Videos of bighorn sheep squaring off are hard for me to watch. Mighty beasts locked in battle. A young challenger provokes the fight by taunting the older and more experienced ram, who walks away. But the message is: “You want to fight, come get it.”
The struggle lasts for hours, each ram battering the other until a deadly end, or until one trots off in shame.
The real estate industry is butting heads in ways I have not witnessed in 25 years. This is a bighorn square off with some mighty young challengers entering the fray.
In the old days, like-minded real estate business models were highly competitive, no doubt.
But today, it is a far more dynamic, and certainly more fierce.
For a bigger part of the decade, Keller Williams was beating up on Re/Max, the Realogy brands, Berkshire Hathaway and the big indies. But now all of them are lifting their horns for new fights, with some well-funded challengers proving to be ferocious competitors.
You have virtual brokerage eXp Realty going head to head with KW, as the Bellingham, Washington, upstart reportedly recruits 1,000 new agents a month.
The emerging 100 percent commission models like HomeSmart, Realty One Group, Fathom, West USA and My Home Group are scooping up agents.
Enter the rising and fearless tech brokerages — Compass and Redfin.
And, an overseas invader Purplebricks from the U.K. may become the first national discounter to make it in the U.S. (the jury is still out).
And never underestimate the indies, who are successfully recruiting a new generation of agents.
So what are the game plans for all of these competitors, and who will come out on top?
The company was built on an industrywide roll-up strategy 23 years ago, but that plan is no longer what the new guard at Realogy thinks will win in the end. Instead, the firm is focused on new technology and new data offers for agents. The challenge: Can the New Jersey franchisor build or buy its tech fast enough to fend off any further erosion in share?
Acquisitions seem to be the core strategy of this behemoth. When innovators get footholds in other industries, consolidating the old guard is a tried-and-tested plan for legacy companies to bulk up on share. How far will the Warren Buffett company go with this strategy?
Founder Gary Keller promises to remake his 35-year-old firm into a technology company but is sticking to his business model of selling training and services to agents. Peddling technology will likely boost revenue and should attract a new crop of agents. Now, will the company build or outsource its next generation of technology? We hear at least one major acquisition may be on the horizon.
Short term, the New York City-based firm is gobbling up top-producing agents. Long term, co-founder Robert Reffkin promises a culture and a technology platform that will be the envy of the industry. Can it build and monetize the platform before it runs out of money? $500 million should be enough to get the fast-growing company there, but it must avoid becoming the Johnny Depp of out-of-control real estate spending.
Glenn Kelman’s strategy seems to be like the story of the tortoise and the hare, as he methodically tests new products, slowly moves into new markets and hunts for share. In the end, results count, and Redfin has become one of the largest broker-owners in the country. But when does its consumer service offer catch up with its distribution might, earned through the best real estate search technology out there? Then, it could dominate.
On fire, true nerd eXp founder Glenn Sanford is in the big leagues with his virtual offer and commission share program. The strategy seems to be working; the challenge is managing hockey stick growth. While his company is listed on the Nasdaq stock exchange and is profitable, Sanford is not sitting on a pile of cash. So he must follow the path of winners before him, like KW and Re/Max, who also grew up organically.
With its management team reset, the Denver-based bighorn is re-establishing its cred with its own rank and file. It made a strong tech acquisition and has found stability at the top, post-Dave Liniger. Now the firm must move smartly to leverage its abundant assets to keep up with old and new competitors.
Capitalized to grow quickly, the U.K. discounter must prove American homesellers are ready for a low-commission model. The strategy is clear: “List for $3,600.”
In addition to franchise sales, the Arizona-based 100-percent commission firm is aggressive on the acquisition front to expand quickly.
Its growth strategy is selling local franchise rights to regional owners. This master franchising plan takes a play from the Re/Max playbook in the early days. Realty One gives away a lot with this strategy, but it can grow fast.
Never discount the indie brokers in this battle. They are often well-positioned with unique cultures, local knowledge and agility to move fast.
And unlike the new and old national companies, many of these firms are women-owned and run — so they have special skills to undercut the big boys. Philistine female warrior Nara up against Goliath is a story I am rooting for.
Let the face off begin, the horns are locked.
