CEO'S TAKE: Creating a Frictionless Transaction
February 20, 2019 CEO's Take Ryan Castle
The consumer experience today has one overarching theme – frictionless transactions. Whether it’s stock trading, car buying, or picking up a roll of paper towels, even major life decisions such as changing jobs or hiring people, is about doing it with less friction and making the whole process easier.
Real estate is no different. That is the appeal of the ‘iBuyer’, the name given to the process where real estate brokerages, hedge funds, or anyone else with enough cash is making offers to sellers and closing on the sellers timeline. Some companies call this an ‘instant offer’ – the seller gets an offer on the spot and avoids the whole listing process. These ‘iBuyers’ then turn around and list the property on the open market.
Sure, the trade-off for the seller is that the purchase comes at a lower price offer and some of the fees being charged are large, but they’re selling frictionless transactions, not ‘maximum offer’ transactions. There’s no showings, no having to keep the house clean and neat, no waiting on photography, no negotiating offers and counter offers – none of the stuff that can cause friction in the transaction of simply wanting to sell a house. The sellers weigh those friction-creating ‘costs’ versus the cost of selling now for less and avoiding the stress. For the sellers wanting frictionless transactions, there’s plenty of investor money and real estate brokerages betting on that sellers choosing less stress over more cash.
So, beyond starting your own iBuyer company or connecting with well-heeled investors wanting to do it, what you can you do? Quite simply, you can cut the friction. Look at your transactions: Determine what causes the most friction and eliminate it. This will be different for all sellers.
As a consumer, here is what I would want to know: What is the listing broker going to do to reduce, minimize, or eliminate the friction, i/e my stress, in the transaction? Whatever the answer is, please don’t make it like a couple I have received recently.
One agent told me, “I like the friction because it shows my value.”
Frankly, if this is how you’re thinking, you need a better value proposition. If your value is only apparent when the process slows down or the closing gets delayed, then the consumer is going to go around you. Instead, your value proposition should be based partly on ironing out any friction that comes, and overall making the process smoother and simpler for the consumer.
Quite simply, real estate is complicated. A REALTOR® should make it simpler and less stressful for the consumer.
Another agent told me, “Sometimes the hassle is worth more money to sell on the open market.” The problem with this value proposition is that you’ve now agreed that working with you and the established business model is a hassle.
Your words matter. Reframe the issue and tell the seller that by working with you, you can get them the most money with the least amount of stress.
In the car industry, dealerships are fretting about Carvana, an online website that promises a frictionless transaction and process for buying used cars. I recently bought a car with my wife, and I was looking at cars at Carvana.
However, I noticed some of the data was wrong, so I had to call their customer service to see if the car actually had all wheel drive. Turns out, it didn’t – the data was wrong (maybe a similar parallel to real estate data?). But, overall the process looked and felt simpler. Pick a car, get financing, and they deliver it to you within days.
I told myself that I’ll test the car dealerships here, and Tracy Volkswagen delivered. They produced a frictionless, simple experience that was on our time frame, not theirs. They were able to answer questions and direct me to what made the most sense for us – they made the process very simple, and their experience beat the digital one.
I write all of this to open up your thinking: How can we as an association or MLS facilitate simplifying the transaction for you? What are the bumps in the road, the pitfalls what causes the friction in the transaction and how could it be solved? Is it offer management and communication? Is it showing appointment management and communication? Is it a better client experience in searching for homes? It may be an aspect the Association or MLS has a role in — or it may be an appropriate role for the brokerage or agent to solve.
Let us know by contact me, as I’m always eager to chat about the future of real estate and your needs.