What We're Reading
T3 Insight Monthly Digest Readings
- Reading for: April 2020
- From: Inman
- Summary
Climb Real Estate Co-Founder Mark Choey charts Climb’s journey, from budding idea to growth, to eventual sale to Realogy.
- Commentary
Choey’s blow-by-blow, over 5,000-word tale of Climb’s rise and eventual sale to Realogy reveals the passion, vision and savvy required for a brokerage to grow quickly and succeed. It also shows just how big a presence Compass occupies in the minds and hearts of brokerages, and how its growth instigated Climb’s eventual sale to Realogy and sheds light on the brokerage consolidations happening in many markets across the nation.
- Reading for: April 2020
- From: Inman
- Summary
The most public implementation to date of the so-called “Clear Cooperation Policy” by Bright gets another close look at their February deadline to start levying $5,000 fines. However, as of the date of this article, no fines have been needed.
- Commentary
Bright’s policy, which pre-dates the NAR 8.0 policy, is designed to address off-MLS listing concerns. It has become ground zero for the national discussion of this controversial MLS policy change. While not all Realtor associations and MLSs who will be implementing and enforcing this policy over the coming months will receive the same attention, each organization’s leaders should learn from Bright and thoughtfully develop implementation strategies, update policies, and deliver educational campaigns to reduce the potential for friction with the brokerage community.
- Reading for: April 2020
- From: Inman
- Summary
Realogy announced the development of a proprietary CRM and agent-facing listing websites for agents at company-owned and affiliated offices. The tools — built in partnership with tech startup OJO Labs in which Realogy has an equity stake — fit into Realogy’s new “productivity hub,” which features an open architecture that facilitates integrations with other tech, proprietary and third-party alike. Realogy currently has the CRM tool in pilot phase.
- Commentary
Realogy joins large real estate companies Keller Williams Realty, RE/MAX and Compass in providing custom, proprietary tech for agents in its network. It represents a slightly different approach to these companies, however; it has leveraged strategic partner OJO Labs to build the tech instead of building the technology in-house. Realogy participated in OJO Labs’ $75 million Series C round in March 2019 and its $20.5 million Series B round in May 2018.
- Reading for: April 2020
- From: Inman
- Summary
The nation’s largest MLS is expanding its services well beyond the state of California to partner with broker-owned Louisiana MLS Greater Southern MLS. CRMLS will provide technology and services. Greater Southern MLS is a relatively new entity that hopes to build a state-wide MLS in Louisiana. Brokers founded Greater Southern MLS in response to the challenge of dealing with (and paying for) multiple MLSs in their footprint.
- Commentary
This deal demonstrates CRMLS’s ability to work with a variety of ownership models, including brokers, and continues the noncontiguous collaboration emerging in the MLS industry. The Louisiana side of the story may contain more pertinent lessons for most Realtor association-owned MLSs as the emergence of this broker-led initiative is a direct response to the local MLS’s inability to address brokers’ request to bring the data together. If CRMLS and Greater Southern MLS find success, this could be a whole new competitive factor for local MLS leaders who think they do not have to work collaboratively or consider data and organizational consolidation.
- Reading for: April 2020
- From: Inman
- Summary
In announcing its new Cash Close service, HomeLight jumps into the iBuyer fray. HomeLight backs a synchronous seller — a seller who is also buying a home — with a cash offer on their new home. When the offer the seller makes on their next home is accepted, HomeLight purchases the seller’s old home and then re-lists it with seller’s agent. HomeLight also serves buyers with a cash offer. Both programs require consumers to apply for and use a HomeLight Home Loan.
- Commentary
As iBuying morphs into something we’ll call iFinancing, companies such as HomeLight are introducing twists on the traditional iBuying model as they work to win ancillary business on top of their core iBuyer value proposition.
- Reading for: April 2020
- From: The Atlantic
- Summary
Approximately two-thirds of American households would struggle to deal with a $400 emergency cost, according to a report from the Board of Governors of the Federal Reserve System. This reflects the increased cost-of-living challenges many Americans face. Housing prices represent the biggest cost families face; home prices have risen faster than wages in 80 percent of U.S. metros. And all but one metro of the 160 tracked by NAR saw affordability drop from 2017 to 2018.
- Commentary
Housing affordability has become an increasing challenge that the real estate industry should watch closely. Constrained inventory plays a role in keeping home prices high, but other economic factors play a role, too.
- Reading for: April 2020
- From: RISMedia
- Summary
Howard Hanna Jr., who founded his eponymous brokerage in 1957 in Pittsburgh, turned 100 on Feb. 10, 2020. Howard Hanna Real Estate is one of the nation’s largest family-owned brokerages and the eighth largest brokerage overall.
- Commentary
Hanna’s children — Howard “Hoddy” Hanna and Helen Hanna Casey, No. 9 on the 2020 SP200 — and his grandson — Howard “Hoby” Hanna, No. 43 on the 2020 SP200 — continue to lead the company today. Howard Hanna exemplifies the quintessential family-owned brokerage founder.
- Reading for: April 2020
- From: Redfin
- Summary
Relatively affordable neighborhoods dominate this year’s list. Seven of the top 10 neighborhoods to watch in 2020 have median sale prices of less than $500,000. Three even fall below the 2019 national median of $279,900, making them affordable compared to other parts of the country.
- Commentary
As the majority of America’s metropolitan housing markets price a growing number of residents out of homeownership, the southeast rises as one of the most desirable, affordable places to live. Half of Redfin’s neighborhoods with median sale prices under $500,000 are in the states of Virginia, North Carolina, Florida and Tennessee. These attract aspiring homeowners, and corporations looking for workers are following suit. This article also provides great statistics and insights into which regions to watch by metro area.
- Reading for: April 2020
- From: Crunchbase
- Summary
Philadelphia-based discount brokerage Houwzer, which lists sellers’ homes for a flat fee of $5,000 and uses employee agents, raises $9.5 million to expand into Baltimore and Orlando, Florida. It also plans to expand services to include title and mortgage. The firm currently operates out of Philadelphia and Washington, D.C.
- Commentary
Like Homie, Houwzer, launched in 2015, has proved to be an enduring discount brokerage with a newer model. Like many real estate brokerage startups, it’s now focusing on growing its ancillary business.
- Reading for: April 2020
- From: Inman
- Summary
Large San Francisco-based independent brokerage Zephyr Real Estate combined with Lake Tahoe, California-brokerage Oliver Luxury Real Estate to form Corcoran’s first franchisee: Corcoran Global Living. The new firm has 450 agents with an annual sales volume of over $2.6 billion.
- Commentary
A little over a year after announcing it would begin franchising the Corcoran brand, Realogy signs its first franchisee. This comes just a few weeks after Realogy decided to shutter Climb Real Estate, the San Francisc o indie brokerage it acquired in 2016 and announced plans to franchise in 2018.
- Reading for: April 2020
- From: BlackRock
- Summary
Larry Fink, the CEO of large asset management firm BlackRock, which owns large stakes in Realogy, RE/MAX and Redfin, announced in his annual CEO letter that BlackRock will now take climate effects into account when making future investments. With this, he predicts a large reallocation of capital into investments in environmentally sustainable businesses.
- Commentary
This announcement by a major investor in residential real estate companies that it will start including environmental factors into its investment analysis could push down real estate values, which, in many places, have not reflected the long-term impact of climate risk. Some analysts suggest that adding climate and environmental considerations into real estate investment analysis could significantly affect the mortgage market, in addition to the residential real estate industry as a whole. BlackRock owns 17.49 percent of RE/MAX stock, 15.56 percent of Realogy stock, 6.51 percent of Redfin stock, 2.22 percent of eXp Realty stock and millions of shares of Zillow Group stock (according to Inman).
- Reading for: April 2020
- From: TechCrunch
- Summary
Utah-based discount brokerage Homie raises $23 million to open in three new markets starting with Las Vegas in March 2020. Homie, which operates in Utah and Arizona and uses employee agents, represents sellers for a flat fee of $1,500 and provides buyers rebates of up to $5,000.
- Commentary
2015-founded Homie has shown some staying power as a new discount brokerage. Its performance as it expands will reveal whether it has the potential to follow in Redfin’s footsteps and grow into a national brand.
- Reading for: April 2020
- From: HBR
- Summary
Choosing effective leaders requires great care and the ability to discern whether a candidate is just a valuable contributor or a promising leader with high integrity and minimal character challenges. Choosing great leaders also requires accurately assessing candidates’ true impact versus just their overall impression and a proper assessment of their demonstrated ability to think intelligently and nimbly.
- Commentary
Strong leaders are the backbone of a successful real estate company and choosing leaders wisely is critical to operating smoothly and growing smartly. This article gives managers some key insights they can use to pierce their hiring and promoting blind spots and better evaluate the leaders that will help their organization grow.
- Reading for: April 2020
- From: 1000watt
- Summary
1000watt partner Brian Boero writes a blog about the realities of those involved with real estate and what the market tolerates with inexperienced agents.
- Commentary
A quick, poignant blog that says what many are thinking. In recent T3 Sixty MLS subscriber surveys, an average of nearly 10 percent reported not having a single transaction in 2019, while another 26 percent reported having between one and five deals. Not shocking or new but still astonishing every time you hear the numbers. With NAR membership at nearly 1.4 million members, that would translate to 140,000 and 364,000 agents, respectively, for a total of 504,000 members, who basically do not survive as full-time agents.
- Reading for: April 2020
- From: Vendor Alley
- Summary
Vendor Alley publisher Greg Robertson points out the differences in the way KW listing agents are presented on the new kw.com and zillow.com, and concludes that KW listing agent attribution is better on Zillow. In addition, he points out that the new kw.com site is slow, and the images have lower resolution.
- Commentary
Despite the success of introducing an innovative search experience around neighborhoods, the unavoidable challenges that companies must address when rolling out a big, new public-facing tool tend to dominate the initial feedback. This post highlights the challenges all companies, not only Keller Williams, faces in rolling out new initiatives and new software.
- Reading for: April 2020
- From: Inman
- Summary
Overview from 2019’s top MLS-related stories: pocket listings policy, antitrust lawsuits, buyer-broker commission transparency, new MLS tech initiatives and the growing importance of data.
- Commentary
While there weren’t many large MLS consolidation headlines this past year, a number of smaller MLSs did choose to join established regional MLSs, which dropped the nation’s MLS count below 580, according to T3 Sixty’s data. The MLS 2022 Agenda by the MLS Roundtable identified many other key focus points that are more important than consolidation in 2020.
- Reading for: April 2020
- From: Inman
- Summary
RE/MAX has acquired real estate tech startup First, a company that offers a machine learning-powered platform that helps inform agents of the best time to reach out to existing clients in their sphere. T3 Sixty facilitated the entire transaction and represented the seller.
- Commentary
With two key acquisitions in just under two years, RE/MAX has placed itself back in play as a strong contender among the nation’s leading franchisors. Now it focuses on software integration and rollout as it competes with Keller Williams Realty and its in-house platform, among other franchisors.
- Reading for: April 2020
- From: Inman
- Summary
In an end-of-year letter to Compass agents, Compass CEO Robert Reffkin outlined some of Compass’ 2019 highlights (such as closing $88 billion in sales and Compass Concierge used on 17.5 percent of Compass’ listings) and what the company has in store for years to come including a focus on supporting agents’ repeat-and-referral business and its AI platform that will optimize prospecting and followup.
- Commentary
As profiled in the 2020 Swanepoel Trends Report, Compass is moving fast and enjoyed a remarkable 2018 and 2019. But WeWork threatens an alternate universe for 2020 than the one Compass is aiming for. However, Reffkin is driven and enthusiastic, and his letter provides additional detail on how Compass and brokerages will increasingly have to compete in 2020 and beyond.
- Reading for: April 2020
- From: Inman
- Summary
After six months with interim CEO Tracey Fellows, realtor.com has named a successor to Ryan O’Hara (who went to lead Shutterstock in June 2019): David Doctorow. A former McKinsey & Company executive, Doctorow comes to realtor.com from eBay, where he served as head of global growth.
- Commentary
Realtor.com remains a large national portal, but it continues to operate in large shadows of Zillow and Redfin. O’Hara brought a new flair and products when he took the helm in 2015 but they failed to significantly improve realtor.com’s market position. Doctorow has his job cut out for him.
- Reading for: April 2020
- From: HBR
- Summary
This analysis of over 1 million patents found that the key element determining whether lone inventors or teams are more innovative has to do with the modularity of the design. For modular designs, teams display more innovation. For integrated, holistic designs, individuals tend to be more innovative.
- Commentary
It is important to understand which type of project you’re working on and direct innovation accordingly — for modular designs with complementary components, leverage a team; for holistic, highly integrated designs, give an individual more autonomy and control.
- Reading for: April 2020
- From: Inman
- Summary
IBuyer Perch rebrands to Orchard, raises $39 million and tweaks its business model to resemble less an iBuyer and more of a guaranteed offer.
- Commentary
Orchard CEO Court Cunningham provides insight on the way some disruptors are viewing the real opportunity in the residential real estate brokerage industry: the $130 billion ancillary business of title, mortgage, and brokerage. Orchard’s model tweak represents the evolution of the model T3 Sixty chronicled in the 2020 Swanepoel Trends Report.
- Reading for: April 2020
- From: Inman
- Summary
Under the leadership of former NRT CEO Bruce Zipf, Realogy acquired Climb Realty in August 2016 as an innovative boutique new brokerage that aimed to reinvent the traditional brokerage experience. At the time, Climb was ranked among San Francisco’s 10 largest residential real estate brokerages based on transaction sides and sales volume (based on 2015 numbers) and had five offices, in Potrero Hill, Noe Valley, Mission Bay, Mid-Market and Oakland’s Jack London Square. In 2018, Realogy announced it would franchise the Climb brand. Now, in early 2020, Ryan Gorman, president, and CEO of the newly consolidated Coldwell Banker (which now includes NRT), announced it will integrate the approximately 160 members of Climb into Coldwell Banker.
- Commentary
Climb was a fresh, new brand but had a big uphill “climb” to achieve national prominence in an industry already saturated with an abundance of real estate brands. The shuttering reflects Realogy’s need to focus its operations as it responds to competition and changing business models. Real estate, in general, is rapidly growing up from a mom-and-pop industry into a sophisticated business where viability, profitability, and return on investment increasingly drive decisions, as they should.
- Reading for: April 2020
- From: Ryan Holiday (Book)
- Summary
Following in the footsteps of the Stoics (i.e., Marcus Aurelius, Seneca the Younger), Ryan Holiday creates this simple-to-read meditation on the power of stillness. In this book, he draws on timeless Stoic and Buddhist philosophy to show why slowing down is the secret weapon for those charging ahead. He uses examples of celebrities both past (John F. Kennedy) and present (Bill Gates) who have used the Stillness method to achieve success.
- Commentary
In our rush-rush culture the idea of stopping and being still in order to get more work done seems counterintuitive. Holiday provides examples that show it really works.
- Reading for: April 2020
- From: The Secrets of Top Selling Agents (Podcast)
- Summary
Podcast host Andy Woolley, CEO of Homes.com, talks with UtahRealEstate.com CEO Brad Bjelke about Brad’s unique background, which provides a great deal of context for his approach to MLS. Brad also shares his vision for his upcoming year as the president for the Council of Multiple Listing Services.
- Commentary
UtahRealEstate.com operates on a proprietary MLS platform with a team of developers and serves the entire state. It has a public-facing website that has had success similar to Houston’s HAR.com in terms of consumer website traffic. UtahRealEstate.com’s BOD is one of the smallest in the country with only six members and no committees.
- Reading for: April 2020
- From: McKinsey
- Summary
McKinsey outlines the five key strategies that lead to successful digital transformation: 1) Laying out clear priorities, 2) Investing in talent, 3) Committing time and money, 4) Embracing the agility, 5) Empowering people. The study analyzes the interconnectedness of these five strategies and relative importance to success. The combined exponential value of having numerous strategies working on your behalf.
- Commentary
We are at a critical crossroads in the innovation of the real estate industry. Digital transformations are happening all around us. Doing them right is more important than doing them period. We have seen hundreds of millions of dollars invested in tech acquisitions that ultimately fail or sputter along. This article illustrates why many of these projects fail.
- Reading for: April 2020
- From: HBR
- Summary
Most companies have constraints, and instead of treating these as an impediment for innovation, use them to spur creativity and problem-solving from their teams.
- Commentary
This is especially true of real estate brokerages, where there is often a lack of capital. Constraints appear to help teams be more creative, when there are no constraints the results are often lackluster.
- Reading for: April 2020
- From: Newsday
- Summary
A detailed, three-year investigation by Long Island, New York, news site Newsday found that real estate agents contributed to housing discrimination based on consumers’ race. Using undercover testers, hidden cameras and fair housing experts, the journalism site found that real estate agents provided disparate treatment on 40 percent of the 86 tests it conducted.
- Commentary
The investigation shows that even if real estate agents are not aware of it, they may be contributing to housing inequality. Brokers and agents should reflect on their unconscious biases, develop training to emphasize treating all consumers fairly regardless of race, gender, etc. and take corrective steps where appropriate.
- Reading for: April 2020
- From: Forbes
- Summary
A new startup, Culdesac, has raised $10 million to build a 1,000-home car-free development in Tempe, Arizona. Development began in November with a slated opening in fall 2020.
- Commentary
Opendoor pioneered its paradigm-changing iBuying model in Phoenix in 2014. Founders and VCs with wild ideas are turning their attention to real estate in a big way. Could this be another game-changing new residential real estate model?
- Reading for: April 2020
- From: Inman
- Summary
Realogy’s stock price suffered a devastating 75% collapse from its peak in 2019. Senior leadership Ryan Schneider (CEO Realogy Holding Company), John Peyton (CEO Franchise Division) and Ryan Gorman (CEO NRT), now two years in their new roles, the company took a number of strategic steps, especially during the last two quarters of 2019.
- Commentary
Realogy leadership’s corrective decisions have turned the industry’s largest real estate holding company and franchisor around; the company’s market cap has doubled since bottoming out in September. Most of the company’s recent actions will, however, only really affect next year’s results, so expect an upward year for Realogy in 2020.
- Reading for: April 2020
- From: Redfin Blog
- Summary
A third-quarter 2019 analysis by Redfin of iBuyers Zillow Offers, Opendoor, Offerpad and RedfinNow in 18 markets revealed that they bought 3.1 percent of the homes sold in the quarter, up from 1.6 percent from the third quarter 2018.
- Commentary
Still just a few years old, the iBuying business model is gaining share. As Zillow, Opendoor and other iBuyers continue to aggressively expand their across the nation, real estate brokers and agents will increasingly have to account for their presence.