There was a time not long ago when the real estate industry narrative was that portals were coming for agents. They were going to get into the transaction, disintermediate agents and take their lunch.
Recently, there seems to have been a shift in that narrative.
Why? Well partly because the really disruptive models, the ones that cast a shadow over the utility of the agent, are now sunk and don't look like resurfacing. The online discount model went down with the likes of Purplebricks and REX and since Zillow shut its Homes division in November 2021 it has been rough sailing for iBuying.
As industry commentator Mike DelPrete said in a recent presentation, agents are absolutely necessary for the "last mile problem" — the dirty, complicated part of a real estate transaction that actually involves forming personal relationships.
Real estate marketplace businesses around the world seem to have come to the same conclusion. The big portals have always made sure to publicly state that their agent customers are vital but now the likes of Zillow CEO, Rich Barton seem to be saying it with conviction.
So what's the next big shift in real estate? What's the next clash of business models that we're going to be reading about?
There might be a clue in Juwai IQI Chairman, Georg Chmiel's presentation from Property Portal Watch Bangkok earlier this year. The German native used a framework devised by some of his country's most famous philosophers to articulate the point.
"The old thesis was that online portals will disrupt the real estate agent and wipeout agencies. That's what we said, including myself, 15 years ago."
The antithesis that emerged over time was that agents became more tech-savvy with the help of tech-enabled brokerages and started to claim that they were the ones in control of the real estate market. Ultimately, as dialectical philosophy dictates, the two opposite theories come together...
"I do believe ultimately [the two points of view] will come together in the synthesis. Online agents platforms are the winners."
'Online Agent Platform' sounds innocuous enough. The image conjured is that of a software, transaction support and marketing provider. A faceless, branded cloud sitting on an app in an agent's phone rather than a badge on their lapel, a corporate identity and an office they have to go back to after a viewing.
As DelPrete has explained, low-touch brokerage businesses like eXp and Real in the U.S. market seem to be doing better than their traditional brick-and-mortar counterparts.
Real in particular embodies the low-touch, cloud-based model and is leaning heavily into AI. The company that floated on the Nasdaq a couple of years ago recently inspired some thoughts from Brain Boero, CEO of the U.S. real estate branding agency 1000watt, in his company's excellent newsletter, The Dose.
"By mashing up AI, all of the company’s transaction and agent data, and its existing support team, the brokerage may be able to scale without the usual operational costs. The possibility here for Real, and other brokerages capable of tech execution, is that margins could grow over time, not compress."
Now what if that app on the agent's phone that does cool AI stuff was also their sole source of leads and data intelligence? In other words, a portal.
Is there any reason why a company like Zillow couldn't do any of that stuff?
So cloud-based, low-touch, tech-driven agent solutions seem to be the future of brokerage. Real says in its marketing schpiel that its appeal to agents is that it "can offer top-tier support and the industry’s leading splits because we operate with limited overhead".
Portals don't need big overheads like offices. Portals are good at cloud-based, tech-driven stuff. Portals need new revenue streams to mitigate the stagnation of their main business model. This all seems ideal.
Becoming a brokerage, or an online agent platform, would potentially mean getting a percentage of an agent's commission like Zillow and Realtor.com are already doing in the United States through their 'next-gen-lead-gen' products.
Realtor.com reports its revenue from commission share via its 'referral model' while Zillow's revenue from this model can be inferred from its 'recognized revenue from contract assets' metric.
Add in the possibility of getting a step closer to that mortgage El Dorado that they're always chasing and the whole idea of becoming an online agent platform sounds almost too good to be true for portals.
How does a real estate shopwindow business become an online agent platform though?
According to the old adage, the best way to boil a frog is to do it slowly. For PR purposes it would also be wise not to tell the frog you're boiling it or even use the word 'boil'.
For portals, the best way to become an online agent platform is by controlling more and more data over time and never mentioning your intentions.
Many real estate portal companies are already well down the path and are doing things that agents have traditionally looked to their brokerages for.
The U.S. market-leading portal Zillow now offers buyer and seller leads and qualification, client management and analytics, listing enhancement, showing management, professional training and title and escrow services among other things. The word 'brokerage' definitely doesn't feature in the marketing for any of these services though.
It isn't just the U.S. market where this is happening. Portals in developing markets have an even greater opportunity to be a big part of an agent's tool kit. A recent investor presentation released by the Southeast Asian market leader PropertyGuru spells it out nicely...
Source: PropertyGuru Investor Relations
Controlling data and being the source of truth in a market is a powerful weapon for a real estate marketplace. It shifts the balance of power and means the portal controls agents without having to try and do the dirty work of disintermedating them.
Beike in China controls transactions and agents through its Agent Cooperation Network (the equivalent of China's MLS) — a position it was able to get to by having superior data to its competitors.
In South America, portal operator 360 Latam has been busy introducing its own MLS-like network (Iris) around the continent. Once adoption picks up we can probably all guess its next step.
It seems the less developed the country is the more opportunity there is to turn your data into the market's single source of truth and then become an online agent platform.
As the leading, and only, real estate portal in Bangladesh bProperty recognised this opportunity a few years ago and started employing people to physically go out onto the street and collect data and photos on all buildings in the country's main cities.
The upshot is that now the portal has information on all the individual properties in those cities and remarkably has even developed its own proprietary address system for cities where formal addresses don't exist.
According to CEO, Mark Nosworthy bProperty is now the source of real estate truth in Bangladesh and can leverage its position.
"What I can safely say is that bProperty... is the only property solution provider in the entire country. And what I mean by that is, frankly, the only one with a portal, the only one formalized real estate agent. And now we're leveraging that position, the information we have and the processes we have to now start to actually infiltrate and work with other industries that are attached to property in order to create more value."
Now I don't know anything about the Bangladeshi real estate market (other than what Mark said in his recent PPW presentation) but I imagine there are some, or soon will be, companies that look a bit like brokerages in that market. I would also imagine that the app on agents' phones that they turn to most is the bProperty one, not the one built by a brokerage.