The Fortress and the Ecosystem
The annual Swanepoel Trends Report explores the biggest trends in the residential real estate industry. This year, Redfin CEO Glenn Kelman was asked to write the foreword, which you can read in full here. The Swanepoel Trends Report is available for pre-order and will be available on Feb. 1.
It was a strange request.
Out of the blue, a competing broker invited me to lunch. He was on one side of the lake that divides Seattle, and I was on the other, so he and his partner offered to meet on an island in the middle. Driving over the bridge, it bothered me that I was apprehensive. Why should I feel that way?
When I sat down, the broker spread his firm’s training materials before me. He wasn’t arguing that his agents were better than Redfin’s. He only wanted me to know that, for all of Redfin’s claims about prioritizing customers over commissions, his agents were also trained to put customers first. I looked through his materials, which I would have been proud to use to train Redfin’s agents. My face turned pink. I said I was sorry for claiming that Redfin’s agents had different motivations than the agents at his firm. And, though we pay our agents differently, I’ve never made such claims again.
What was most remarkable was what happened next: He accepted the apology. He gave me a chance to change and, over time, to belong to this industry. It’s rare for anyone, a spouse or a friend let alone a rival, to be willing to look at another person in a different light.
That was a decade ago. I still think about that lunch when reading bedtime books to my boys, who often interrupt to ask about each character: “Is he bad or good?” Whatever the moral is supposed to be, the story also trains us from the earliest age to sort people into heroes and villains. The “I” in the story is always the hero. This is why my then-seven-year-old began to recognize one of his harmless classmates as Harry Potter’s nemesis, Draco Malfoy. It’s why partisan differences prevent Congress from passing common-sense laws. It’s why the Packers hate the Vikings. And it’s why the real estate industry has sometimes had a siege mentality, with members of the old guard warily eyeing the barbarians at the gate.
And it’s why the Swanepoel Trends Report is so valuable. This report isn’t a one-sided defense of traditional real estate, technology, real estate’s practitioners or our critics. It’s written with the savvy of an insider and the curiosity of an outsider, so that we can see the forces now affecting our industry that have been hidden in plain sight. It gives us a chance to change, because seeing someone else in a new light is the only way we can also see ourselves in a new light.
The Changes Ahead
There’s plenty to learn about in 2018. The expansionary fiscal policy of the last decade has generated nearly free capital, which has not only funded a run-up in real estate prices but also in real estate technology. In 2013, $451 million was invested in real estate technology startups. It’s projected to be $3 billion in 2017. This is an increase of $300 million from last year, but the number of firms who are getting that money dropped from 277 in 2016 to 61 this year.
The result: a new generation of well-funded potential disruptors is emerging, of Opendoors, OfferPads and Compasses. None so far as I know is vying to build another online portal. No company in a decade has tried to do that. Instead, each has a new way to sell houses, and each is chronicled here, explaining how their business works.
An Ecosystem, Not a Fortress
But what I think is most valuable about this report is that it can be like the lunch I once had on an island in a lake with someone I thought I knew, but didn’t know at all. This report can make us see the old divisions between websites and brokers, technologists and agents, in a new light.
The fortress the real estate industry has built to protect our data has turned us all into prisoners, squinting through arrow slits at a world we have forgotten is ours. Rather than trying to lock away our data, we are for the first time in a decade in the process of ensuring we get credit for it, so that the customers who see our listings everywhere also see us, the agent and the broker, as the authoritative source of information about our local real estate market.
Seizing the future for ourselves is the whole premise of the Swanepoel Trends Report. It analyzes our industry as an ecosystem, rather than a fortress, in which every member contributes to the ecosystem, and each benefits as well. Virtually all our customers use a real estate website, but virtually every photo of every home on these sites was captured by a real estate agent, and conveyed to a database by that agent’s brokerage. Every real estate site is thus the product of a collaboration with a million agents.
In this way, agents and brokers are the industry’s eyes and ears, and also our hands and feet, working hard each day to host tours, negotiate sales, and prepare homes for sale. Above all, we’re the industry’s heart and soul, caring for people who have lost their jobs, their parents or their spouses, who have put everything they own into a U-Haul and begun the drive across the country toward a new life.
And of course, we as the agents and the brokers are the brains: no matter how much we may grumble about our own rules, we’re still the ones who set and enforce them. Technology is the nervous system, connecting customers, agents and listings. As such, technology should benefit the whole ecosystem: the customers, the agents and the brokerages, not just the developers of that technology.
If this hasn’t always been how the industry has worked out, we can change it. This after all is our industry, and we can make it what we want it to be. We can reimagine the relationships between agents, brokers and technology to benefit everyone.
That reimagining starts at least in part here, with a report that surveys everything that’s changing in real estate, and a new way of seeing opportunities as threats, and rivals as partners and maybe even, to use one of Stefan’s favorite words, as friends. So I hope this report shows us all new ways to work with one another, before we get back to the age-old business of beating each other’s brains out over a listing consultation!
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