Never before has the “threat” of non real estate companies, often referred to as “Outsiders,” entering the real estate brokerage industry prevailed as strongly as it does today. Read just about any current news or blog, and names like Google, Yahoo, Zillow, eBay, InterActive Corp., Craigslist, Home Depot, H&R Block and now even Wal-Mart are listed as potential players in the real estate and mortgage space.
According to the leading report on real estate trends, the Swanepoel TRENDS Report, this is not a new phenomenon, and the real estate industry has experienced “outsider” penetrations before. Back in the 1980’s and 1990’s companies such as Sears, TWA, Merrill Lynch, Metropolitan, Prudential, Meredith, GMAC and Cendant each brought their own unique set of fears and concerns to the industry when they entered it. Although these large companies experienced growth and success, few made a truly meaningful impact on the industry – particularly on a national level, compared to the initial perceived fear. Most of the growth they enjoyed was the result of the normal organic results associated with mergers and acquisitions.
According to Stefan Swanepoel, the report’s author, after changing names multiple times (from Hospitality Franchise Systems to Cendant to Realogy) the largest real estate franchise is a fine example of an “Outsider” that not only became an “Insider”, but actually has made a significant fundamental impact on the real estate paradigm, contributing significantly towards the ever-changing industry model.
As a result of the National Association of REALTORS® (NAR’s) bank and financial focus during the last few years, many “Outsiders” have basically been flying under the radar and hatching creative plans to initiate and secure their involvement. Although the bank controversy has by no means disappeared, NAR remains fiercely antagonistic toward any initiative to permit banks to engage in commerce, fighting to keep such companies firmly blocked from any kind of meaningful entrance. They have been successful since 2001 in persuading Congress to obstruct the Federal Reserve Board and the U.S. Department of Treasury from finalizing a rule that would permit financial holding companies and financial subsidiaries of national banks to engage in real estate management and brokerage.
This time, however, there may be legal loophole in federal banking law that will allow an “industrial loan company” to bypass the distinction between banking and commerce in federal law. Furthermore, this is not new, and dozens upon dozens of large companies (such as Nordstrom, General Electric, General Motors, American Express and Target) are already operating under this regulation. However now with Wal-Mart, where some 138 million consumers shop every week, financial institutions and NAR have become bed-fellows in opposing Wal-Mart’s plans to open its own bank.
It would seem the time has come for the industry not only to accept that “Outsiders” are here to stay, but that many more will be arriving in the not-too-distant future. Some may change the home buying and selling process in their own right, but collectively they will almost certainly revolutionize the industry over the next decade on an order of magnitude, never before anticipated or experienced.
Is this news good or bad? According to the Swanepoel TRENDS Report, competition and change is not intrinsically bad. The real estate industry, like any other, can benefit from new approaches and initiatives. What makes the current situation so interesting is that many of these companies will introduce completely new strategies that, when combined with their size and reach, will carry both the potential and the capacity to re-engineer the entire real estate paradigm.
According to Swanepoel, many of these companies will most likely un-bundle the existing real estate process and services, then subsequently re-bundle it with any other services that may not be even deemed a vital part of the home buying and selling transaction right now. “The residential real estate brokerage of 2016 will look vastly different than today’s,” Swanepoel predicts. With 13 books and industry reports about trends to his credit, he knows better than most.
For more information on this hot topic, as well as all the other hot trends pushing, pulling and changing the real estate industry, read the latest 110-page Swanepoel TRENDS Report. It provides a balanced and objective evaluation of what and who is transforming the real estate industry today. Published by RIS Media, it is available exclusively at www.realestatebooks.org. |
