Last week, e-commerce behemoth Amazon dropped a bombshell on brokerages by joining forces with real estate giant Realogy on a matchmaking service for home buyers and Realogy-affiliated brokers.
The service, TurnKey, is now available in 15 major cities, though New York is not one of them.
The service offers to match people looking to buy a home with a local broker based on a profile the potential buyer creates. If a deal is sealed, the buyer receives packages of home services and goods from Amazon or Amazon-curated affiliates, paid for by Realogy.
As for what this style of deal-making will ultimately mean for the industry, the reviews are mixed.
A spokesperson for listings website Zillow told Real Estate Weekly, “These sorts of marketing deals can be interesting. However, we believe the real value for consumers comes with creating a seamless, integrated real estate experience from start to finish, which is our focus.”
But Allen Alishahi, co-founder and president of ShelterZoom, a blockchain-based real estate platform, called it a positive step for buyers and brokers.
“Selling and renting real estate is too slow, too inefficient, too opaque and too expensive,” said Alishahi. “And, frankly, this has been the norm for too long. Deals like the Realogy/Amazon partnership address the longstanding need for an expedited process that benefits consumers and brokers alike.”
Howard Rubin, senior partner at law firm Goetz Fitzpatrick, who represents many real estate clients, said he believes the service could change the way residential deals are done across the board. But not necessarily in a way that spells doom for other players.
After all, Amazon did choose to partner with a major existing company while offering a lead generating service rather than try to sell homes on its own.
“A lot of large brokerage companies are breathing a sigh of relief that Amazon didn’t go into the industry,” said Rubin. He suspected this may be due to restrictions in certain areas on how commissions can be split. “So they’re making the kind of deal where they’re giving a fixed amount of money.”
Additionally, it’s not as though Amazon has a monopoly on incentives that can be offered to clients or on forming partnerships with home-related businesses. And in Rubin’s opinion, the offer of goods and service packages that start at $1,000 in value and go up as the homes get pricier is still not what everyone wants.
“Some customers will still opt for a traditional broker who’ll hold your hand through the whole thing,” said Rubin, while others will just want the cheapest price possible.
“Brokers are looking into how to get to millennials, who get their information online,” said Rubin. “The first place you look is at a company like Amazon. I wouldn’t be surprised if Facebook or Google or another online entity doesn’t make a similar kind of deal.”
Then there are the startups — or rather upstarts. These days, the attorney noted, along with representing traditional brokerages, he represents a handful of tech-focused startups like Keyo who are also trying to disrupt the industry.
Overall, he suspects that commissions will drop and some brokers will drop out. “There’ll be fewer brokers but those who remain will be doing higher volume. You’re going to have to.”
Meanwhile, Aleksandra Scepanovic, managing director of Ideal Properties Group, is of the belief that the Realogy/Amazon alliance isn’t likely to have the devastating effect on mom-and-pop firms that Amazon has had on mom-and-pop retail.
“I don’t believe they can do more damage to boutiques than the market already has,” she said. “(Already) you also have a very high level of competition with really big tech giants that have inexhaustible resources.”
On this partnership, she added, “It’s a small step for mankind.”
Instead, she sees the launch of TurnKey more as a struggling company trying to rebrand itself during tough times that include a well-publicized lawsuit against rival Compass.
“Realogy has been struggling to remain relevant in the changing real estate landscape,” said Scepanovic. “This is the first positive news to hit stakeholders’ desks in a while. I’m wondering if it may be too late. I don’t think a $5,000 credit for Amazon goodies is going to be the wonder drug that heals all of Realogy’s stock maladies, but it’s certainly a move in a positive direction. It’s a step away from the lawsuit.”
She also pointed out that it’s possible other companies could also end up partnering with Amazon at a future date since there’s been no word that the current arrangement with Realogy is longterm or exclusive.
“Maybe Compass will be the next one to offer Amazon goodies to their customers as well,” said Scepanovic.
But assuming this doesn’t happen, her takeaway from this is that brokers and firms need to find ways to stand out in a field that’s always been competitive.
“This is all about differentiating oneself in the marketplace, but there may be other alternatives,” she said. “Sometimes it is enough to be a boutique that does care about a client and offer a meaningful gift. Like if you sell a gorgeous townhouse in Brooklyn you can spend $300 on a book that covers all the history of the house that’s beautifully designed. That would be a more meaningful way to say thank you than getting them a new version of Alexa that they may already have.”
Meanwhile, ShelterZoom has recently released some stats that indicate consumers have been waiting for a shakeup in how homes are bought and sold.
In a survey the company issued to 1,000 Americans, 36.6 percent of respondents said the process takes too long; 28.2 percent find it confusing and 21 percent believe there are too many people involved. Specifically when buying a home, there were even more concerns: 42.7 percent believe commissions are too high, 33 percent feel there’s a lack of transparency and the same percentage believe there are conflicts of interest while 21.9 percent said they can’t trust the agent.
When asked what they wanted to see, 48 percent of respondents wanted to be able to track every step of the offer once it’s presented to the seller, the ability to see how many offers are being made on the home (46 percent), to be notified if there is a change made by the seller, broker or agent (42 percent) and the ability to negotiate online and close online (33.5 percent).