Shop Talk: The Real Estate Agent Blog

How the real estate industry is impacted when corporations take an interest in the market.
September 28, 2018

When Corporations Get Involved In Real Estate

by The CE Shop Team

How Your Business Might be Affected by Corporations Entering the Industry

The real estate market is an ever-changing landscape and one of the most recent trends in the industry involves corporations. In this competitive atmosphere, larger companies are taking an interest in the market as a whole because of the vast revenue possibilities.

Zillow

Zillow has long been an essential resource for agents, buyers, and sellers alike. Lately, however, they have been expanding their reach in the real estate industry. Zillow’s newest Instant Offers marketplace offers sellers an alternative to the traditional home buying process. In this marketplace, Zillow accepts offers from homeowners and a dedicated Zillow Seller Success Specialist schedules a home inspection, helps throughout the closing process, and then turns around and sells the home. This all-inclusive option draws sellers in with a quick and easy experience, guaranteeing a closing in “as little as five or as many as 90 days after the sale contract is signed.”

This radical change in their business model might be the beginning of a landslide success but investors weren’t necessarily sold. After announcing their new plan to flip houses, Zillow share plunged 9 percent in the stock market, due to this shift in business practices. Daren Blomquist, senior vice president at Attom Data, a real estate data services company, said that Zillow has branded themselves a media company but added that “when they start buying houses directly, it’s hard to say they are just a media company now.” The way they do business will continue to evolve and alter exactly how the real estate market works with companies. In an already competitive market, we should expect tensions to rise between brokers and businesses like Zillow if online home buying continues to gain traction. Though, according to Zillow, this is a great opportunity for agents, stating that “the vast majority of sellers who requested an Instant Offer ended up selling their home with an agent, making Instant Offers an excellent source of seller leads for Premier Agents and brokerage partners.”

Amazon

Amazon is a well known online powerhouse in the retail industry, with a constant eye on expansion. So far, they have extended into many new service-related offerings and even branched out into physical stores. They quietly tested the real estate waters in 2017 when they unveiled a “Hire a REALTOR®” page on their site. According to GeekWire, “when reports of the Amazon page surfaced, Zillow’s stock price slumped from $46.15 a share to $44.54,” showing just how interconnected the market truly is. HousingWire reported that The National Association of REALTORS® did not authorize Amazon to use their trademarked phrase or coordinate with them about this possible launch. This page was taken down but the idea that Amazon might get into the real estate referral business shook the industry.

Amazon is also working to launch Amazon Experience Centers, where consumers can test out Amazon’s smart home products in model homes around the nation. It seems that with each of these decisions, they are taking small steps into the real estate industry and testing out how their business model can be incorporated into the real estate market.

Airbnb

Airbnb is a home-sharing organization that connects people with places to stay in communities around the globe. As a company firmly in the travel industry, they are quickly broadening their horizons and expanding into the real estate realm. Several years ago, Airbnb partnered with realtor.com® to allow future homeowners the opportunity to test out a home before they purchase it. Airbnb has since been continuing their efforts to associate themselves with real estate.

In Miami, the company is working in partnership with a developer to design an apartment building that houses 324 units. Being an Airbnb building, tenants will be encouraged to sublet their space online through Airbnb. This decision to branch out to real estate was motivated by their efforts to legitimize home-sharing throughout the market. Struggling to convince building and facility management companies to allow tenants to rent out their space, Airbnb is taking control by becoming building management itself. Until this point, the company had acquired other rental services, such as Luxury Retreats, and also provided landlords with a slice of their earnings, sometimes as much as 15 percent, if they agreed to make Airbnb their exclusive rental site. With a direct focus on expansion, Airbnb is making big waves in the real estate market.

What’s to Come

Corporations and the real estate market are finding new ways to coexist. Though some of these business models exclude real estate agents and brokers, others allow consumers more accessibility to the complicated process of selling and buying a home. Either way, it’s essential for you to ride the changes and adapt to new advances in the market. If Zillow has made a mark in your market, look into becoming one of their Premier Agents or brokerage partners. Protect your business by keeping up-to-date with the latest trends. This is only the beginning and more changes are likely on the way once these trials have been tested and proven successful. However, these changes may be slow to come since over 50% of home buyers find their home online but nearly 90% still use a traditional real estate agent as part of the transaction.

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