1. Disruptors or pretenders:
What lies ahead for real estate?
C.A.R. CEO Joel Singer
Mid-Year Luncheon
April 28, 2016
#BC15

2. Industries Disrupted by the Internet
Travel Agencies
Expedia, Kayak, the Airlines
Bookstores
Amazon
Stock Brokerages/Insurance Agents
E-Trade
This is the old news…

3. Real Estate Agents vs. Travel Agents
Real Estate include:
Lessors of Real Estate
Offices of Real Estate Agents & Brokers
Activities Related to Real Estate
Source: California EDD (Not seasonally adjusted – by Industry Data)

4. Yet Realtor® market share Seemingly remains unscathed

5. More Homes Are Being Purchased through an Agent or a Broker in Recent Years (U.S.)
SOURCE: NATIONAL ASSOCIATION OF REALTORS®

6. … And More Sellers Used an Agent or a Broker to Sell Their Homes (U. S
SOURCE: NATIONAL ASSOCIATION OF REALTORS®

7. Membership Ranks Growing
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

8. Not Disrupted…
Nor DEvalued?

9. Buyers Search with Agent for 12 weeks
Q. Once you found your agent, about how many weeks did you spend looking for a home with your agent? (Asked if agent was used) SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® (2015 California Home Buyer Survey)

10. Ad Spend % - Real Estate Agents & Brokers
2016 report has not been completed.
Overall, real estate is the third-largest advertising category, behind general merchandise stores and automotive. One in every 10 advertising dollars is spent by this category. It indexes 40% higher on digital expenditures than average. We’re forecasting real estate advertising to increase 4.8% this year, to $31.8 billion.
The category includes:
• Agents and brokers, up 2.2% this year, to $13.9 billion. They spend 75% of their ad budgets on digital.
• Rental unit managers, up 13.8% this year, to $3.3 billion. They spend 52% on digital.
• Mortgage lenders, up 6.0% this year, to $12.3 billion. They spend 44% on digital.
• Developers, up 9.5% this year, to $2.3 billion. They spend 69% on digital.
SOURCE: Borrell Associates
SOURCE: Borrell Associates

11. Ad Spend for REALTORS® Down
Note, 2016 Member Profile data will be released mid-late May 2016.
SOURCE: National Association of REALTORS Member Profile Survey

12. Ad Spend is down as a whole…

13. #winning

14. BUT Have we Really won the internet War?

15. Top 5 Real Estate Websites
Source: ComScore/NAR Website Traffic Stats Feb 2016

16. By 2012: “Four sites—Redfin and Zillow, based in Seattle, and Trulia and Realtor.com, based in the San Francisco Bay Area—attract 61 million of the 67 million visitors to real estate websites each month in the U.S., according to ComScore.”

17. Disruption is Continuous…
Car Service
Movie rentals
Brick & Mortar
Music
Hotels
Checks v. ePay
Gasoline v. Electric Cars
Taxi Industry
Uber/Lyft ride share
Hotel Industry
AirBNB, VRBO
Music/Recording Industry
iTunes, Spotify, Pandora
In Home Entertainment Industry
Netflix/Prime streaming
Electronic Payments Industry
Mobile payments, PayPal, Venmo
Brick & Mortar
“the Everything Store”

18. Why Does Nest Exist? Why didn’t Honeywell or Emerson do this?
who's the next? What if someone writes an app that's on our phone that reads your fitbit tracker, knows where you've shopped, knows when you get home, knows what TV show is on that you watch, and delivers food to you via drone in 30 mins or less.
Why didn’t Honeywell or Emerson do this?

19. Why Media and other companies Are Vulnerable…

20. Zillow’s Marketplace Revenue
Zillow 10k released on February 11, 2016
Source: Zillow

21. Zillow’s Average Monthly Revenue Per Advertiser
Zillow 10k released on February 11, 2016
Source: Zillow

22. Zillow’s Premier Agent Advertisers
Source: Zillow

23. Zillow’s Average Monthly Unique Users
From zillow 10K
 ”There were 141.0 million average monthly unique users of our mobile applications and websites for the three months ended June 30, 2015 compared to 81.1 million average monthly unique users for the three months ended June 30, 2014, representing year-over-year growth of 74%. The increase in the number of Agent Advertisers and growth in traffic was primarily due to the inclusion of Trulia after February 17, 2015.”
Source: Zillow

24. Zillow Current Stock Price Remains Below the Close Price at IPO
Zillow Current Stock Price Remains Below the Close Price at IPO. Can they meet Shareholders Demands?
Zillow Stock Price
Can they meet their own requirements?
SOURCE: Zillow Group, Yahoo Finance

25. Buyers use the Internet for research, but most do not make an offer online
SOURCE: Owners.com, Housing Wire

26. Online R.E. brands that failed to put a solid foot print in the industry
Home Gain
MarketLeader
ZipRealty
BuyFolio
Hubzu
RentJuice

27. BUT There are significant Other vulnerabilities for us

28. REALTOR® Productivity
Productivity declined in 2014, but is up from the 2007 trough.
Source: C.A.R.

29. Buyers Online Before Contacting You
Average # of Weeks Spent Investigating Homes Before Contacting an Agent
How many weeks did you consider buying a home before contacting a real estate agent? (Asked if agent was used)
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® (2015 California Home Buyer Survey)

30. Fewer Buyers Found Home through Agent
Q. How did you find the home you purchased?

31. The Basic Problem
The home-buying/selling experience sucks – especially from initial contract to close is a gauntlet of pain.
The mortgage process
Home-inspections
Hidden and extraordinary costs
The “why” factor?

32. People would prefer the following over going through the home mortgage process again:
Maybe a new mortgage process is part of creating the sustainable housing market …
SOURCE: Guaranteed Rate Mortgage Survey of 1,000 adults 25 and older; USA Today

33. Yet, agents are still highly valued

34. Agent Satisfaction Ratings Improve - Average Ratings on 1-5 Scale -
2014
2015
Your real estate agent’s negotiating skills
3.4
4.3
Overall process of finding a home
3.3
4.1
Overall satisfaction with your real estate agent
4.4
Q. Please rate your degree of satisfaction with the following aspects of your home buying experience on a scale of 1-5, where 1 is “least satisfied” and 5 is “most satisfied”.

35. Top 5 Reasons for Satisfaction With Agent
Responded fast (26%)
Listened to needs (24%)
Helped find best home (22%)
Worked hard (22%)
Did a good job facilitating transaction (18%)
Q. Why do you have that level of satisfaction with your agent?

36. Most Buyers Would Work with Agent Again
Q. Would you work with the same agent again?

37. Most Buyers Would Recommend Agent to Others
Q. Would you recommend your agent to others?

38. Why Buyers Choose Their Agent?
Why Buyers Chose Their Agent
What was the single most important reason for selecting the agent that you used in your recent home purchase?
SOURCE: CALIFORNIA ASSOCIATION OF REALTORS® (2015 California Home Buyer Survey)

39. Advice to Agents from Buyers
Communicate better (17%)
Communicate according to client preference (12%)
Negotiate better (9.3%)
Understand market better (9%)
Respond faster (7.6%)
Q. What advice would you give to real estate agents to improve the process or the level of service?
SOURCE: C.A.R Home buyer Survey

40. Disruptors or pretenders?

41. Sold in Minutes?

42. OpenDoor claims to…

43. No Days on Market?

44. Ten-X: Formerly Auction.com

45. For Buyers Ten-X claims to…

46. For Sellers Ten-X Claims to…

47. The Reality: Expertise and Relationships Matter

48. It’s about building a relationship with your clients

49. REALTORS® offers more than just a property search…
A Real Estate Transaction is not just a listing on an MLS or a “For Sale” sign…

50. Disruptive Thinking

51. Disruptive Thinking
“Its not what people SAY they want that matters. What matters is what people REALLY want…”
– George Blankenship on Disruption
From:
Meet George Blankenship
Former Tesla, Apple and GAP Inc. executive, George Blankenship, drives businesses toward innovation and transforms companies from status quo market contenders to forward-thinking and dynamic companies of the future.
Former executive at Tesla Motors, Apple Computer and GAP Inc., George Blankenship brings 30 years of international strategy, retail and real estate experience to his audiences. He most recently disrupted the auto industry, redefined customer engagement, and revolutionized the car-buying experience in his executive role at Tesla Motors. As vice president of real estate at Apple, Blankenship formulated and executed one of the most triumphant retail growth strategies in history and is widely recognized as the architect of Apple’s brand-building retail method. Apple saw a material, sustained increase in sales, profit and consumer loyalty due to Blankenship’s focus on reformulation of the consumer experience, building brand awareness, and ongoing accessibility to customers. Blankenship has meaningfully redefined the role of superior customer experience in contemporary markets and knows how to hone and refine corporate values to deeply strengthen customer loyalty. An industry leader and market expert, he brings high-energy and unmatched insight on how companies can build and create brand loyalty, remain competitively positioned in a modern market, and thoroughly equip themselves to deliver first-class customer care. His innovative processes inform and transform secure, status quo organizations into forward-thinking and dynamic players of the future.

52. Or some quote but I can’t put my finger on it…maybe the Peter Drucker quote “The best way to predict the future is to create it” or something like that.
-Steve Jobs

53. Thank you!
#BC15