Tech Companies Concede to Real Estate Relationships
Recent moves by real estate tech companies are revealing the importance of relationships, even in the digital age.
New moves from top real estate tech companies are revealing the importance of relationships, even in the digital age. Online real estate marketplaces, for example, are now participating in the home buying and selling process, and commercial real estate marketplaces are positioning themselves as tools for brokers, not a potential means to subvert brokerage entirely.
“Technology firms come to realize eventually that where homes are concerned, relationships are impenetrable,” real estate expert George Mantor tells GlobeSt.com. The heart of the lawsuit isn’t over techno-stuff, it’s over relationships.”
Mantor uses the example of online real estate marketplaces, which have expanded into the brokerage industry, like Zillow and Redfin. “The change in focus can be seen at Zillow, which has ventured into buying and selling homes to find a way to profit from real estate transactions,” says Mantor. “Zillow loses money on every house it flips but claims that the margin is shrinking. Maybe they’ll make it up on volume.”
He also notes the potential for tech to be used for questionable business practices. A recent lawsuit in New York highlighted the potential to use technology in this way. “On July 10, 2019, Realogy filed a 68-page complaint with the New York State Supreme Court, accusing Compass, the tech-focused real estate brokerage of a range of allegations including “unfair business practices, poaching competitors’ employees and independent real estate agents, and illegal schemes to gain market share at all costs and to damage, or even eliminate, competition,” says Mantor.
Even this lawsuit, for Mantor, is an example of the importance of relationships to close deals. “Stealing each other’s agents is about the only plan most large real estate firms have for growth,” he says. “The number of transactions remains relatively constant year to year, so eroding someone else’s market share is the only avenue.”
Technology is regularly the talk of the industry today, and there is a push for real estate companies to adopt technology tools to increase efficiency. However, Mantor maintains that these tools will never replace the importance of relationships, which will continue to be crucial to real estate deals. “Technology, or whatever passes for it at the moments has always been breathing hot and heavy on the necks of real estate practitioners but much of it has been little more than a distraction,” says Mantor. “When times turn stressful, people don’t seek answers from technology, they turn to those they trust. Technology cannot replace a good listener.”