Home buying & selling cruises toward car trade-in model with Opendoor in driver’s seat
You know Rupert Murdoch’s News Corp owns much of the media we consume, but did you also know they’re huge in real estate?
They’ve got a big stake in Realtor.com’s parent company, and Realtor.com is the home site of the National Association of Realtors, which licenses most American real estate agents—-about 2 million agents in all.
So News Corp has huge sway over the way you find your next house.
I don’t think a lot of people know which sites have which corporate overlords. That thought came to me because News Corp CEO Robert Thompson was talking about the company’s real estate biz on its latest public call with investors.
He took a second to trash talk a business model called the instant offer or iBuyers, which are companies that will buy your home for you so you don’t have to deal with real estate agents and can move faster.
Instant offers are like the car buying trade-in model, but for homes.
When it’s time to swap your ride, you walk into the showroom and say “I have this car and want this car,” and you walk out with a newly financed car. Done and done. And when you do it with a Tesla, the showroom is a web browser.
With instant offers, the process is basically the same but you’re on your own for financing—for now.
There are a few companies working with this model right now, including large brokerage names you’re familiar with like Redfin and Keller Williams as well as startups like Knock and Offerpad, but the early leaders are Opendoor and Zillow.
Here’s what News Corp’s Thompson said about the model:
We are not in the business of flagrantly flipping houses or covertly competing with our clients.
Why would someone like Robert Thompson rip these modern customer-first homebuying models? Because they “cut realtors out,” and he represents all of them!
This struck me because no one really knows what an instant buyer or iBuyer is right now even though the biggest brains in real estate are either competing with them like Thompson, or giving them billions of dollars to grow like kingpin investor SoftBank does for Opendoor.
And I put “cut realtors out” in quotes because that’s not totally true as this model evolves. Both Opendoor and Zillow work WITH the nation’s 2 million licensed Realtors. More on that next time.
As for the role of home financing in all of this, lenders have a lot to learn from the auto industry about how we want homebuying and selling to be.
Just like with cars, we care less about the financing than we do about the homes we’re buying and selling.
The instant buyers get this, and News Corp’s brass is touchy on it because they know if instant buyers integrate mortgage as seamlessly as the auto industry, it’ll drive homebuying and selling into a fast lane the current model can’t keep up with.
More on this next time as well…
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Reference:
– Q2 2019 Earnings Call (News Corp)