Are Real Estate Brokers in Danger of Being “Uber-ed” Out of a Career?

Posted by:

Consider the “technology company” Uber for a moment: They have neither employees on the front lines nor do they own cars, Uber is simply a technology company whose platform connects drivers with passengers and for that they collect a share of the fare. The driver is responsible for the car, insurance, maintenance, knowledge of the streets and, of course, getting the passenger to their destination safely.

Uber is not only causing disruption in the taxi and car-hire industries, it is causing a sea of change in how ride-sharing is used by people in the cities it operates.

All the while Uber’s only real product is their proprietary software.

Now consider the real estate industry: the process all starts with a home owner that wants to sell and ends when a buyer completes the deal. In between there are a myriad of steps that need to be completed from the listing and showings to the exchange of funds and the legal contracts that transfers home ownership.

A “real estate technology company” (RETC) could take apart the steps required to get from the start to the finish of the transaction, when looked at from the perspective of only supplying the underlying technology.

1. Home owner decides to put their house on the market and enters some details into RETC software (app)

2. RETC’s “app” analyzes owner’s house based on owner inputted criteria, neighbourhood details, insurance appraisals, comparable listings and recent selling prices, and other “big data” the RETC has available

3. Home owner approves or modifies RETC’s recommendations and listing is published

4. When interested parties want to view house, home owner is notified and RETC schedules pre-screened “home showers” to be present so home owner can be out of the house when it is viewed

5. When buyer decides to proceed with purchase a contract is provided by RETC and deposit funds are transferred to escrow account held by preselected lawyer or RETC itself

6. When conditions are met, sale is finalized and contracts go to lawyers, insurance, municipality, etc. for transfer

7. Home owner moves out, buyer moves in

Obviously this is a highly simplified version of a home sale and the interactions that make up the deal.

However, you can see where a suitably aggressive and innovative technology company could pull together the details of the transaction, from the listing to handling the final transfer of property and money and push out the real estate broker, relegating their role to being the “home showers” that use their knowledge and experience as an in-person driver of the technology while being excluded from the majority of the transaction process.

By creating a simplified platform for a seller and buyer to connect and with the use of existing data and analytics based on previous neighbourhood sales, municipal records, and connecting the sale documentation to the appropriate professionals, the “Uber of Real Estate” could be here quite soon.

Real estate brokers (home showers) that bear the investment of time, knowledge and expense would now be giving the technology company a share of their earnings simply due to the benefit of bringing buyer and seller (driver and passenger) together using the RETC’s proprietary technology and data. The rate of pay would be “Uber-ized” by the RETC as it solely determines the market pricing.

We can see on the horizon the models that hint of this capability and the battle for real estate data that could make this “Uber-ization” of the real estate industry not only possible but highly contested.

Additional reading