If you are not familiar with the concept of what an instant offer is, I will give you a general description. If you want to Google it and get more in depth please do. That’s not my job. I’m here to help, not do research to get a fucking grade for a class.
An instant offer is an offer to buy a property at a specified and agreed to price in usually three days or less. The seller of the property has the ability to choose from multiple offers and once they decide the ENTIRE transaction is handled by a third party. They also can close on that property in thirty days or less.
Now, there are variations on the basic concept and business model but simply put you submit your property information get multiple offers in three days or less, pick the one you like, close and get a fat check in less than thirty days.
NOW, the resi people are freaking the fuck out about this. Why? Where is there a “traditional broker” in that scenario? I do love the resi people when they feel threatened in any way they go all out. Nasty letters, special websites, calls to action for special legislation and laws, threats of boycotts and on and on. They hold nothing back and they get flat out raw. It’s fun for me to read about and sometimes you have to wonder why #CRE does not come out all screaming and flaming hot on certain issues? Usually, it’s “meh.” I’m kind of cool with that for some reason.
So, your first thought is the obvious one. The resi people are afraid of disintermediation at the very least and the elimination of all kinds of rights, values of property, integrity, and blah blah blah. Yea, you get that but what may be the bigger issue here and why should you (#CRE) be paying a bit more attention to this. There is that direct to the consumer thing which I have written about before. Oh, that’s coming to #CRE for sure. Don’t even think we are immune to that. But you are missing the one thing WE can’t miss.
Control of the Entire Transaction.
See, did you just gloss over that before? A quick scan for the bullet points? What does something like an instant offer do? Yes, it goes directly to the consumer but what else does it do.?
It becomes The Top of the Funnel for one thing. Your lead gen/deal making funnel. Think about it.
What else does it do?
It creates direct access to a consumer/user for how long? Maybe for life. That’s call (CRM) Customer Relationship Management.
Am I finished? No.
It also helps define a marketplace and value.
Reread that one. Again. I’m serious.
Shit, think about that. Isn’t that part of your job?
Let me throw something in that you might think is WAY out there but is not.
It creates Market Share.
Wow, that one is going to hurt.
What if something like an instant offer creates let’s say 1,000 transactions in a 10,000 transaction market?
That’s only ten percent of the market. Just ten percent.
Take away ten percent of the deals in your marketplace from last year.
Take ten percent from your brokerage.
Take ten percent of your own deals.
What’s that number mean to you?
If this all sounds so doom and gloom why then do I like It?
Well, part of me just wants to sit back and watch the chaos.
Part of me enjoys that fact that the market is in the hands of the consumer. Power to the people and all of that.
And you are like “Duke it’s #CRE, cool your jets, my friend, we are not part of that.”
I could not disagree more.
What is the true value of a property, any property? Resi or commercial?
How inefficient, fraudulent and or criminal is any potential transaction? Especially one that is hidden or “non-disclosed?’
Why hide it, you and I both know why.
How about this?
What if the people doing the transaction have no interest in the property whatsoever?
What does that mean?
I say Trillions that’s what I think it means.
Trillions of value created for everyone.
Maybe that’s a broker. If so, hey all the better.
What if there is, even more, value to the consumer/user without a broker?
Oooo, you’re not liking that one are you?
Did I mention the resi people were freaking the fuck out?
I’m sure I did.
But we are #CRE after all so why not just hang back and say “meh.”
Ok, do that if you want.
It’s just me but I think you may want to dig in and take a closer look.
So Why Does #CRE Need To Pay Attention To This “Instant Offer Thing?”
If not we are going to get fucking hammered!
+1 I did mention Controlling The Transaction did I not?
+1+1 I thought I did.
Did you make it this far?
Here is a little bonus brain flow for you.
-Look at the Infographic that I used for the title pic.
- Take each individual box and think about what companies now occupy that specific space. In other words who is making money by doing just that specific task in the transcastion.
- How much money, real money is involved in just one transaction? You’re smart so it’s not to hard to imagine.
- Now multiply that number in your head by how many thousands and thousands of real estate (resi and commercial) transactions are executed every year.
- This is what startups do. They look at something like this and decide which piece that they can tear apart by being more efficient, cost effective, faster, smarter, etc. etc.
- How many can you look at and start to get an idea of what could happen? Did you say to yourself “what if they?”
- What if you owned THE ENTIRE TRANSACTION? How much money is that?
- But, you say that can’t be, it’s not fair to the consumers or the marketplace.
- Are you sure that’s the only reason you are thinking that?
- What if you owned part of it? How much room is there to make some serious bank?
- That’s the battleground for real estate. The transaction.
- How do you acquire market share?
- Oh, there are many ways. That’s what is freaking the resi people out. I’m not sure they even understand why they are so pissed.
- Now you know why and what do you think about a commercial real estate transaction?
- How much money in each of those transactions?
- Look at the infographic again.
- How much money is being spent now and will be spent to go after the entire thing?
And the resi people are screaming, whining, ranting and worrying about brokers and brokerage.
If I were them I would stand back and look at the entire real estate industry.
How about commercial real estate?
You say “Meh.” Right??????????