In his insightful presentation Pandemonium, Mike DelPrete delves into the shifting dynamics of the real estate market.
The global real estate tech strategist, and scholar-in-residence at the University of Colorado Boulder, highlights the growing disparity between traditional agents and digital platforms, emphasising how this gulf affects market behaviour.
By analysing key performance indicators and business models, DelPrete provides a comprehensive view of the industry’s current state.
His observations offer valuable insights for anyone keen to understand the evolving landscape of real estate
- Navigating market volatility: Mike DelPrete takes an in-depth look at the real estate market’s cyclical nature, emphasising that a downturn often serves as a litmus test for the industry. During prosperous times, numerous business models can thrive, but a downturn quickly reveals which models are sustainable in the long term. DelPrete urges companies to be agile and adaptive, with an emphasis on sustainability and resilience.
- Evolving brokerage models: DelPrete showcases how newer brokerages like United, Fathom, and EXP Realty are changing the game by offering higher percentages to agents. In doing so, these companies are gaining market share at the expense of legacy brands that stick to traditional commission structures. The shift indicates that agents are increasingly prioritising profitability, which DelPrete suggests is a trend worth watching.
- Blockbuster versus Netflix moment: DelPrete raises the question of whether the real estate industry is on the cusp of a disruptive change, similar to how Netflix outpaced Blockbuster. He delineates a set of criteria for such a transformation to occur: flat or declining growth among traditional companies, high fixed costs that make them less agile, and exponential growth among disruptors that leverage technology and new business models.
- Importance of low operating costs: DelPrete points out that disruptive companies like EXP Realty operate on significantly leaner budgets, with lower operating expenses per transaction. This allows them greater flexibility to adapt to market changes and to pass on those savings to agents and customers. It positions them as formidable competitors against traditional brokerages with high overheads.
- The ‘Last Mile Problem’ in real estate: Despite advances in technology and online platforms, DelPrete argues that real estate agents remain an indispensable part of the equation. He calls this the ‘Last Mile Problem,’ where technology can facilitate a lot of the transactional elements but falls short when it comes to personalised customer engagement and finalising complex deals. Agents, according to DelPrete, are the irreplaceable central element in this last mile, bridging the gap between online convenience and essential human expertise.
