Given that discount players like Purple Bricks effectively cuts out the listing agent, will the role of the buyers agent become more pronounced and how are established brokers coping with the likes of Purple Bricks?
Topic – Real Estate and Prop Tech
Mentor – Brad Inman
- Traumatic for the industry
- 3 buckets of dislocation
- Industry scrambling to figure it out
Property Management Matters with Tara Bradbury – Team meetings – how often?
Kevin: Well, this time next week we’re going to be in New York getting ready for the Inman Connect Conference and our guest all this week is Brad Inman and today we talk about Purple Bricks and their impact or likely impact in to the United States. I’d like to take you in a different direction if I may and that is with discount players, players like Purple Bricks effectively cutting out the listing agent. Will, do you think, the role of the buyer’s agent become more pronounced and how are established brokers in the States coping with like likes of Purple Bricks?
Brad: Yeah. It’s really traumatic for the industry. There’s no question. This is a key change in how the world is operating here. There’s always discounters but now you have companies getting significant share. And so I think what you’re going to see a lot of dislocation. One of our key moderators at Connect is a woman by the name of Calia Roberts and I think she said this really, really well. She says there’s going to be three buckets kind of like Wall Street where you have the eTrade, digital sale, DIY which is kind of open door and those companies doing on-demand selling.
Brad: And then you’re going to have the middle layer companies that are, like Charles Schwab where you get help but you do a lot yourself and that’s probably like Redfin and like Purple Bricks. And then you’re going to have the relationship like the high network financial managers who are going to do a bunch of transactions. So I think that description isn’t too far off with how I see the world.
Kevin: What are agents doing to compete with the likes of Purple Bricks?
Brad: Well I think for now, they’re scrambling to figure it out. I don’t think they have it figured out at all. I think there’s those that are getting into on-demand services which is part of that solution, I think. Others are ignoring it at their own risk. But a lot of them are teaming up with investors locally so that they can play the game. On the Purple Bricks side you’re seeing compression, commission compression which is kind of a natural course.
Kevin: Yeah. I guess it’s only a matter of time isn’t it, heading a race towards the bottom in the cut fee world. But Purple Bricks doesn’t really have a good track record of being a profitable operator. I mean there’s got to be a level at which you simple cannot operate and provide a good service to the consumer Brad.
Brad: Yeah. But innovative companies released in the US that have ventured that, they had the runway with funding to figure all those problems out and they generally do if they’re funded adequately to do that. But yeah, all of these new companies, they have their problems, no doubt about it.
Kevin: With Brad tomorrow we’ll take a look into the crystal ball. We’ll have a look in the next decade what the agents or agencies are going to look like in the development of supplementary revenue streams. That’s tomorrow when Brad Inman comes back.