rub is, there are a lot of bad agents as well.

  • Christopher Himes

    HomeLight is doing some cool things, helping buyers and sellers find the best agent for them. It’s valuable and unique. The MLS-driven companies won’t tell you who the best brokers are because they have no idea. They’re also paid by brokers who subscribe to the service for leads (so they want as many, good and bad, as possible).

  • Michael Michael

    “Why does everyone want to get rid of agents?” It’s not that we want to get rid of agents, it’s just that we can’t disrupt the industry with new innovations by being tied down to agents that want to maintain the status quo. I find it unfortunate that this describes the majority of agents I talk to. Also, agents don’t want to “give up the keys to the kingdom” or “hand everything over on a silver platter” .. I find these are the most common types of expressions when it comes to building tools that enable consumers. Any innovation which enables, educates or empowers the consumer, inevitably does/might/could erode the total value of the agent, or at the very least makes the agent feel less needed .. threatened. This makes certain agents chafe at disruptive innovations.

    By putting agents in this position, Redfin, Z, T .. et al, match the Ghandi quote: “First they ignore you, then they laugh at you, then they fight you, then you win”

    I would argue that, as an innovator, if this quote does not apply to you .. you’re doing it wrong.

  • I want to agree with your point but I think some of them are not considerable. Saying they are all involved on the same idea might be true but do you want to ignore the fact that truly the realtors are charging extremely too much? … so the fact these startups wants to find ways to reduce the cost is a great value to the renters or buyers.

    Nevertheless, there is a lot of room for improvement and you guys from SF should stop with all this disruption of a thing. Startups should just create products that adds value to people’s lives and find ways to help the agents too.

  • Erez Yonatan

    The problem with those startups is lack of knowledge in the industry and greed.Many startups think that it is a walk in the park to buy or sell real estate. Well the bad news for all of you that it is not and very very very complicated and can get to the point that both seller and buyer will need to meet in court to solve their problems. Buying or selling real estate involved in hundreds of things connect between them.It is easy to think one thing but to make it work is a totally different story.Yes you can remove your bad tooth doing it yourself but you will never know what are the future problems might be. That is why you need to go to the dentist.The same is with almost everything.Most people do not have any knowledge in real estate and to educate them takes time if at all. Many people have no time to deal with it so they go and hire an agent.What is so wrong to have a loyal agent who will guard your ass in the transaction.There are good doctors and bad doctors there are good attorneys and bad attorneys same with real estate agents. Will you want to represent yourself in a criminal case that can put a big effect on the rest of your life? NO! you hire an attorney. Buying real estate is almost the same.Now go tell to consumers that all this a computer algorithm will do it for them. Goodluck! (:

  • Mrs. Property Solutions

    Lots of interesting points to ponder here. I am a buyer in the real estate industry and since I flip houses, obviously it is my job to get a house for the lowest price possible. Not usually something that people want to hear. But the way that I am able to do this time and time again is by adding value to those that we serve. If we can add value, to me, that is the best way to disrupt an industry. Too many people are trying to skate by with doing the minimum possible for people.. let be the ones that add value!

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