One week ago, Amazon broke the biggest consumer finance and real estate news of summer so far, saying it’ll connect potential homebuyers to Realogy real estate agents through its new TurnKey program.
Lots of industry chatter carrying into this week, but nobody’s talking about the endgame, only the news.
More on that in a moment, but first, let’s recap.
WHAT AMAZON & REALOGY DEAL DOES FOR YOU
Realogy owns household name brands like Coldwell Banker, Sotheby’s and Century 21. So if you engage with TurnKey on Amazon, you’ll get asked 4 questions then receive a call from one of these Realogy agents.
If you close a home purchase with that agent, you get up to $5,000 in Amazon credits to spend on smart home devices like Alexa and/or Amazon home services like assembling furniture and installing audio visual toys.
Execs from Amazon and Realogy are right to say this is less about cash incentives for closing and more about making it easier to move into a new home. It’s smart business that goes right to the core of Amazon’s mission: make things easy for you.
But let’s not forget this: 47% of U.S. internet users go to Amazon first when looking for a product. As a deal like this matures, it will train customers to start thinking of Amazon as the first place to go when buying a home.
This means Amazon has the potential to become one of the largest lead sources in real estate.
From watching Zillow mature from a lead machine to a one-stop real estate shop, we know what happens when savvy lead generation players get a taste of the full real estate pie.
THE REAL ESTATE DISRUPTION TIME BOMB
Disruption is slow, then sudden. Like the proverbial frog boiling in a pot of water, real estate pros won’t always be able to tell when they’ve gotten out-disrupted. But all the signs are there.
Doomsday for a lot of real estate pros looks like waking up to this mock headline we shared last year to illustrate Amazon’s potential impact in real estate:
And every time the words “Amazon” and “real estate” are in a headline together, we get 3 responses from the industry:
– The sky is falling and real estate as we know it is doomed!
– This is a huge opportunity for me personally, since Amazon will want to partner with me!
– Who cares, I’m too good at what I do for Big Tech to beat me, and Big Tech doesn’t get how hard and nuanced this job is.
WHAT EVERYONE’S MISSING
Yes, the Realogy brand portfolio boasts huge household names, and is huge in real estate terms—it claims 300,000 agents and 16,300 offices in 113 countries under its various brands.
But it’s a relatively small company. Its market cap today is only $566 million (down significantly since the Amazon/Realogy deal was announced July 23).
Realogy’s acquisition price is lint in the pocket of Amazon, which has a market cap of $945 billion and $41 billion in cash and cash equivalents.
So if this TurnKey partnership pays off, this deal is turnkey for Amazon. Remember it bought Whole Foods for $13 BILLION in 2017.
That’s what industry types should keep an eye on as this plays out.
Amazon has one goal—to get you to buy more stuff on Amazon. If getting into the home buying, selling, and financing game gets you to buy more stuff, they’ll do it.
In the boiling frog analogy, this deal is them putting a pot of water on the real estate stove.
If it comes to boil and homebuyers who aren’t already Amazon addicts catch the bug from buying with Realogy, Amazon will have already cooked its own segment of the home buying, selling, and financing market before anyone even realizes it.
With a deal as sweet as up to five grand to spend on Amazon, it’s pretty probable homebuyers will line up for this. Why wouldn’t you? Is your real estate agent or lender going compete with this?
We’ll keep watching as Bezos and company turn up the heat in housing.