The real estate industry has seen many technological upheavals since the start of the pandemic.
As agents faced the unprecedented uncertainty of the past year, they quickly adopted tools to keep sales moving, from video tours and 3D tours to FaceTime screenings.
But that’s not the only digital transformation underway in real estate. For some time now, the industry has seen an increase in the number of iBuyers, real estate companies who buy a seller’s house for money, online, bypassing real estate agents. Some examples of iBuyers are the Opendoor, Offerpad, Redfin Now and Zillow instant offers. This could be the start of major changes in the real estate industry and huge problems for agents, if they can’t find a way to compete.
Feely Group, a Canadian digital real estate agency led by entrepreneur Kevin Feely, is a pioneering agency in terms of competitiveness. Like the US residential real estate market, the Canadian residential market had a strong year in 2020, along with an increase in iBuyer transactions. I recently spoke with Feely about what real estate agencies should do with this new development.
Shama Hyder: Tell me how the increase in the number of iBuyers is changing the real estate industry.
Kevin Feely: IBuyers and discount brokerages are growing in popularity as consumers seek to avoid paying real estate agent fees.
This isn’t just a major threat, it can actually be the career death of mediocre real estate agents who don’t know how to deliver value and exceed their clients’ expectations. The best way to deliver this value is through our professional marketing and negotiation skills. Agents must always adapt to new marketing strategies and methods to get more of their salespeople in their pocket.
Hyder: What advice would you give to agents who are struggling to compete with this new option?
Sensational : My first advice is to always be marketing and prospecting. At Feely Group, we are always running ads and adding buyers to our database. We have so many buyers that we sell 30% of our listings without getting to the market.
Not only are we able to provide sellers with the price and closing they want without tons of strangers walking into their homes (especially during Covid), but we are also able to provide our buyers with access exclusive to their dream home before other buyers.
Second, it is important to note that 69% of home sellers not use the real estate agent with whom they bought their house. This is because most agents see their clients as one sale and then move on.
Instead, realize that you could – and should – develop long-term relationships with these customers. They may not buy or resell for 10 years, but when they do, they’ll be thinking of you. We pride ourselves on going the extra mile for our customers, and 50% of all of our business is loyal customer.
Consider ways to provide tangible benefits to your clients that they won’t get through other agencies. For example, everyone says they will sell your house for the best price. Or what? The ad expires.
In fact, we’ll give our customers a cash offer on their home as an insurance policy, and we’ll buy it if it doesn’t sell. As we are now in a very hot seller’s market, we have adapted our offer. We are now offering to sell our clients’ homes at 101% of market value or we’ll pay them the difference! If this is too risky or impossible for your agency, consider other ways to create value.
Finally, I would advise any agent to join a team or progressive brokerage. iBuyers won’t just be the death of mediocre real estate agent, but also the death of mediocre real estate brokerage.
Most brokerages are stuck in the past when it comes to how things were done and haven’t incorporated technology the way they need it to. The truth is, they will all be wiped out very soon. Choose an agency that has the wind in its sails and gives you the opportunity to grow. When choosing a brokerage, ask yourself the same question your clients ask you: How can I benefit? What’s in it for me?
The real estate industry has defied expectations throughout the pandemic, coming out stronger than before, while showing itself to be highly adaptable. As more and more young entrepreneurs like Feely enter real estate, I think we’ll see what he predicts: a phasing out of agencies that have failed to adapt, as the industry itself is evolving towards a more high-tech and fully digital model.