Opendoor got a $4.8 BILLION offer...what does it mean for your business?
Open Door just got a $4.8 billion, with a B, offer for Open Door. Today, we're going to cover what that means for the real estate business, or industry, as a whole, in more particular, you, as an agent, is this going to have an impact on you? What is happening? Why is there so much money going into real estate companies like Open Door?
It will have an impact. It's not going to be an immediate one. It's going to be like the frog in the boiling water. But I'm going to cover what you can do about it now to get in front of this thing. They're trying to change the behavior of consumers to not call or use a real estate agent, but to call them, use their algorithm, sell your house to them, buy from them, go through their vendors and use their vendors.
So if you're mortgage broker, if you're title, if you're insurance, they want to own the whole thing and they want it to be all on the interwebs. You click a button, you walk into a house, they know who you are, they tell you you're pre-approved as soon as you walk in through the door. You use your app on your phone to get yourself in. You've already been vetted as far as the fact that you're not a criminal so you have access, all those types of things.
They just want to streamline it and own it and eliminate us. And they see Amazon doing it with brick and mortar. They're like, "Why can't we do that to the old real estate agent?" Well, I'll tell you why, because we're going to stop them.
Am I right?
If you don't have Open Door in your market, the way it works is they had to make some changes in DFW, so they stopped offering more than 300 or 400,000. Any houses over that they just stopped. They said, "That's not part of what we can do anymore."
But one of the great things, when I was looking at my house, I enjoyed going to look at Open Door houses because you don't need an agent. You download the app and the app senses when you're close to the door and unlocks it for you.
Open Door houses, go from 8:00 AM to 8:00 PM every day, seven days a week, because they're vacant houses.
You just sign up for the app, walk in, it registers that you're the one that unlocked the door, so if anything happened they got cameras and stuff set up. So they got their bases covered. But it was just so convenient for the people that quarantine.
The younger generation too. So many people don't even want to make a phone call to order a pizza, just go on the app or just do it online. I've found it to be more prevalent with certain personality types, like S's and C's. Like our dev team, they ain't calling anybody for food. Just all of a sudden some ninja comes in with food, I'm like, "How did that happen?"
But that would be the preference, would be to not have to talk to anybody. So a lot of things to compete against there that are going against human desire and human nature. But the thing I think is the most prevalent with humans in general is the desire for self-interest. And self-interest as far as money is concerned is always going to trump convenience.
What I've found is that people generally gravitate towards that over even a relationship, unfortunately. Because in America, we're not very relational. In Asian cultures, they would have more of that. You would even use your friend if it cost you more money. Over here, my sister would use another agent if it would save her more money.
I was talking about it the other day with a buddy. I was like, "Man, my sister bought this house." You know what happened? She got in a frenzy, she got in a panic. It was an open house and it was a foreclosure and there were multiple people there going to bid on it, and she just didn't want to have the possibility of losing the deal. So she just wrote it up right there with the listing agent, and then called me about it later. And then I had to disown her after that. Down one sister.
But people value different things in the process. And that's the advantage of every real estate agent being a human that you have, is you can pick up and you can understand just based off a conversation what's the important part for them.
Let's talk about this guy, Chamath Palihapitiya. He's invested this money through other people's money, with the goal of 10 X-ing this investment of this $4.8 million or billion. So they're trying to 10 X it to $48 billion.
And this guy though, I did some research on him and he's been very successful, but do you know that he's the ex VP of Facebook growth? And he's the guy who is on all of these different interviews and documentaries. He's on The Social Dilemma, which is the new Netflix documentary. And what they're talking about is what they did and how sinister it was to behaviorally engineer and use what's called persuasion technology to get us to be addicted to social media.
And he's the one coming out saying, "Oh, what we did was a bad thing." A tool like a bicycle is something that serves us. When we have a technology that needs from us, that is trying to constantly withdraw from us, change our behaviors, change our habits, he's like, "it's no longer really a tool. It's something that is extracting instead of depositing."
And that the thing that is so scary is that this is the guy investing in going into changing the behaviors of consumers, to change the way they buy and sell homes. And if you look at this guy's track record, he was, within the first year, hired at Facebook and was a big part of creating that ride, as far as changing consumers' behavior, all the way from the first experiments to the Like button, to tagging friends and photos. He was there for the whole gamut.
And if you look at how in real estate technology, one of the things they talked about, for example, was when you swipe down and something else populates, and you swipe down and something else populates and you never know what it's going to be, that that behavior, I forget the specific term, but it's the very same type of addictive behavior as hitting a slot on a slot machine. You don't know what the outcome's going to be. You just don't know.
So if you look at real estate technology, I'm thinking about it when I'm watching this documentary, there's really not much in the way of that. It's pretty straightforward. It's more of a tool. So at best, you might get a update of homes that are new that match what you're looking for if you're shopping for a home, for example. But how many things like that could be really massaged into the real estate shopping process to make it more addictive?
I know personally, I shop two or three markets without the intention of necessarily buying a home anytime soon. Sometimes I even go on Facebook Marketplace. I ain't looking to buy anything. I'm just bored.
So imagine implementing those type of technologies into the real estate shopping experience and how dig of those things would be. This guy, he's a really scary guy. If there's going to be somebody that could do this and pull this off and change the consumer's behavior, it would be this guy. It's behavior manipulation.
This is the guy that's going into the real estate business to change consumers' behavior. And it doesn't happen overnight. You can't change a consumer's behavior overnight. I've talked about before the book The Culture code. And in that book, they talk about Nestle wanting to sell coffee in Japan and nobody drank coffee over there. They drink tea. So they've made coffee flavored candy and it made this a multi-generational strategy. Now they sell, I don't know how many tons of coffee in Japan.
That's where this is going if we allow it as real estate agents. We're only a 200-year-old industry. We could wake up 50 years from now and none of this thing be here or look the same if we're not careful. And so we want to talk about how to combat it. Because you know who's not worried about this?
The big dogs.
And they got market share already and a substantial market share. So my goal from this is to shake some people awake a little bit if you think that it's just going to be like this forever.
It's called disruptive innovation. It's happened to multiple industries. Like lawyers with LegalZoom. The travel industry is probably the biggest, basically got wiped out. Could you imagine being a travel agent in the seventies?
And so I think with real estate… they've been trying to do this for a long time. They've been trying to get rid of us. Swanepoel came out with it at one time, one of the events he was speaking at. They want that money. They try to get it so hard, they're trying to remove us from it. And a lot of them, they don't understand what we do.
I'll never forget, when I first looked at the iPad and it had the app on there for Redfin on there as one of the native apps that it came with. I took that as a slight as an agent. I was like, well, the technology world must feel like real estate agents don't provide value.
And what that says to me is they just don't understand the business. They don't understand the industry. They don't understand what it is we do. They think that we're a middleman tollbooth type of a model, but that's just not the case. We add so much value to the transaction. And so many transactions, I always argue, would never have happened if not for me, because it's such a big, scary thing and there's so many unknowns.
It's like if you bring your dad to ask him, "Hey, what do you think of this house?" The thing he's going to have to do is point out all the flaws, because if he doesn't, once you're in there, you're going to be like, "Hey, this is broke. Why didn't you tell me about it?"
What are we going to do about it? What should an agent do if you want to be in this business 10 years from now, or maybe you think generationally. Maybe you have a family brokerage, whether it's a franchise or independent, and you want to be able to leave this thing to your kids. You want them to be able to take over and just walk where your feet are and follow your footsteps.
Real estate's probably been a great business for you, a great lifestyle. And you want to be able to continue that on. What are you going to do about this? You need to do something. You can't just sit there with your head in the sand and say, "Oh, well, good luck. I don't think they're going to make it." Because again, research this guy. It'll wake you up.
This is what it's like. Rise, baby. Stand up. Don't let them just come in and take it. The biggest thing I've always said with real estate, specifically, value unarticulated is value unappreciated. A lot of people don't understand, or they've had such a bad experience.
To be honest with you, part of the problem with the real estate industry, the perception of agents, and Swanepoel came out with this study that NAR commission or whatever, the danger report, was the number one threat to the industry was the masses of marginal agents. Agents that really don't have a ton of experience and aren't adding a lot of value in the process, versus I could go to a KW office down the street on Preston Road where there's 300 plus agents and I could just pull two random business cards. One could be an agent out of that office that sells 300 houses a year. One could be the mayor of Frisco who sells 50 or 60 houses a year or two on top of being the mayor, which is a good way to have a brand in your marketplace.
Or you could be someone that just got licensed. And if they're not taking their craft serious and all that stuff, they can leave a bad taste in someone's mouth. But if they're at the Lake and they're working with you, who sold the most houses out of anybody, there's a lot of value they're going to get out of dealing with you versus dealing with some brand new person. But certainly more than a company that's just a corporate entity, because you have the ultimate trump card, which is ability to build a real relationship with them.
Right, right, right. The thing about it is this, my first meeting in real estate, I'm 19, 20 years old, I walk into this real estate office and it's a conference room. And all of these agents, I think there were 30 of them in this independent company at the time, sitting around this table, pounding their fists on the table, snarling at each other, because they were chunking up the territories that they were going to use to farm. And so this was my territory, this is your territory. Obviously, I don't even know what the heck's going on. So I got some garbage territory. Way out in the hood of the Lake.
That was the way that you used to protect your territory. You used to farm it. You used to send out mailers and you would try to stay top of mind. And if you were in a brokerage where you guys had territories, you'd want to keep everybody else out of your territory. Obviously, all the rest of the agents could compete. But that was the idea, that was the goal. And today, the only thing that someone could do to combat this, is to farm their database. And a database is the same as farming a territory. It's the same concept, it's just the digital version.
And that was our back and forth joke. The big dogs don't worry because they have such massive databases that they have spent a long time, curating a long time, spending a lot of money on, that they know they have this brand recognition, top of mind consciousness, and they have this pack of audience, people who are paying attention to them whenever they send out correspondence and information, especially as it becomes contextual. Which if they're looking to buyer sell, now all of a sudden that newsletter that they've been sending out for the past five years becomes relevant, or whatever offer they're putting out into the market to that database.
The idea of having a database and farming it digitally is something that for some people, it sounds so daunting, and it's like, "Well, if I was going to do that, I should've done it." The old saying is the best time to plant a tree was 20 years ago, second best time is now.
And to get in front of these people that are going to do exactly what we're talking about, before they come into your market is the key. Having that database of those people who have raised their hand and giving you permission to call them, giving you permission to email them, giving you permission to text them, giving you permission to market to them, because it is permission based marketing that we like to prescribe and personally subscribed to. That is the real key to making sure that you're able to combat these people.
And you have to understand, when they do come into your market, which they will if they're not there already, the offer is too sexy for them to not at least check it out to discount. That's what I learned with the guaranteed sell program.
We had three top agents in my market. And you had to call one of every three. Almost every seller did. They would want to interview three agents. And so I was able to crowbar my way into that mind share, so they'd have to call me too because the offer was too sexy to discount. And so it'll be the same thing with this.
But the truth is, there's going to be a lot of people who aren't interested in this, that aren't takers. They're going to be a lot of rumors out there too, that are like, "Oh, they just low ball offer you." They are going to be a lot of people who don't take action because of those rumors.
And so it doesn't really change the strategy necessarily. It just makes the strategy that much more important. And it probably will thin the herd, so to speak, as far as agents are concerned, depending on the market that they're able take you. Regardless, the way to combat this is to make sure you have that relationship with a large database in your market.
And I will always try to beat this into people's heads, of the bigger database. If you do a good job marketing to your database, that's the most valuable asset that you own, with a doubt. That has the most value to you, monetarily.
Well, for the old school agents out there, we used to call it a book of business. It'd be like your people that you've done business with that you're going to continue to do business with. The difference is, these people, there's more of them, it's way easier to touch them now, because it cost you nothing to send out an email. Costs you nothing to send out a text message or a no ring voicemail. Maybe a few cents, but in comparison, doesn't cost you really jack to stay in touch with them.
It's just much bigger. It's just a much bigger sphere of people that are paying attention to you. And any large agent, any mega agent, guaranteed they have a mega database. You know what I mean? There's no question about it. And the way to do that quickly and to build yours today, right now, as we're broadcasting this, is through direct response marketing, pay-per-click marketing.
With Open Door, they already have a pretty good concept. They can adapt. They've now got crazy brains that are going to be on this as well. Right now it's one of the better markets. It has stayed hot through this crazy pandemic. The time on market keeps shrinking and all that stuff in most markets.
If you are sitting back and waiting, now is the time to be like, "Okay, let me make a business out of this. Let me go all in with creating a real business." You know what I mean? And not just dabbling into helping some people out and doing my 10, 15, 20, 30 transactions. Create a business that's lasting. You know what I mean?
That was the one thing that I keep taking away from conversations with Jim over the weekend a couple weekends ago. He's willing to put a hundred hours into new agents that are coming into his brokerage because he's got one goal in mind, trying to collapse what took him 10 years into people to do in two. And plenty of ways that you can do that. And now is the best time to do that. And based off of what I read this morning from Inmans thing, Gary Keller was predicting a year or two of some rather changing, to get a little bit tougher here. He called it tough times, not rough times, tough times of a year and two, which I'd be interested to actually read that and see why he's thinking that.
Even two years ago he was predicting the tough times and it didn't happen. His business grows in tough times. So I think he's waiting for them. You know what I mean? Because people who are at other models don't have to have the overhead.
Listen, it's always good to be prepared for tough times. The problem with that, in my opinion, is you never become offensive to go and take advantage of the good times.
We've had one hell of a run here with the real estate market since the last little boom. And then I think even us, when the pandemic hit, it got into scary mode, especially with all the forbearances and all that stuff that was happening.
Which there's a good argument for that, still being a huge factor and possibly a glut on inventory, which would turn it back into a buyer's market and have downward pressure on pricing. But who knows? It doesn't matter. The strategy's the same.
That's my point. There's no better time than right now. The same thing that you were just talking about with the trees. The best time was to start 20 years ago, the second best time is right now.
Spend all the money. The budget can be a fraction of the budget and have the same outcome, which has been our whole goal this whole way. The biggest difference between someone that's not scared of someone coming into the marketplace, because they've got 11% market share in their place, 17% market share in their market. They're not worried. It's just a little dent. They've gotten business like that. That's something that they can really sell, like what you did at the Lake.
If you can do that, that's the whole point of what we built with Market Maker, is to be able to just turn key that in a way that keeps you focused on being face-to-face with people, which is what you get paid the most amount of money to do, but have us be helping with the assembly line of keeping people coming to get in front of you.
And also that relationship with your database, it's automated. When I tell people about what we do, they're like, "What? And the appointment just goes on their calendar?" I'm like, "Yeah, yeah." They're like, "That has to be the greatest thing ever for an agent." And I'm like, "We like to think so."
If you want some help with this stuff, go to marketmakercall.com. Watch the short video on how we help you build that database. We call that generating leads. Nurture that database. That's staying in touch with the database, keeping top of mind consciousness with them. And then ultimately, deliver them to your calendar as an appointment that's pre-positioned. In other words, they know something about you, they know who you are. You are positioned as an expert here In your field, somebody who's not just chasing them all around the place because they filled out a form on the internet. Again, if you'd like some help with these things, go to marketmakercall.com, check it out. It is exclusive. There's one agent per zip code. Marketmakercall.com
Go get it. Like we always say here at Market Maker, you are always just one pre-position appointment away.