When I was a little kid in a small Minnesota farm town in the early 1970s, many of my teachers were anti-war activists fresh out of college.
As a result, they had us sing all of the popular anti-war folk songs in our music classes.
They seem convinced that if Nixon and Ho Chi Minh (North Vietnam’s leader) only knew that a bunch of chubby, tow-headed 2nd graders in rural Minnesota were singing anti-war songs, the fighting would stop immediately.
It didn’t work.
But I give them credit for trying.
Anyway, one of those songs was “Where Have All The Flowers Gone”. While that song utterly confused us poor 8-year-olds (I mean, couldn’t they just plant more?), it makes much more sense to me now because it reminds me of my blog topic today: “Where have all disruptors gone?”. OK, OK, my lead-ins are getting way too obscure, but I really did think of that song… 😊
Every year, we hear about disruptors that will bring down the residential estate industry as we know it. And every year, it doesn’t happen.
- Ibuyers anyone? Opendoor, Offerpad, HomeLight, and Zillow were going to revolutionize home sales by offering fast, hassle-free home purchases – so those poor sellers didn’t have to go through the trouble of listing their homes with a real estate agent. The only problem was that those pesky sellers decided that they didn’t want to leave as much as 15% of their home’s value on the table to avoid a few hours of work. Shocker…Opendoor famously went public in 2020, enriching Chamath Palihapitiya, but its stock has since completely collapsed.
- Disintermediation Technology. Fancy new tech was supposed to allow buyers and sellers to do everything themselves – without the help of real estate agents. Yeah… not so much.
- Lead Gen Dominance. The big lead gen firms (Zillow, Realtor.com, Redfin, etc.) were going to take over real estate because they figured out how to use technology to generate all of the leads – giving them control over agents everywhere.
- Discount Brokerages. Buyers and sellers are tired of paying those huge commissions, right? Wrong. We’ve seen dozens of discount brokerages (offering reduced or rebated commissions) come and go – and they never seem to gain traction.
- NAR Lawsuit. Holy-much-ado-about-nothing, Batman! The many huge lawsuits over commission collusion and the huge payouts were supposed to destroy the real estate industry, remember? That was about 10 minutes ago, and it turns out that the only thing those lawsuits destroyed were the bank accounts of many brokerages – to the benefit of a bunch of trial lawyers (pretending to “care” about consumers. Note: They don’t and never did).
- Large Brokerage Dominance Via Branding And Tech. When huge well-capitalized brokerages started to invest heavily in tech and branding, we were told that they would take over real estate. I’m still waiting though..
- Artificial Intelligence? We’ll see, but don’t hold your breath.
I am sure I am missing many other examples, but the above still illustrate my point.
Disruption predictions turn out to be wrong every time.
It turns out that buyers and sellers:
(1) prefer to work with humans;
(2) don’t mind paying commissions for expertise and professional advice; and
(3) don’t want to give up $100,000 to save a few hours of effort or to close a week faster.
We of course have seen the same things in the mortgage industry, as internet lending, big commercial banks, dominant mortgage banks (Rocket, UWM), housing crashes, and/or AI were or are going to take over or crash the mortgage industry. Again – not so much. Those of us still standing are doing better than ever.
