22 Sep Uber disrupted the taxi cab industry and now has plans to do the same in Real Estate
On September 4, 2018, PRNewswire in San Francisco published an article about Uber’s plans to disrupt the real estate industry. If you’ve been paying attention even a little bit you know Uber has already disrupted the taxi cab industry all across the country.
Their real estate model is based on reducing the transaction cost by up to 50 percent using a demand model.
Brent Ritz, Chairman of Uber Real Estate said, “You will never again have to pay a full commission using Uber Real Estate. We take the Jack Ma and Steve Jobs approach to business and supply the consumer with what they want.”
He added, “Consumers will receive Uber-Like Execution with only experienced professionals, no more drama and only substantive yes or no answers….Consumers just want to go online and get it done with Uber-Like Execution. Presently we are completely website driven. An Uber, mobile application, for Real Estate, is under development.”
I have been in the real estate industry for about 5 years now. I started and still continue to be a real estate investor and house renovator and flipper. I got my real estate agent license after I had been doing those other things for a few years. I am not one of those people with who can tell you what is was like when the MLS was printed on books the size of the old Yellow Pages phone books but I’ve been around long enough to know that sometimes there “is no app” for that.
What I mean is that real estate is about people who have a goal in mind and they need someone to help them reach that goal whether they are buying or selling. Each one of these people is unique. Every person has a unique combination of things including their stage of life, goals, and financial fitness to name just a few. Each house is also unique. Even two houses built in the same neighborhood in the same year can now be much different in terms of their inside and outside condition, renovations, color schemes, and appliances. That doesn’t even take into account the unique seller motivations, balance remaining on the mortgage, and the desired selling price.
Throw into this mix that for most people the buying or selling of a house will be the biggest financial transactions they ever make in their lives. This creates the perfect recipe for high drama.
I remember the first house I ever listed. The owner had it built on a lot he owned and he only intended to build it to sell it. On my first walk through of the house I could tell it had been built by a builder without a lot of consultation from an architect. As a builder myself, I knew the house was going to be hard to sell because it only appealed to a very specific type of buyer. We had zero interested buyers at the owner’s selling price after a few weeks of marketing the house. I asked him to reduce the price and he did but it was a very small reduction and not enough to attract buyers. He wouldn’t even look some data I produced showing him the house needed a much bigger price reduction. The listing eventually expired. The owner hired one or two other realtors after me and it eventually sold about 9 months later. When I looked it up on the MLS, I could see it had sold for about $60,000 less than where I had it listed. On my second listing, I was working closely with the owner and he had a selling price that was about $20,000 too high. After my initial marketing efforts had not produced any buyers my plan was to show him why he needed to reduce his price. Before I could do that, the owner suddenly passed away and his surviving spouse then ended up with other bigger challenges to deal with than trying to sell a house. My listing on this house eventually expired and she was still not ready to renew the efforts to sell it.
So even as a rookie, I learned a valuable lesson that real estate and brokerage services are inherently inefficient and sometimes it can quickly turn into a much bigger challenge than anyone expected. Sometimes it really isn’t anyone’s fault because life events happen and we don’t get to always choose what happens. It’s like that saying from the Forrest Gump movie, “Life is like a box of chocolates. You never know what you’re gonna get.”
I once saw a YouTube video where Chinese billionaire Jack Ma explained how the biggest challenges are also the biggest opportunities. So even if real estate and brokerage services have great inefficiencies, it is these same challenges that create big opportunities for those agents and brokers who know how to maneuver through and delicately balance the issues.
Let’s get back to the idea of Uber Real Estate. It’s hard for me to imagine that yes or no answers, striving for no drama, and operations that are completely website driven are going to be the best for customers.
The most basic foundation of real estate involves people coming together to accomplish mutually beneficial goals. Even if we have become super dependent on all our technological devices, I don’t see a nearby future where technology replaces these human interactions. There is also a profound truth that customers like to do business with people they know, like, and trust. That is why some real estate companies can prosper mainly based on referrals and not direct marketing for new customers.
Only time will tell. I know many of us the industry will be watching closely to see what happens!