by Wendy McPherson
With the business of disruption being the mainsail of the Silicon Valley ship, Real Estate is a large vessel ripe for highjacking. Those of us currently in the industry have seen what we perceive as great changes in the last few years. But, really, at the end of the day "the more things change, the more they stay the same."
Wendy McPherson. Photo by Veronica Weber.
What is starting to change are the players: All of a sudden Warren Buffet is in the residential real estate brokerage business. Warren Buffet, an icon who is known for only loving high margin businesses. All of a sudden, venture-capital money is pouring in our business on all fronts, not just the online ones like Zillow but the bricks-and-mortar ones, too. Rupert Murdock (Rupert Murdock!) is now in the real estate business to the tune of almost a billion dollars with his acquisition of Move.com. So something is cooking.
We are on the eve of disruption. Someone, somewhere is going to "Uberize" our industry. I have some crazy thoughts on this.
What if all buyers had pairs of virtual-reality glasses and were able to instantly download each house they want to see and then literally walk through the house at their own pace, from their own current living room? They could walk through their potential next house's bedrooms and the kitchen and open some of the drawers and closets -- and then walk up in the attic and around the backyard. They could even walk to Starbucks from their prospective house. And they could check the entire neighborhood out at various times during the day and night, via live streaming. Think of the same type of technology behind a driverless car, which Google says may only be five years away.
What if the state of California, or the Feds for that matter, decided that all licensed agents must be employees and not independent contractors? They just did that to certain types of mortgage brokers. Many Silicon Valley companies are under continuous scrutiny for their "independent contractors" actually being employees so the companies can avoid all the additional costs of having actual employees.
Making the issue even more complex, the definition of the term "independent contractor" varies depending upon which law is being considered. Different statutes (for tax, unemployment taxes and workers' compensation) define "independent contractor" differently. The Feds and the states are missing out on a substantial amount of income for every "independent contractor" out there. Additionally, as employees, a lot of the "wild and wooly" nature of the business would evaporate and agents would be held to standards by their employers unseen in today's environment.
What if there was a website called housematch.com? The clients don't shop for houses on this site; they shop for singles or couples or families like them that are also looking to buy or sell a home in the area in which they want to live. This site will be the "matchmaker" for finding property and setting up the transaction. After most details are worked out between the parties, a housematch.com home-buying-solution specialist would complete the transaction, greatly simplifying what has become a very complicated process. I have had clients tell me that they have sold multimillion dollar companies with less paperwork than it takes to buy a house. Our overly complicated business may be unraveled.
These are (?) ridiculous ideas. But the idea of using a driverless car in five years to show property may be the second choice behind those virtual-reality glasses.
To summarize, the real estate business may be at that tipping point -- the point where both the users and the new providers will both benefit. Right now, cities across the country and around the world are changing their existing laws and codes so that Uber can operate legally. Will real estate be the next business in line for these legal and cultural changes?