Over the past few years, the digital transformation has been inciting businesses to offer a customer experience that’s seamless and effective – or “frictionless”, in startup speak. This obsession with “hassle-free” procedures for customers has been lingering in the real estate industry for several months’ now, and a whole host of new companies offering multi services are making traditional real estate agents fear they’ll lose their role as the middleman.
The iBuying revolution – even in France?
To get a better understanding of the interest sparked by this emerging market, simply read the review from two customers concerning the new Zillow Instant Offers service. Zillow is the leader in online real estate listings. Created in 2006 by the founders of Expedia, the heavyweight launched its brand new service in several American cities at the beginning of 2019. In the review in question, a couple from Houston are looking to sell their 3,800-square-foot home which has become too big for them since their two children left home. The owners are prepared to make two or three percent less on the sale of their home by selling to Zillow. They simply need to go online, fill in the form and once they receive the estimation, all they need to do is click ok.
So for many customers, is this now an end to the questionable home staging phase, to laborious admin steps and to lengthy periods of incertitude? Well, that’s exactly what these numerous iBuying services are proposing they’ll do, by automatically setting the buying price (thanks to algorithms, of course) and guaranteeing the sale will go through in a couple of days. However, France is not to be outdone in the industry. New kids on the block such as Homeloop, which banks on making €20 million in 2019, hope to see a wave of investment in the sector after venture capitalists have had the time to see what’s going on. Established companies are getting in on the action too: in mid-2018, France-based Digit RE created dili.fr, a service which is continuously expanding one city at a time, with successive rollouts in Bordeaux, Lille and Nantes.
Total platformization of the real estate transaction
The expected revolution goes way beyond a basic experiential dimension, as it targets the whole value chain. In fact, for many service providers, it’s about monetizing data they collect on the current state of the market and on users and their behaviors. Such data is collected from estate agents when they carry out a transaction on these new platforms, in public data directories linked to the real estate landscape (transport, security, schools) and, of course, from the sellers themselves. Their promise: to make the whole value chain (purchase, renovation, insurance, sale) more efficient and on one single platform.
This new generation of estate agents is spreading fast. For example, if we take Opendoor’s trajectory, they’re asserting themselves as the main contenders on the single-family home market. Since launching in 2015, the leader in iBuying has already been valued at $4 billion and already owns 10% of the market in Phoenix, the American city where it was first rolled out. Opposite Opendoor, traditional brokers such as Redfin and Realogy (Century 21) seem to have held back before launching their proposals. In “the race to become the one-stop shop for all things real estate”, these companies are also eyeing up mortgage lending companies (often investing in these in order to have control over the whole value chain) but also the rental marketplace, to continue to grow their activities vertically.
Are these new companies sure to be solid if they were to come up against a housing crisis? Eric Wu, the founder of Opendoor, won’t comment on market data, however he does have confidence in his instant home buyer price estimation tool and pricing teams. Welcome to the new data-centered market!