For most people, buying real estate is the largest purchase of their lifetime. They scrounge together a nest egg over several years, assume an enormous amount of debt via a mortgage loan, and pony up thousands in related fees for third parties to execute the process.
Is it so unreasonable that they ask for transparency and accountability in return?
Until very recently, the real estate industry had an information problem. It earned a deserved reputation for being gatekeep-y, cagey, technophobic and practitioner-centric versus customer-centric. Consumer resources were challenging to come by – and even more challenging to use.
But times change. Like many other industries in the age of disruptive innovation, real estate caught a rude awakening in the past decade.
Namely, online platforms and marketplaces – leveraging emerging technologies and disruptive models –are democratizing real estate information. Here’s how.
Agent Searches: From Opacity to Transparency
The first step in the real estate consumer journey is typically to engage a real estate agent. And in times past, this was a frustrating leap of faith. Agents rarely advertised their full list of services or commission rates, amounting to an egregious case of opaque pricing.
Further, they withheld pertinent information like transaction histories and negative reviews. Instead, many preferred to take an “offensive” approach, nurturing leads with salesman-like push tactics.
Open marketplaces exploded that dynamic. Nobul, in particular (currently the fastest-growing tech company according to Deloitte), has done a lot of work to reverse the decades of opacity in real estate.
They publish exhaustive data on agents. The platform’s AI-powered algorithm then matches consumers to relevant real estate agents, and those agents compete for the consumer’s business by offering lower fees and better services.
The whole process happens at no cost to the consumer. As CEO Regan McGee told BNN Bloomberg, “We’re building a full ecosystem: end-to-end real estate, and consumer-centric. Buyers and sellers never pay us anything, and they never see an ad.”
Listings Searches: From Gatekeeping to Gate-Crashing
To grasp how revolutionary online listings platforms are, you have to consider the history of the real estate agent.
This Medium article does a fantastic job summarizing the roughly 130-year history of the modern realtor. But the “Cole’s notes” are this: around the late 1800s, local real estate brokers pooled their informational resources to create the first MLS (multiple listings service).
It was a “scratch my back, and I’ll scratch yours” agreement, which hardly changed over the next century. Agents were the sole gatekeepers of the MLS, and consumers relied on them for second-hand access.
Then online listings marketplaces like Zillow, Redfin, Nobul and others flipped the script. Suddenly, consumers could do their own research on platforms that syndicate the MLS. They could compare and contrast various properties, cruise through photographs and even book viewings – all before speaking to an agent.
It’s hard to overstate how this simple change has reshaped real estate. Consumers are now better informed about their choices, and sellers reach a wider net of prospective buyers. Call it the “e-commerce” approach to real estate.
Syndicated listings networks aren’t perfect, but they’re a vast improvement over the prior status quo.
Tools and Resources for Consumer Empowerment
Lastly, in the ecosystem of real estate information, it’s important to look at “empowerment resources.”Empowerment resources are a class of information that aims to educate and inoculate consumers against common real estate problems: overleveraging, mortgage defaulting, unwise timing and underpricing.
They include, but aren’t limited to:
- Affordability calculators that allow consumers to schematize their monthly payments
- Mortgage comparison tools that let you shop for the most competitive rates
- Location-specific buying guides that indicate best practices, potential rebates, etc.
- Market conditions indicators that tell you whether you’re currently in a buyer’s or seller’s market
- And AVMs (automatic valuation models) that help sellers quickly and inexpensively pinpoint the value of their property
Again, these resources were scant or exclusive before the digital age, available to savvy investors but not necessarily average consumers. Their current online ubiquity and democratization have helped promote an equitable playing field in real estate consumerism.
To summarize, the biggest purchase of your life should not be a gamble. That’s a premise that everyone can get behind, from practitioners to consumers, investors and policymakers.
All of the informational tools, platforms and marketplaces listed above make real estate an overall safer investment for consumers.
Importantly, they also make the entire industry look better by reducing instances of foreclosures and consumer remorse. Welcome to real estate 2.0: transparent, accountable, equitable and accessible.
