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Op/Ed

Realtor expert insights: PropTech’s invasion into traditional real estate

(EDITORIAL) Proptech ended 2020 with a total of $23.8 billion of investment in the real estate segment, introducing an array of services across the Brokerage, Title, and Escrow sector. Let’s discuss.

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invasion of proptech

For two decades, real estate tech companies (PropTech) have been proclaiming they’re innovators and game changers.

In some cases, they are. They’ve propelled real estate into a more effective practice that meets consumers where they are.

In other cases, they have not only changed nothing, but dipped into Realtors’ pockets while criticizing them, then dream of exterminating them.

Few voices have a solid understanding of the many moving parts, but in conversation with broker Anthony Phillips, we knew we needed to include him in our conversation, because what we share is a deep concern for Realtors, the honest, hard working folks serving their communities.

What follows is an introduction to Phillips, and what you’ll soon read from him – it’s compelling. Buckle up!


Q: Could you start by telling us a little bit about your background and career in real estate?

Anthony Phillips-RealtorMy entrance into real estate began as a Project Manager for homebuilder Del Webb which ended in 2008 during the real estate crash. I then obtained my real estate sales license thinking I would buy fix and flips; however, the market was deteriorating so quickly that buying anything was too risky, so I started my sales career representing tenants seeking to rent luxury high-rise condos.

In 2012, I founded Luxury Real Estate Advisors/Management, and in 2013 I was fortunate enough to represent the Seller and broke the record for the highest price/sf sale in Nevada history. This transaction was publicized and provided a springboard for my career.

Since then, I have had the pleasure of representing Heads Of State, Multi-National Conglomerates, and CEOs worldwide.

As for education, I have completed Executive Programs at Cornell and MIT.

Q: What prompted your interest in PropTech?

Tech is a game-changer, so I continually evaluate new tech and new companies claiming to use various technologies.

My firm was one of the first in Nevada to use IBM Watson to analyze 100,000+ real estate transactions to glean insights and deploy advanced marketing techniques.

Q: What is your opinion of the current lineup of PropTech firms?

It is mixed; I admire Glenn Kelman from Redfin as I believe his representations made in public and on investors’ earnings calls appear to be humble and truthful.

On the opposite end of the spectrum are companies like Zillow and Rex Homes, who, in my opinion, knowingly mislead.

Moreover, many bring an aggressive and dubious approach to gaining market share. Realtors often tout recent sales or marketing capability, but they rarely target their competitors in ads.

PropTech’s sole marketing message is comparing their services versus traditional Realtors; however, they often make misleading claims about their capabilities versus a Realtor’s lack of capabilities and exaggerate Realtors’ fee structures.

Q: What are some of the examples of knowingly misleading claims?

One pervasive claim on PropTech websites that may mislead a consumer is using the term “savings.” PropTech firms display calculators on their websites to show how much the consumer “saves” when using their firm vs. full-service Realtors. “Savings” is not a deciding factor to transact, Buyers’ and Sellers’ net proceeds are the preeminent factors, and discount PropTech firms often do not disclose to the consumer that their home may sell for a lower price due to limited marketing exposure.

It is nice to “save” $4,000 in fees but not at the expense of selling your home for $12,000 less.

As for specific companies:

Rex Homes and their CEO Jack Ryan. Ryan admittedly initiated the DOJ complaint, which resulted in the DOJ declaring a statement of interest. Ryan published a series of articles about Realtor “Cartels” and may have colluded with some of the class-action firms currently bringing anti-trust claims against NAR and its 1.4m members.

I am not an Attorney, nor do I collaborate with NAR, any other Association or named Defendants in these lawsuits; however, I understand case law, and one of the first claims made, in my opinion, included allegations that were patently false, knowingly misleading, misleading by omission of critical variables, basing claims of excessive commission structures on skewed data that is 16 years old and in some cases, legal conflicts of interest which could be actionable. Jack Ryan was cited in this lawsuit.

Most cases usually claim the Seller is damaged because they pay the Buyer’s Broker commission; however, a recent lawsuit claims the Buyer is damaged because the commission is “baked” into the sales price. One can argue who pays the commission, but it is irrelevant since net proceeds are the deciding factor in a real estate transaction, and they can be negotiated in several ways. It would be nice if these “high-power” law firms would elect a position on this matter.

These cases also reference lower Seller commission structures in foreign markets like Singapore or the U.K. but conveniently omit that Buyers often pay their Agents in these markets, so the overall fees are similar to transact, ~5%. There also appears to be a hyper-focus on commission percentages; however, consumers bank dollars, not percentages, and average home prices in markets like Singapore are significantly more expensive in the U.S.

In the U.S., any Seller deemed damaged by paying a Buyer Broker fee would be remedied by the lack of fee when they acquire a subsequent property.
Subsequent cases appear to be inferior regurgitations of initial claims.
Ryan is currently suing the state of Oregon, and in my view, the complaint makes several misleading claims.

If it is proven that Ryan filed a lawsuit with knowingly misleading claims and subsequently broadcast these assertions via press release to 3000+ websites and over 20,000 journalists, it would be an unprecedented violation of ORS 696.301, which states:

696.301 Grounds for discipline. “Subject to ORS 696.396, the Real Estate Commissioner may suspend or revoke the real estate license of any real estate licensee, reprimand any real estate licensee or deny the issuance or renewal of a license to an applicant who has:”(1) “Created a reasonable probability of damage or injury to a person by making one or more material misrepresentations or false promises in a matter related to professional real estate activity.”

(4) “Knowingly or recklessly published materially misleading or untruthful advertising.”

If found in violation of Oregon statutes, Rex Homes license could be revoked. Moreover, most states have similar regulations, so there could be a domino effect.

Regarding Zillow, I believe they make misleading claims on a range of issues. The most significant, in my view, involves disclosures of alleged violations of RESPA (unlawful kickbacks.)

There is a shareholder lawsuit against Zillow, which was disclosed to shareholders stating: “On February 28, 2020, our motion to dismiss the consolidated shareholder derivative complaint was denied. We do not believe a loss is probable related to these lawsuits.

Zillow claims, “We do not believe a loss is probable related to these lawsuits,” despite Judge John C. Coughenour of the U.S. district court in Seattle claiming, “the court can draw a reasonable inference that Zillow designed the co-marketing program to allow agents to provide referrals to lenders in violation of RESPA.

RESPA is a criminal act, and if affirmed, their privileged Brokers licenses could be in jeopardy. Zillow’s iBuyer and Flex programs require a privileged permit in each state.

Q: Why did you decide to speak out and take on the risk of confronting well-funded companies?

If I don’t, who will? I am uniquely qualified as I understand real estate, finance, marketing and have massive discovery capabilities. Furthermore, I have Commissioner-level contacts at the FTC and SEC, and connections with a minimum of four class-action firms seeking to file claims against PropTech firms when we discover anything actionable.

Q: What is your plan going forward?

I am going to tell the other side of the story.

I plan to assess EVERY PropTech company, including their TOS, and publish my opinions. If I discover egregious acts, I will file claims at the FTC, SEC, the relevant State Real Estate Divisions and share evidence with class-action firms.

NAR has been a punching bag and playing mostly defense against claims, and I have yet to see any significant counterpunches against the opposition.

Now that changes.

Op/Ed

Decades in the making, real estate’s innovation propels industry through pandemic, into the future

(EDITORIAL) Our minds are plagued with uncertainty as the pandemic reshapes all sectors, but this unique insight helps us to see the clear path forward.

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Bob Goldberg, CEO at The National Association of Realtors

In unprecedented times, people reflexively become gripped with fear and trepidation, but industry leaders can assess the bigger picture and not only take stock, but forecast what emergence will look like. The following guest column from Bob Goldberg, CEO of the National Association of Realtors® does just that – he takes stock of today’s realities and offers unique insights into changing the status quo.


Commercial real estate, an industry many feared would suffer broad, lasting distress as a result of the pandemic, fared better in 2021 than just about anyone expected.

The multifamily market, in fact, had a historic year, as the National Association of Realtors®’ Commercial Market Insights Report pointed out last month. Vacancy rates hit 35-year lows and median asking rent grew at a record pace amid a recovery in household formation.

Meanwhile, demand for U.S. industrial space continues to significantly outpace supply, and NAR economists expect the demand for commercial real estate to strengthen throughout 2022.

Given where we were less than two years ago, it’s natural for us to ask, how did this happen?

How, when offices were left vacant, urban cores were abandoned, and even more existing business activity turned online, has commercial real estate survived, or, in some cases, thrived?

The reality is that real estate – both commercial and residential – has been evolving alongside a changing market for decades.

Innovations which had been years in the making were perfectly positioned and perfectly timed when the pandemic began. New, cutting-edge technologies allowed families to relocate, transactions to close, and commerce to continue even as much of the nation ground to a halt in early 2020.

Indeed, without the broader market activity that has been catalyzed by our industry – with home sales hitting 15-year highs and demand for multifamily and industrial real estate booming – this period of relative economic prosperity would have been more distant, more elusive. 

As is the case for most things in life, hard work and sacrifice are to thank. But we can also credit a principal that is perpetually in focus at NAR – innovation.

Renowned economist Theodore Levitt once said that creativity is thinking up new things, while innovation is doing new things.

It’s been American real estate’s collective, remarkable ability to continue doing new things that has made this revival possible, a phenomenon which has benefitted consumers everywhere along the way.

Through our tech growth program, REACH, and our association’s investment arm, Second Century Ventures (SCV), NAR has been on the cutting edge of innovation in real estate technology for more than a decade.

Some of the more than two dozen companies from the REACH portfolio which were instrumental in the industry overcoming lockdowns and social distancing measures include BoxBrownie.com and Immoviewer, which specialize in 3D 360 tours and floor plan renders; UbiPark, a contact-free smart parking solution; and Loop&Tie, a bespoke gifting platform that helps real estate professionals engage with clients and employees from afar.

Overall, SCV has allowed Realtors® to seed some 160 technology companies that engage in everything from digital title and escrow transfers to virtual staging tools and automated marketing campaigns. E-signature services provider DocuSign and remote notarization platform Notarize are a few of the most recognizable entities, but a host of others have imagined the revolutionary resources which will soon be commonplace in our industry.

Residential markets reaching 15-year highs in the midst of a pandemic without tools like these is simply unimaginable.

In the commercial sector, too, these innovations have proven invaluable. Some of the 30 new technology companies supported by REACH Commercial which have been leading the charge these past two years include Lulafit, Pear Chef, and Cove. Indeed, just months after the pandemic broke, Cove launched new software platforms to help tenants and building owners return to work safely once stay-at-home orders were lifted.

As Bisnow highlighted at the time, these innovative new resources were created to help companies track the occupancy of their spaces, set cleaning schedules and conduct health checks, while their employees could reserve desks, stagger arrival times, and form elevator queues.

Looking ahead, we must retain the aptitude for progress that propelled real estate through COVID in order for our industry to thrive through the seemingly endless string of market transformations.
 
One of the true bright spots in an otherwise tragic circumstance is that this pandemic has made people more aware of the places and spaces we occupy. How all of us live and work in these spaces has changed forever. Naturally, this new mindset has generated a renewed focus on sustainability.

Real estate’s motivation to engage is obvious.

The First Street Foundation, which developed the Flood Factor tool employed on realtor.com® and elsewhere to provide flood risk assessments for hundreds of millions of properties, engaged on a recent study which estimated structural damage from U.S. flooding will exceed $13 billion in 2022.

More severe flooding events and property damage are the most widely known consequence of climate change, but its impacts do not stop there.

CoreLogic’s 2020 Wildfire Risk Report reported more than 1.9 million homes – with an associated reconstruction cost of almost $650 billion – were at elevated risk of wildfire damage. The regions most at risk, perhaps unsurprisingly, are metro areas in California. 

NAR offers grant resources to state and local Realtor® associations in effort to make communities more resilient, encouraging new and unique strategies that foster sustainability and combat the potentially damaging impacts of climate change. In Oregon, for example, the Rogue Valley Association of Realtors® – a region devastated by wildfires in recent years – used a Consumer Advocacy grant from NAR to coordinate a two-day training and certification program for home inspectors conducted by the National Fire Protection Association.

Henry Ford is claimed to have noted that if he had asked his first customers what they wanted, “they would have said faster horses,” rather than the automobile. Whether Ford said this or not is today the subject of some digital disagreement. But that’s irrelevant.

Truth is, we often don’t know what we need until we’re faced with a moment of distress or distraction or despair. A once-in-a century global pandemic, for example.

No one knows the future, and very few know what they will want at any, undetermined point in it. All we know for certain is that the future will be different than today.

And if we’re not changing the status quo, we might just find that we’ve become it.


Bob Goldberg is CEO of the National Association of Realtors®. Since assuming the role in August of 2017, Bob has overseen transformations that have positioned NAR as real estate’s leading figure in the fight for diversity and inclusion; the industry’s primary driver of technological innovation; and as an association lauded for a genuine, unwavering commitment to its members. As part of the responsibility NAR has to more than 1.5 million REALTORS® worldwide, Goldberg has overseen the formation of a number of initiatives which have influenced the market and proven immensely valuable to NAR’s general membership.

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Op/Ed

Do you not like working from home? You aren’t alone, even if it feels like it

(EDITORIAL) The work-from-home life isn’t suitable for every worker – and that’s okay! There are pros and cons. Let’s acknowledge the differences.

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working from home vs office

Working from home has become the new normal for many of us. And while some of us have been doing it for years and love it – and some of our new work from home homies are loving it, as well – there are some that are aching to get back to the office.

Yes, you read that right, there are some people who would prefer working in an office over working from home. While I’m not one to take part in that water cooler chatter, there are some major benefits to working in an office. And, even if those benefits don’t float my boat, it doesn’t make them any less beneficial.

First of all, you get social interaction – something that can be lacking while working from home. Even if you have others living in your house, it’s not like you’re shooting the work breeze with them during the work day, nor do they have the ability to help you with your work-specific tasks.

I will say, some days when I’m working from home all day and happen to not have any phone calls, I sound kind of like Yoda when 5pm rolls around and I’m talking with friends or family. It’s like I get rusty and I’ve jumbled up the ability to properly interact. Just as social interaction is important in our personal lives, it’s important for some people to thrive in a professional setting.

Second, when you’re working on a team, communication can be much more difficult in a remote setting as certain elements get lost in the computer-mediated shuffle. It’s so much easier to pop over to someone’s desk and ask a quick question than to wait on an email or instant message that includes little explanation and zero non verbals.

Lastly, when the workday ends at the office – you get to go home. When the workday ends at home – you’re still at home. This diminishes the excitement of getting to sit on your couch (because it’s likely you’ve already been sitting there for a while).

It also makes it harder to stop working. Working from home has the ability to blur the lines between personal and professional life. Just as we may take a break to throw in a load of laundry during work hours, we may find ourselves working on spreadsheets and proposals during personal hours. Having that set, in-office schedule helps separate work and life.

Like anything else, working from home, like working in an office, comes with its pros and cons. Which style do you prefer?

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Op/Ed

The dos and don’ts of balancing your life with your real estate career

(EDITORIAL) Your real estate practice can be overly consuming if you let it. With discipline, you can have a good work/life balance.

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Real estate agent shaking hands with couple over a For Sale sign marked sold from Zillow

In your real estate practice, you have a plate, and you can only put so much onto that plate before things begin to fall off into the cracks. These cracks are what I call “fires” – you know, those things that become emergencies because simply put, you let them.

What I am about to share with you at first glance may come off as cold, however, I believe that with a little thought, some practice, and your own tweaks, you can realize the income you want and afford time with your family – all while elevating the respect you deserve from your real estate clients.

Balancing work and life in real estate is no easy feat.

At no point in my real estate career have I ever allowed myself to appear too eager or desperate for a client, and my clients always felt special and cared for, even though I observed a strict daily schedule. The following is how this can be accomplished:

Lesson one: You know your threshold of how many clients you can handle at once. Your pipeline should be full, and the next client in line for your services should know you’re worth waiting for, and be assured that the same care and attention will be shown to them as soon as they are “next” (never answer a client call while with another client, or this will not work for you). A client became “next” when an offer was accepted on one of my existing transactions. My threshold was originally four clients. If my pipeline was expanding quickly, I brought on agent assistants. As they waited their turn, my assistant held their hand and kept them busy with pre-qualification, buyers agreements, and the like.

Lesson two: When I took on the next client, clear rules of the road were established. I do not leave the house (home office) until 10. I have better things to do with my time than to sit in rush hour needlessly. Some like this time for phone time, however, your undivided attention is not always given, and the possibility of missing vital details while driving and negotiating grows exponentially (as do safety risks). My phone calls were made from 8am to 10am before I left my office.

Lesson three: All of my appointments were set on the half-hour – I’m not sure why, but it worked and I was always on time, as were my clients. The same went for phone calls. Schedule them on the half-hour. You will find, for example, that if you grab lunch at noon, you’re ready for business again at 12:30.

Lesson four: Be home either before or after rush hour. I preferred before. The implied impression of my work hours with my clients worked in my favor nearly 100% of the time. Why? Because I skipped the salesman b.s. of showing them more expensive homes first – I actually took them to the home described in the range they wanted. I set the proper expectations in the first place. I listened to my clients, and they appreciated it. The day they may have waited for my undivided attention gave them immediate results, and they loved it.

Lesson five: If you cannot show your buyers their next home within five showings, either you’re deaf to their needs and wants, or they don’t intend to buy – if you’re experienced, you know it when you see it, and they’re wasting time for the next customer in your pipeline. Place them on a drip campaign with a buyer’s agreement in place, or refer them.

Lesson six: Decide when your workday ends. Mine was at 5:30. However, from 8:30pm to 10pm I would work on offers, faxes, enter listings, answer texts, and emails.

Lesson seven: Not every client was right for me. For example, I have a zone of travel. The markets I work in. Working outside of that zone takes up time from my clients in travel, and time from my family. Refer them, or if you’ve tapped into a further away zone, build your team. Teams can grow and shrink as needed.

Lesson eight: You are a business. Real estate is a business. You have business hours, and you have you time. My you time was with my family, but I love marketing, so I added a 6th half-day for my marketing, blogging, and the like.

As my business grew, my referral network grew. I utilized an assistant until an indie brokerage was established. We had a clear code of how we conducted business, encouraged our buyer’s agents to adapt their business model as I’ve described, and never allowed an unseasoned agent to handle more transactions than their limit. Inevitably my threshold grew to six, but it took time.

With the technologies we have today with instantaneous communication, it’s very easy to allow things to creep onto your plate. So my final lesson is to utilize an assistant frequently.

It is possible to work and live but it takes discipline and a set of business rules for yourself that you’re accountable to besides just the Code of Ethics. It’s about being honest with yourself, and never being so desperate that something can’t wait a minute.

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