Reading the tea leaves too early and what may be coming next
Sep 11, 2024
auto_awesome
Josh Sitzer, a key player in the new 'a la carte' brokerage Landian, dives deep into the evolving landscape of real estate. He discusses innovative business models and the skepticism surrounding AI-driven brokerages. The conversation touches on how technology influences trust and commission structures, with insights into the shifting perceptions of value. Additionally, the hosts explore parallels between online dating and real estate, highlighting the importance of maintaining authenticity in both fields.
LANDian represents a significant shift in real estate with its a la carte pricing model aimed at cost-sensitive consumers amidst evolving market conditions.
Amara's Law highlights the misconception that technological changes will yield immediate results, emphasizing the need for patience as innovations reshape the real estate sector.
The persistence of a large agent pool, fueled by low licensing costs, challenges traditional perceptions regarding agent count and profitability strategies in real estate.
Deep dives
The Impact of LANDian on Real Estate Models
LANDian is introduced as a technology-driven brokerage offering flat-fee services for real estate transactions. Compared to traditional brokerage methods, it aims to disrupt the market by utilizing an a la carte pricing structure, attracting cost-conscious consumers. The model follows the trend set by previous discount brokerages, raising questions about its long-term viability given the historical struggles of similar businesses. Despite the skepticism, the landscape has shifted after recent settlements, indicating a potential connection to consumer trust and market demands.
Amara's Law and Technology's Long-Term Effects
The concept of Amara's Law illustrates common misconceptions regarding the rapid changes technology brings to industries. People often overestimate immediate effects while underestimating long-term impacts, especially regarding innovations like AI in real estate. This suggests that while initial results from platforms like LANDian may be discouraging, they could lead to substantial change over time as consumers adapt and technology evolves. Real estate professionals must remain agile, anticipating the shifts that may occur in the next decade.
Consumer Behavior and the Need for Approval
The psychology behind major purchasing decisions, such as buying a home, reveals that people often seek endorsement or approval from professionals in the field. Despite the rise of technology enabling buyers to conduct independent research, the desire for guidance from an experienced agent persists. This dynamic suggests that technology alone cannot replace the trust consumers place in personal relationships with agents. The success of any new business model will hinge on the ability to fulfill this psychological need while innovating around operational efficiencies.
Market Predictions and Commission Structures
Predictions regarding commission rates indicate a significant potential for compression over the next decade. The discussion reveals a consensus that, as competition increases and technologies improve efficiencies, buyer commission rates may be reduced to approximately 1% to 1.25%. This anticipated shift challenges agents and brokerages to reassess their value propositions and adapt to a changing landscape. In light of these developments, real estate professionals must strategically determine how to maintain profitability without relying solely on traditional commission structures.
Sustainability of Current Agent Counts
Despite a prevailing belief that the number of active real estate agents might decline, current analysis suggests that agent counts are unlikely to drop significantly anytime soon. The low cost of becoming and remaining licensed contributes to the retention of many agents, particularly part-timers who may not rely on real estate income. The ability to maintain licensing without substantial financial commitment allows a broad base of low-volume agents to persist in the market. Consequently, real estate companies must adapt strategies to operate efficiently and profitably amidst a large but potentially inactive agent pool.
Rob and Greg are back to their regularly scheduled broadcast! The episode includes discussion on Landian, the new “a la carte” brokerage launched by Josh Sitzer, yes, that Sitzer. Rob discusses his recent Sub Stack post on “Amara’s Law and Real Estate” and how we shouldn’t read too much in to how things are going with the NAR settlement. The boys also discuss online dating, new business models, capitalism and agent count. But somehow they bring it all together.
