This month’s episode of Future 15 features two industry trailblazers in conversation: Sean Black of Knock and Glenn Kelman of Redfin. These two CEOS have been pioneers of change for 20+ years — including driving the digital revolution of the early aughts. They discussed what’s next and how the transaction revolution is shaping the future of real estate.
Watch the recap for Sean and Glenn’s full insights, but we’ve gathered a few key takeaways below.
Glenn and Sean both believe that buying and selling transactions will be done directly on your phone — in the next 5 to 10 years.
Sean: What does home buying and selling look like for the consumer in 10 years? What’s your vision?
Glenn: Well, at least part of our vision is that we can turn real estate into an on-demand service.
Sean: When you say it’s “on-demand,” I interpret that as it all happens like every other transaction we, as consumers, do which is on your phone. The youngest and fastest growing generation that’s coming up now who grew up with the phone, is buying everything from vacations to cars on their phone. Are they buying the house entirely on their phone in five years?
Glenn: I hope so.
iBuying will remain a small percentage of overall transactions.
Sean: What do you think is the future of iBuying?
Glenn: As the cost of capital increases, I think the offers are going to decrease because we have to factor that into our margin. There are going to be people who avail themselves of an instant offer because it’s an estate sale or they’re in a jam. I think the way that Knock has addressed this problem, in some ways, is more elegant because if you’re just trying to move up, not being able to own two mortgages makes it almost impossible to do. You can sell your home to an iBuyer or you can get some kind of bridge financing, but bridge financing is probably more efficient.
While the emphasis during the digital revolution was on eyeballs, winners of the transaction revolution will focus on providing top-notch services. Innovators will turn their attention away from website traffic and towards experience.
Sean: Do you think it’s inevitable that the search experience ultimately finishes with the transaction? That consumers go from all the way from searching to buying on Redfin?
Glenn: I think Redfin could live in a world where a Zillow or a Realtor.com or a Trulia could be the Google and we are the Amazon. Uber as an example probably cares about its traffic, but what it really cares about is whether people use it to get a ride. We want to be a destination when you want to get into a property and see it very quickly.
By a similar measure, if you’re listing a house and you want to figure out what it’s worth, you can actually talk to a real estate agent on-demand. If we can offer that push-button service, I think we could live without being the number one real estate website because that Zillow mountain is a tall one to climb. We still want to grow our traffic and compete tooth and nail — we’re adding rentals, we’re expanding nationwide. But, the most important thing is to deliver the best service and not to be the best real estate website.
Industry innovators will find that with great data comes great responsibility.
Sean: During the “Search Wars” from 2005 to 2015 when we were all trying to get as much information to the consumer as possible, it seemed like the more information, the better. I think there’s been a rethink about that and if certain kinds of information (does more harm than good). I know you’ve taken a stance, for example, on crime data.
Glenn: I’m generally pro-data. Even if the consumer can’t absorb the information directly because the listing page is 100 miles long. All the machine learning algorithms that we use to price a property and to recommend listings for a consumer are going to benefit from that data.
But the crime data, I don’t see it as clear cut. There was a huge debate within Redfin. Some very smart and completely ethical people argue that we should publish the data, and another group of people said that it reflects communities that have been over-policed instead of communities where there’s actually more crime, and they had study after study showing that.
I think the history of media companies is that we slowly wake up to our responsibilities where you realize, “Oh my gosh, we’ve got 50 million people on our website and we influence which neighborhoods they want to live in and which ones they don’t want to live in, and we need to take that seriously… reasonable people can totally disagree about it, but in the end we landed on the side of, “Don’t publish stuff where it’s just a rumor. Don’t publish stuff where you kind of know it’s not right.”
Watch the full episode above for more.