When is the real estate industry going to innovate?

Melissa and I wrapped up our transition to a new home this past week. We’re really excited to be in our new place and are chomping at the bit to get our new furniture delivered and finally get settled in!

The whole process of selling our old place and buying our new one took about four months. By many standards that’s quite a fast transition. We were lucky enough to be able to buy our new place before the old one sold, so we could move in at a reasonable pace.

One thing that Melissa and I keep talking about, though, is why hasn’t the real estate transaction paradigm changed. It seems like everything else is changing as technology tools become cheaper and more readily available. People are still paying a 6% commission to sell a house - a number that really hasn’t changed much in decades - and receiving less in return.

Melissa and I found the last two houses that we bought - thanks to the internet. We gave the realtor a list of houses we’d like to see. In the past, it was up to the realtor to do the research and present the client with choices.

Many of our signatures were done via DocuSign - the realtor did not have to come find us or schedule any real time to get these completed. A simple technology tool did all of the work. For home showings and inspections, there’s an app for that - we received a text when there was a requested time - the agent had very little to do.

I understand that this technology costs some money - at Earth Equity, we invest thousands in technology every year. However it’s a scalable solution that an entire team can use and very reasonable when looked at from that perspective.

Another example of problems in this system is the home inspector. The inspector who was at our old house, broke the kitchen faucet. Both inspectors, when they tested the electrical breakers, neglected to turn our well back on. They blamed us for both issues! In my opinion, home inspectors are simply a way for buyers to negotiate a lower price on a home. Their value is seriously questionable. All the while, we never felt our realtor was our advocate, simply an intermediary.

So we keep asking ourselves - why were there nearly $55,000 in commissions paid between the two house transactions? Where was the $55,000 in value that was received. We (mostly Melissa) arranged the house for showings. We (mostly Melissa again) were inconvenienced for home inspections. I even had to text the buyers’ realtor myself to get closing information. The attorneys drew up the documents and they were paid separately. The mortgage brokers were paid separately as well as the home inspectors!

Why hasn’t somebody innovated this experience like Uber or Tesla or other disruptors? The best I can guess is that the entrenched system is so entrenched as to keep innovators out. This traditional system is no longer needed - or at least the costs need to reflect the actual value received. When I employ someone to sell something or buy something for me, I’m looking for an advocate - someone who brings value to the table - not just someone who is making money off an antiquated paradigm.

Innovators & Disruptors - here’s your opportunity!!!