Software isn’t eating real estate brokerage, yet

Part of moving to the Netherlands was dealing with a real estate broker. I am surprised it is 2016 and the system is still that inefficient.

The problem with brokers is almost the same problem with taxis, there is a conflict of interest. Taxis make more money by driving you more than you need, and brokers make money by bringing you more expensive units. And both have – almost – no interest for retaining you, therefore they need to squeeze the biggest amount of money they can for the transaction they are dealing with you.

While the taxi problems got solved by Uber through having the collective rating from different customers, the problem remains with real estate brokerage.

What the broker do?

  1. Search & Discovery: They help you search for units & schedule viewings. They also keep sending questions back and forth with landlords.
  2. Negotiating details: This is where it gets interesting, while they will try to convince you there is no negotiation on price, they might negotiate other minor details such as can I smoke? Can I bring my pet?
  3. Finalize the deal: Writing & signing the contract, recording the unit status before rental, and finalizing government documents if any.

Technology ate half of the first part, search and discovery, but not the rest. There are thousands of real estate directories & classifieds online helping customers search and discover properties.

Yet, scheduling viewings still happen in a very manual way, annoying landlords with tons of calls, questions, and requests while such info should be available online and facilitated easily.

I think there is an opportunity to build the right technology stack that removes friction, facilitates communication, automates contracting, and makes every part of the process seamless, removing the need for a middle man with a conflict of interest with the person they represent. This day didn’t come yet, but I see it in the near future.

  • Same thing in the states. You got Trulia (owned by Zillow), Zillow, Redfin, and you still go through brokers. One of the biggest issues is landlord would rather pay 10% to brokers than dealing with potential renters. They hate the hassle of finding a right renter so they let the broker do it. Also many of the landlords lives in different states and cities and they are investing in Realestate rentals so I don’t think they are willing to fly from their home city to come and meet the renter that is most likely won’t be a good fit.