![\"commission_chart\"](\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/commission_chart.png\")
<\/a><\/p>\nRentHop<\/a>, an apartment search marketplace founded in 2009 [2], started with the premise that real estate agents were no longer adding enough value to justify high transaction fees. \u00a0Three years later, after many business model pivots and skirmishes with the brokerage industry, RentHop finally embraced the real estate professionals. \u00a0Today, this company and a slew of peer competitors earn a majority of their revenues matching buyers to brokers.[3][7][14]<\/p>\n What Does a Broker Do Today?<\/strong><\/p>\n To analyze the potential digital transformation of the real estate industry, we first decompose and group broker services by potential for technology disruption.<\/p>\n Easy to Automate<\/strong><\/p>\n The above items are considered low-hanging fruit and “easy” to automate. \u00a0Numerous tools and services already exist to perform the above tasks. \u00a0However, a first-time home buyer still needs to know which website or app to use, and learn how to properly use it. \u00a0For each new technology that enables consumers to analyze real estate more effectively, it adds to a list of skills expected from a seasoned professional. \u00a0For those unwilling to invest the time to research the latest resources, the agent becomes even more valuable!<\/p>\n Possibly Automate,\u00a0with Caveats<\/strong><\/p>\n Some tasks are easy to automate in theory, but two decades of innovation have not yet shown promising results. \u00a0Marketing platforms are always changing at the rate of technological innovation, and real estate agents seem\u00a0best at evaluating and adopting to the latest trends (and we see lots of variability in skill of adoption [11]). \u00a0Are humans or machines quicker about switching to the next new mobile, social, or virtual reality advertising platform? [14]<\/p>\n On the scheduling frontier, every year dozens of new startups launch hoping to be \u201cthe OpenTable of real estate.\u201d The plan is to aggregate all the sellers and agents in town, post the inventory with available showing times, and have buyers schedule viewings without dealing with a human (maybe a low-cost assistant shows up for the touring portion to represent the seller).[8]<\/p>\n The analogy has two major flaws: \u00a0The stakes are vastly different when shopping for dinner home for the next many years. \u00a0More importantly, a restaurant customer is very likely to show up and purchase food. \u00a0However, a customer who tours an apartment only has a very low probability of transacting (agents show homes all day long and are\u00a0happy to complete just a handful of deals per quarter). \u00a0The low conversion rate makes the economics of a broker model more desirable for sellers to seek help. \u00a0Many agents schedule many showings in a crowd-sourced fashion, but only one winner receives a commission check.<\/p>\n Difficult to Automate<\/strong><\/p>\n The true challenge\u00a0acknowledges that finding a home is as much an emotional decision as it is quantitative. \u00a0Individuals\u00a0have unique utility functions, yet can’t articulate or understand all the components (often making irrational decisions in the heat of the moment). \u00a0A skilled agent carefully re-evaluates the search\u00a0during their interactions through a series of explicit questions (what did you think?), passive observation (looks like the small kitchen turned her off), and deduction of revealed preferences (I wonder why this house excites them). \u00a0The agent decides whether to make significant adjustments to the search, or in extreme cases, politely cease working with the client.<\/p>\n The extreme variability in broker incomes also suggests that client interactions require skill and are\u00a0not merely a commodity. In most US cities, the median agent earns between $30,000-$50,000 a year while top agents earn over $200K\u00a0(in high-demand markets, the dispersion can be 10x or more). \u00a0Among the many explanations for earnings variability, the most important difference is the agent\u2019s closing rate — the number of houses sold or leases signed per year.<\/p>\n For now, brokers can distill for us a process that\u00a0so far hasn’t been properly\u00a0captured in a database schema, a block of text, a set of photos, or even a virtual reality tour. \u00a0(Word Count: 797)<\/p>\n <\/p>\n [1] US Department of Justice: Competition in the Real Estate Brokerage indsutry [2] RentHop (Wikipedia) [3] Getting the Agent Without the Fee [4]\u00a0 RentHop: Easier Apartment Hunting Without the Broker Fee [5] Want to Disrupt an Industry?\u00a0 Try Actually Working In It First [6] RealtyHop Helps Investors Find Underappreciated Rental Properties [7] With Revenue Tripling, RentHop Makes Apartment 性视界 Smarter [8] Oliver, A New Apartment Finding App Cuts Out The Middleman [9] Inman News, Real Estate Agent Salary: High-tech Agents Lead the Pack [10] National Associate of Realtors, Field Guide to Working with FSBOs [11] NYC Broker Leaderboard (timely response rate to online inquiries)\n
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\nhttps:\/\/www.justice.gov\/atr\/competition-real-estate-brokerage-industry<\/a><\/p>\n
\nhttps:\/\/en.wikipedia.org\/wiki\/RentHop<\/a><\/p>\n
\nhttp:\/\/www.nytimes.com\/2009\/02\/08\/realestate\/08rent.html?_r=0<\/a><\/p>\n
\nhttps:\/\/techcrunch.com\/2009\/07\/11\/renthop-easier-apartment-hunting-without-the-broker-fee\/<\/a><\/p>\n
\nhttps:\/\/www.fastcompany.com\/3001334\/want-disrupt-industry-try-actually-working-it-first<\/a><\/p>\n
\nhttps:\/\/techcrunch.com\/2015\/05\/20\/realtyhop-helps-investors-find-underappreciated-rental-properties\/<\/a><\/p>\n
\nhttp:\/\/www.forbes.com\/sites\/petercohan\/2012\/12\/20\/with-revenue-tripling-renthop-makes-apartment-search-smarter\/#37d3bf5177ec<\/a><\/p>\n
\nhttps:\/\/techcrunch.com\/2015\/07\/28\/oliver-a-new-apartment-finding-app-cuts-out-the-middlemen\/<\/a><\/p>\n
\nhttp:\/\/www.inman.com\/2012\/02\/14\/survey-high-income-real-estate-agents-lead-pack-tech\/<\/a><\/p>\n
\nhttp:\/\/www.realtor.org\/field-guides\/field-guide-to-working-with-fsbos<\/a><\/p>\n
\nhttps:\/\/www.renthop.com\/nyc_broker_leaderboard<\/a><\/p>\n