What We're Reading
T3 Insight Monthly Digest Readings
- Reading for: June 2020
- From: MIT
- Summary
Robotics in manufacturing and warehouses is becoming cheaper to operate and becoming more widespread. Demand for these systems may skyrocket as Covid-19 exposes the vulnerability of businesses who rely on humans working in close proximity.
- Commentary
Real estate also faces an increased demand for limited human exposure in work and transactions. Self-tour technology provides one example of a future that involves less human interaction in real estate.
- Reading for: June 2020
- From: TechCrunch
- Summary
Digital transaction management startup Spruce raises $29 million in a vision to become the platform hub for real estate transactions.
- Commentary
Building the platform upon which real estate transactions progress has captivated the industry and many real estate companies are in the process of building a platform. Spruce may soon have an off-the-shelf platform available for other that would prefer the “buy it” option.
- Reading for: June 2020
- From: Mansion Global
- Summary
The pandemic has changed buyer and renter needs and wants: many are now looking for larger homes, more privacy, self-directed home searches and single-family homes, according to polling and broker and agent experiences.
- Commentary
Before Covid-19, demand of single-family homes already greatly outstripped supply, and at this milestone of the pandemic, it appears that imbalance has only deepened. Lifestyles have shifted. The desire move to less populous areas, have a dedicated place to work at home and nearby open spaces and privacy, have made a single-family homes more popular. Time will tell whether a large enough segment of people with this sentiment will cause a meaningful industry shift and whether these desires endures after the pandemic. So many people forget so quickly.
- Reading for: June 2020
- From: Stratechery
- Summary
In this analysis of Shopify’s evolving business model, Stratechery writer Ben Thompson explores and outlines the key components of a platform. “That’s part and parcel of being a platform: you win when those on your platform win, even if customers never even know you exist,” he writes.
- Commentary
Real estate is rife with talk about building platforms. Upon closer look, companies present many variations for how their platforms will operate. As brokerages aim to win consumers and support their agents, they walk a tight rope in developing or using platforms that differentiate them in the eyes of consumers and make their independent contractor agents look good. This is a solid read.
- Reading for: June 2020
- From: Notorious Rob
- Summary
Rob Hahn asks whether the real estate industry is really serious about improving its racial disparities. He examines the industry’s response to improving the racial disparities within it and revisits Newsday’s investigation into racism among real estate agents in its “Long Island Divided” story.
- Commentary
In the wake of the national conversation around race as America grapples with George Floyd’s tragic death, the residential real estate brokerage must dismantle systemic racism. It is such a widely spread, deeply rooted reality, that multiple solutions will be necessary. Only devoted commitment over long periods of time will bring about real impact. This will be complicated. This will be hard. This will be expensive. But we must do it. As Rob says, “Show me the money.”
- Reading for: June 2020
- From: HousingWire
- Summary
On the back of increased interest in self-guided tours for their safety and convenience, lead verification app Kleard announces Kleard Now, which gives agents the ability to set up their listings for self-tours. It does with an app and an associated lock agents purchase.
- Commentary
Covid-19 changed many homebuyer behaviors. As the pandemic recovery deepens, self-tours will likely be among the trends that remain, given the convenience they provide and the technology now available to offer them securely.
- Reading for: June 2020
- From: The New York Times
- Summary
The median sale price for an existing home measured $287,000 in April, 7 percent more than in April 2019. As the market warms up after the coronavirus freeze, buyers are back with a frenzy, but many face challenges securing financing as mortgage providers have increased their standards and scrutiny.
- Commentary
All signs point to a vibrant third quarter for the real estate industry. Prices have held steady, even rising in many areas, and demand remains strong. A continued lack of supply remains the only governor on just how large the real estate bounce-back will be.
- Reading for: May 2020
- From: Crunchbase
- Summary
According to a study by Crunchbase, female-founder-exclusive startups captured just 3 percent of startup funding in 2010, the same percentage they captured in 2019. Still, some metrics show female-run startups seeing funding improvement; in 2019, 20 percent of global startups raising their first-round had a female founder. That’s double the percentage from 2009
- Commentary
Across the board, females are underrepresented in the startup world — from number of founders, to percentage of funding, to leadership roles and board seats. This study provides some hard data that hopefully will help the investors — and entrepreneurs — improve the gender imbalance in startups in general and real estate startups in particular.
- Reading for: May 2020
- From: The Globe Newswire
- Summary
Berkshire Hathaway HomeServices announced its first 100-percent black-owned franchisee with the establishment of BHHS Tiffany Curry & Co. Realtors in Houston in May owned by Tiffany Curry.
- Commentary
The real estate industry continues to have a dearth of minority leaders, as the SP 200 identifies every year, so this fully black-owned franchise is long overdue, but a welcome announcement.
- Reading for: May 2020
- From: National Association of Realtors
- Summary
NAR’s chief economist Lawrence Yun predicts that Covid-19’s impact will peak in the second quarter. He predicts that the consequent slowdown in housing starts will prolong an already years-long shortage of housing.
- Commentary
Demand has outstripped supply in recent years, and, even though, market activity seems poised to increase in the third quarter, we may be in for continued sellers’ market for years to come.
- Reading for: May 2020
- From: CNBC
- Summary
The nation’s unemployment rate reached 14.7 percent in April, the highest since the over 25 percent rate in the Great Depression. Economists don’t think the nation’s economy will suffer the same challenges as it did nearly hundred years ago, because of healthier underlying fundamentals. However, if the high unemployment rate persists for months, the economy will take a big hit.
- Commentary
The nation’s unemployment rate is one of the key drivers determining how and when the real estate market responds, so keep a close eye on these numbers.
- Reading for: May 2020
- From: National Association of Realtors
- Summary
With Covid-19 forcing homeowners to get intimately acquainted with their homes, realtor.com surveyed 1,300 homeowners about their favorite features of home. The most valued features include a three-way tie at 13 percent of respondents: a quiet neighborhood, outdoor space and close proximity to grocery stores and pharmacies. Leading what respondents said they wanted to change: more space
- Commentary
Forced to stay at home, many homeowners (and renters, too, for that matter) are adapting what they really value in a place they live. Brokers and agents who respond to this trend will benefit from the shift.
- Reading for: May 2020
- From: Fireside Chat
- Summary
Adam Contos, Helen Hanna Casey, Glen Sanford, Robert Reffkin, John Peyton and M. Ryan Gorman, and Josh Team.
- Commentary
The weekly Friday Fireside chats featuring conversations between T3 Sixty principals Stefan Swanepoel and Jack Miller and a different industry leader every week reveal insight and meaning as the industry’s brightest minds share how they’re approaching the pandemic. They’re well worth their 45-minute run time.
- Reading for: May 2020
- From: The New York Times
- Summary
Owning your own home is already financial outside the reach of many people and hybrid-homeownership could start to gain traction. An increasing number of new models offer homeowners cash in exchange for a portion of equity in their home and monthly payments.
- Commentary
These models offer innovative alternatives for home financing, and potentially give more consumers access to living in homes beyond renting. As with any new model, these come with potential dangers, such as limiting the full long-term financial benefits homeowners realize as homeowners.
- Reading for: May 2020
- From: Homespotter
- Summary
The pandemic has brought virtual home showings to the forefront. There are three main types: virtual private showings — one-on-one virtual showings; virtual open houses — group virtual showings; and virtual tours — videos that feature the property.
- Commentary
It’s important to learn the best practices of each type of showing. For example: virtual private showings — show up early and prepare how you’ll showcase the home and turn on the lights; virtual open houses — have a mechanism for collecting buyer and seller leads; virtual tours — use a service such as Matterport or Realvision to get immersive video.
- Reading for: May 2020
- From: Nfx
- Summary
Trulia co-founder Pete Flint outlines how founders can survive a severe down by focusing first on managing losses, then reorienting their companies toward new opportunities and third by keeping their teams healthy.
- Commentary
Unforeseen crises, like Covid-19, force clear-eyed, swift action from company leaders. This list from Flint, now a principal at venture capital firm NFX, recommends a solid set of actions leaders can take to not only survive the downturn but potentially come out ahead after it.
- Reading for: May 2020
- From: BBC
- Summary
Experts say video chat requires more focus than in-person meetings, as we must work harder to pick up on and process nonverbal communication. In addition, when we’re on camera, we’re aware of being on display, which heightens presentation energy, which can tire us out.
- Commentary
Yes, zoom fatigue is real, especially if you have to prepare, present or substantially contribute on a video call. Don’t simply say yes to all requests for video calls because it is so much easier than previous travel. This is a new normal so consider if a video call is necessary. It is great that you can connect with many more people than ever before, but you can also overdo it. Time management still applies, it is simply redefined.
- Reading for: May 2020
- From: Washington Mutual
- Summary
Buyers and sellers have had to deal with tightened economic conditions, moving challenges, and more novel home-transaction experiences during Covid-19. This article highlights how a few real estate consumers in the Washington, D.C., area navigated transactions in the era of social distancing.
- Commentary
Everyone has had to adapt because of Covid-19. It’s important for real estate brokers and agents to focus on how they can best support the new and constantly changing needs of consumers. Stepping up is a requirement, not an option.
- Reading for: May 2020
- From: Fireside Chat
- Summary
Realogy execs Ryan Gorman, CEO of Coldwell Banker, and John Peyton, CEO of Realogy Franchise Group, share their company’s efforts in playing both offense and defense during Covid-19. Gorman and Peyton say, early on in the pandemic, they found themselves helping their offices and affiliates better understand the federal relief packages and then, in recent weeks, shifted to helping them validate and implement virtual tools. They also have been advising their agents to invest in learning, social media and stay close to their spheres.
- Commentary
Covid-19 is presenting the industry with the opportunity to redefine and restructure their businesses. Don’t waste this opportunity and make sure you come out of this pandemic period stronger than your competitors.
- Reading for: May 2020
- From: Zillow
- Summary
After a steep decline in mid-March, Zillow data shows that visits to for-sale homes on zillow.com and the Zillow mobile app in mid-April 2020 were above 2019 levels.
- Commentary
Housing demand remains strong, suggesting that as the country opens, the real estate market is poised to return. Early indications reflect a checkmark-shaped recovery.
- Reading for: May 2020
- From: McKinsey
- Summary
Official Covid-19 cases are likely drastically underreported, as our deaths, McKinsey reports. Experts expect a Covid-19 second wave. Testing, tracing and targeted quarantine remain critical practices as economies slowly begin to open wider. McKinsey reports that 13 potential Covid-19 vaccines, including some novel approaches, are in clinical trials, with many companies and scientists collaborating and sharing information to help develop a vaccine.
- Commentary
McKinsey’s analysis indicates the steep challenges Covid-19 presents but also shares some hope on the horizon. It appears clear that the nation and world economies will have to deal with the coronavirus and its effects for years. This is all the more reason to refine business operations for virtual operation, develop and maintain healthy cash flows and focus on building a resilient infrastructure.
- Reading for: May 2020
- From: National Association of Realtors
- Summary
The National Association of Realtors outlines how brokerages and agents should approach reopening their offices by suggesting the creation of a Covid-19 Task Force and by itemizing specific tasks such as: implementing CDC-outlined cleaning protocols, post CDC-recommended cleaning throughout the building, identify hands-free options for high-touch areas such as knobs, light switches and plumbing, modify work areas to support social distancing and more.
- Commentary
NAR provides a valuable resource that brokerages, Realtor associations and other industry participants should reference as they begin to open offices where allowed.
- Reading for: May 2020
- From: ShowingTime
- Summary
Showings in the seven days through May 12 have surged to approximately 10 percent above the first week of January, and closer to 2019 levels for the period. The last time year-over-year showings were as close was in mid-March.
- Commentary
The increase in showings reveal that buyer activity is picking up. This is the first step toward more pending sales and then more closings and a release of pent-up demand.
- Reading for: April 2020
- From: GeekWire
- Summary
After suspending iBuying service RedfinNow in March, and selling a $100 million stake in its company to investment firm in early April, Redfin announced significant furloughs to its employee agents and layoffs of 7 percent of its staff.
- Commentary
Redfin’s deep furlough of employee agents reveals one of the key vulnerabilities of the employee agent brokerage model. Many agents, like their brokers, face dampened income with real estate all but coming to a halt in many markets, but the employee relationship reveals a tighter bond, and a deeper cut when severed.
- Reading for: April 2020
- From: Inman
- Summary
RE/MAX has temporarily deferred broker franchise fees, and has provided agents its AI-powered marketing tool First for free for three months.
- Commentary
Many brokerage companies are finding ways to ease the burden on business partners as the web of COVID-19 spreads into nearly all levels of the economy. Brokerages and agents can apply this same thinking to their own partners, if even on a smaller scale. This will help everyone weather the storm together.
- Reading for: April 2020
- From: Franchising
- Summary
Agent flat-fee franchisor Realty One Group signed 25 franchisees in the first quarter of 2020. This brings the franchise brand to over 13,000 agents as it opens three new U.S. states: North Dakota, New Hampshire and Rhode Island.
- Commentary
Like other companies who offer competitive compensation packages to agents, Realty One Group has seen large growth recently. The company, founded in 2005, ranked as the ninth largest franchise brand with a 2019 sales volume of $28.10 billion, according to the 2020 Real Estate Almanac.
- Reading for: April 2020
- From: Inman
- Summary
Compass fired 15 percent of its 2,500-person support staff, or approximately 375 employees. It also has shrunk its concierge program and paused its bridge loan program.
- Commentary
Every real estate company faces daunting challenges now. In some ways, this difficult time allows firms to reevaluate their businesses and focus on their core competencies.
- Reading for: April 2020
- From: The Real Deal
- Summary
EXp Realty parent company eXp World Holdings reported $800,00 in net income for the fourth quarter of 2019 while revenue grew 82 percent from fourth quarter 2018. This is the first profitable quarter for the company since listing on the NASDAQ in May 2018.
- Commentary
EXp Realty has grown wildly in last few years, on the back of its relatively low annual commission cap for agents ($16,000), its revenue-sharing model and its virtual design. As a completely virtual company, the brokerage operates more nimbly without one of the main expense line items for traditional brokerages. Agent count grew 63 percent in 2019 to 25,423 agents.
- Reading for: April 2020
- From: Benzinga
- Summary
Constellation Real Estate Group and its subsidiary Constellation1, an all-in-one provider of front- and back-office technology and data services to real estate firms, acquired broker platform provider Virtual Properties.
- Commentary
Constellation Real Estate Group continues to amass a growing suite of real estate tech tools. T3 Sixty represented Constellation Real Estate Group on the transaction.
- Reading for: April 2020
- From: ShowingTime
- Summary
This real-time data set shows just how much COVID-19 has impacted showings. In data through April 6, 2020, showings are down 63.6 percent across the nation.
- Commentary
While companies have implemented virtual showing technologies, this chart emphasizes the demand drop caused by the coronavirus pandemic. While real estate activity is down, brokers and agents can refine processes and cultivate contacts with their spheres.
- Reading for: April 2020
- From: Seeking Alpha
- Summary
Realogy added $400 million from its existing credit line in March and executives temporarily cut pay: 90 percent for CEO Ryan Schneider and 50 percent for execs reporting to him. In a podcast with Brad Inman, Schneider also talked about deferring franchise fees and about his interest in making Realogy Brokerage Group more nimble and virtual. (Inman also spoke with T3 Sixty CEO, Stefan Swanepoel, which can be found here.)
- Commentary
Like many real estate companies, Realogy has made aggressive moves to add liquidity and cut costs. COVID gives brokerages a chance to reevaluate their operations in a digital world, it also requires decisive quick leadership, and cash. Realogy moved relatively quick on both
- Reading for: April 2020
- From: Sequoia Capital
- Summary
Sequoia Capital’s observations and advice to CEOs and founders about what to expect and how to adjust to the market environment brought on by COVID-19 include making fast, decisive and informed decisions, keeping a close eye on cash runway, revising sales forecasts conservatively and reducing capital spending.
- Commentary
Anyone response for their real estate organization’s P&L should carefully review their financials on a frequent basis and refine their operations to sustain a downturn.
- Reading for: April 2020
- From: Realtor.com
- Summary
In the weeks ending in March 29 and April 5, new listing volume dropped 34 percent and 31 percent, respectively, from the same weeks in 2019. While still up from a year ago, list prices show lower year-over-year increases since COVID’s influence kicked in.
- Commentary
We all sense real estate’s slowdown and these numbers back it up. With the possibility of a longer recession looming, even after the COVID-19 immediate impact subsides, brokerages should implement a conservative gameplan.
- Reading for: April 2020
- From: TechCrunch
- Summary
Zillow Group and Opendoor, and several smaller iBuyers, have announced they have paused buying homes in all of their active markets. Zillow Group had approximately 1,860 homes in its inventory as of the March 23 release and continued marketing and selling efforts.
- Commentary
In some ways, iBuyers are well-positioned to serve consumers in an environment when speed and certainty become even more important. In other ways, they face a big burden as they have large carrying costs and dampened homebuyer demand in many markets.
- Reading for: April 2020
- From: Harvard Business Review
- Summary
HBR studies what companies have done to prepare for, thrive in, and get through a recession. The review notes that quick financial decisions are important to survival in addition to managing cash flow and debt. Organizations with nimble decision-making structures, particularly those tuned to local market dynamics and who empower local leaders, fare better than those that do not.
- Commentary
Facing a potential lengthened recession, real estate brokerages, especially those with large footprints, should deputize local leaders to make important decisions based on local information while adhering to core company guidelines. While easy to consider, layoffs are often not the best long-term option, as hiring and training costs can be high; consider furloughs and reduced pay to bounce back quickly when the market returns. Adoption and training are always tricky to implement when schedules are full; use this time as an opportunity to refine and implement processes that streamline operations.
- Reading for: April 2020
- From: Inman
- Summary
Coldwell Banker’s new program — Coldwell Banker Diversity in Ownership Program — is available to brokers looking to affiliate who identify as racial or ethnic minorities, women, military veterans and LGBT. CB waives the $25,000 initial franchising fee when qualifying for the program. Brokers can also receive other perks including up to $100,000 in support, mentoring, royalty fee rebates for two years and fee membership into real estate organizations such as NAREB, AREAA, NAHREP and NAGLREP.
- Commentary
The definitive annual ranking of the 200 most powerful and influential leaders in our industry: the SP200:clearly depicts how industry leadership significantly lacks representation from minority groups. Programs like this one from Coldwell Banker represents a great proactive steps by a national giant to help the industry change its ways and become a more inclusive place, especially at its upper ranks.
- Reading for: April 2020
- From: Inman
- Summary
Plaintiffs in the Missouri-based class-action antitrust suit that alleges commission structures are anticompetitive have subpoenaed Fannie Mae and Freddie Mac for details of agent and broker compensation for the last 13 years.
- Commentary
T3 Sixty, publisher of T3 Insight, has also been subpoenaed to provide details of some of its industry research for the Missouri-based class-action antitrust suit. The industry reach of this lawsuit and the other class-action antitrust suit continue to deepen and all indications are that the case and its impact will persist for a long time.
- Reading for: April 2020
- From: Inman
- Summary
Redfin expands its partnership with Opendoor by nine cities bringing total markets in the partnership to 11. The partnership presents Opendoor as an option to sellers who visit Redfin’s site.
- Commentary
This partnership extends the reach of iBuyers even farther. With Zillow and Redfin among the most popular real estate sites in most markets, more and more consumers will encounter the iBuyer value proposition in the wild. IBuying is going mainstream.
- Reading for: April 2020
- From: Inman
- Summary
Agents who join KW after April 1, 2020, will no longer receive profit sharing (based on the agents they recruited) if they leave the brand and join a competitor. Agents previously received profit sharing for their lifetime regardless of their post-KW real estate journey. KW’s Agent Leadership Council also voted to increase the profit-sharing vesting period from three to seven consecutive years with the brand.
- Commentary
As competition heats up among the nation’s largest real estate companies, these changes from KW reflect how companies may work to incentivize their independent-contractor agents into staying longer.
- Reading for: April 2020
- From: Harvard Business Review
- Summary
Some organizations are utilizing new strategies for helping their employees to learn with “chief learning officers,” which is helping performance.
- Commentary
Chief learning officers (CLO) focus on how to identify and train talent within a company in part by focusing on capabilities not established skills and developing digital savviness. Smart companies know that leaders and staff are a company’s largest assets. This article provides some insights into how to adopt the CLO mindset: if not a CLO: to improve company performance.