Real Estate Disruptors - Part 1 - iBuyers
If you’ve been in the real estate brokerage world, you know that a hot topic in the industry is “the disruptors” and specifically the iBuyers of real estate. Steve Murray President of REAL Trends and I discussed some insights to how brokers today can deal with disruptors like the capitol-driven iBuyers.
How Have Disruptors Changed?
Disrupters aren’t new but they have changed in scale - they are much larger than they were before. They are also leveraging technology and innovative software to quickly and accurately conduct evaluations for their clients.
They are purporting they can be more efficient at buying and selling property, but Steve says he’s, “Not sure that’s the case, yet.” There are still many factors that go into buying and selling that are unique to each transaction as well as the factor of great customer service and the personal relationship that most customers still expect no matter what business model there is.
Brokers should be aware that iBuyers as disruptors are not new. There has always been something that has shaken the industry and even caused innovation and positive change throughout history. Although they are not new, they are still a disruptor because we are still in the discovery phase and brokerages still do not yet know how to proceed.
Fight? Ignore? Embrace?
Do we fight them, ignore them, or embrace them? Because they are well funded, it’s not likely that their backers will pull funding anytime soon. It may not be wise to go up against them and compete with them - your marketing budget is probably smaller than theirs. Ignoring them, thinking they will go away, is also not wise, as their backers probably won’t be pulling their money anytime soon.
But might be worth it for brokerages to see how they can best partner with them and offer even more services to their clients. Think about what service you could offer by leveraging their services. Consider how things could be mutually beneficial to work with an iBuyer.
How Can Brokers Deal with the Disrupters Today?
Considering there is a cost to customer acquisition, whether that be making phone calls, advertising online, direct mail each avenue has its own capture rate. Next, consider partnering with a disrupter where they have done all the research identifying and targeting your ideal customer. They are using their advertising dollars to get in front of that lead and then will give you that prospect. Sure they might ask for a 40% referral fee as their capture rate. But as Steve says, “There are plenty of brokerages out there who are more than happy to take those prospects at that price because it’s typically a really good prospect.”
Partner with a disrupter you are comfortable with, that you can monitor and track, and that delivers excellent service to your prospective customers. Use the information they can share with you to measure effectiveness. Steve says these are much better tools than brokers used previously such as classifieds in the newspaper, which didn’t allow them to track anything. With SEO, lead pipeline tracking, direct pipeline tracking, brokers are able to actually see how much it actually costs them per closing. The ability to maneuver is much better than it used to be in the past.
Takeaways:
Disruptors like iBuyers are not new, but they might be a little different.
Working with iBuyer could be beneficial if it’s the right fit for the brokerage’s business model.
Partner with an iBuyer with technology that can be leveraged to monitor and track effectiveness.
