All of our lives have been changed by the coronavirus and being stuck inside for the last several weeks under the stay-at-home order. Our lives have been changed forever. And one of the questions that I’m getting from people most often, and honestly, something that I’m asking myself is what does the future of real estate look like after the coronavirus.
The number one thing that you can expect to happen in real estate after the coronavirus pandemic is over is technology companies will be technology companies and real estate companies will be real estate companies.
Zillow is in big trouble right now of becoming a cautionary tale for the future.
Zillow, originally a technology company, making its money in media, internet, information and technology, whose core business was selling real estate leads to real estate agents. A very low cost, high margin business has been the foundation of their company for years. However, recently, Zillow decided to get into the high equity business of owning real estate property.
Not only that, Zillow wanted to control the real estate transaction from start to finish after all. Why should somebody else be receiving the commissions and getting the benefits of lending the money when they could do it? So for the last several years, that’s been their plan. This platform was called Zillow Offers. Let me read what Zillow says about Zillow Offers. Zillow Offers is an easier way to sell your home with less hassle on a timeline that works for you. If your home is in a participating market, you can request a cash offer from Zillow in a few simple steps.
What they’re not telling you is that they were also lending the money on these deals. They were being the real estate agents on these deals. Zillow was trying to create an end-to-end platform for real estate. As of March 19th, 2020, Zillow still has 1,860 homes on their balance sheet. They have $530 million in debt dedicated to those properties that they cannot sell right now, and if they did sell, are gonna have to sell at a massive loss, and may not be able to sell the rest of the year. Then you add to that that Zillow’s own CEO has come out and said that they are preparing for a 75% revenue loss as compared to what was expected for the rest of 2020. It all adds up to Zillow being in BIG BIG TROUBLE!
So Zillow does have over $2 billion in cash reserves, so it is possible that they make it through and weather this storm. But at the end of the day, they’re going to learn and it is going to alter their business, and so, moving forward, post-2020, technology companies will be technology companies and real estate companies will be real estate companies.
The second thing that you can expect to happen after the coronavirus pandemic is over is you can wave bye-bye to discount real estate brokerages.
If you didn’t see it in the Washington Post and on their website this week, Redfin announced that they’re going to be furloughing 7% of their staff, almost 50% of their employees. They are in big, big trouble. And of course, what always happens in these recessions, it happened in 2008 and it’s happening now, recessions, slowdowns, whatever you want to call ’em, is that these discount brokerage firms go by the wayside. So that is definitely something you can expect to change, after this pandemic is over, is bye-bye to the discount brokerage firms.
The third thing that you can expect to happen in real estate after the coronavirus pandemic is over is that real estate agents will finally be forced to accept modern technology.
If you have watched any of my content or you know me at all, you know that I have been saying this forever. We are a business that has been stuck in the past and this pandemic is going to finally make people change. Agents are gonna have to start embracing technology. They’re gonna have to get used to video. They’ve having to understand Facetime tours. They’re gonna have to have an internet presence. It’s going to be the future. And on top of that, title companies and state legislatures will finally be forced to accept electronic signature on buyer and seller documents. This is going to force our industry into the technology future and it is going to streamline a lot of what we do. So, that is the third and final thing that you can expect to change in real estate after the coronavirus pandemic is over.