Now that we have partnerships such as Realogy and Amazon and OpenDoor and Redfin, it seems like a good time to consider how real estate players create market share, seize market share and maintain market share in order to compound business growth, leverage data and dominate or “make” the market.
Think first of Airbnb or Google Assistant in the AI market, suggests Andrew Flachner, president and co-founder of RealScout, in a recent piece for InmanNews. Airbnb, launched in 2008, completely revolutionized the hotel, vacation rental and long-term rental markets by slowly and steadily adding “hosts” who rent out rooms, cabins, garages, entire homes to “guests” both nationally and internationally. Today, Airbnb dominates the alternative accommodation market and “owns” 20% of the entire US lodging industry with its 5M listings and 250M monthly visitors to its website.
Airbnb achieved its market share dominance by, from the get-go, creating a bot that automated posts on Craigslist and hammered away at Craigslist viewers until those viewers finally clicked into Airbnb. (Of course, Craigslist could have sued Airbnb for this infraction but didn’t.) And now, because of Airbnb’s current, dominant market share, Morningstar Equity Research predicts that the company will raise its market share to 45% in 2022.
Google Assistant, according to Flachner, created its market share dominance via data. Google Assistant’s data amount and data quality that kick-start a “learning loop” are self-fueling. The more viewers that get better data faster, the more viewers use that data for more purposes and the more Google Assistant can provide better services.
The real estate business is no different than Airbnb or Google Assistant when it comes to market share. Once a brokerage hits a tipping point in terms of market share, it becomes more and more difficult for competitors to “catch up.”
Right now Zillow has 195M viewers/month coming to its website, realtor.com has approximately 90M/month and Redfin has approximately 35-40M/month. Redfin is hoping to capitalize and grow that 35-40M by partnering with OpenDoor. And Realogy is hoping to grow its market share by partnering with Amazon, a business that has 2B monthly visitors.
Compass is hoping to be able to trade capital for rapid growth. The company “offers” sign-on bonuses to “acquire” more agents in order to capture more listings to capture more buyers to capture more sales. Independent brokerage firms are joining forces in order to “pool” their networks and data in order to create and seize more market growth. In places such as Miami, Orange County, San Francisco and New York, this “joining forces” strategy is capturing anywhere from 20%, to 16%, to 32%, to 45% of the respective real estate markets.
How does a business know when it has reached a tipping point for market making and data dominance? According to Flachner, the business has either minimum value liquidity such as Airbnb with its exclusive hosts and listings or exclusive amounts of supply and demand or it has minimum viable data sets such as Google Assistant’s supply and demand for the best and fastest available data.
Whatever you as a real estate agent/broker/iBuyer choose to do, Flachner believes that now is the time to act because now is the time the real estate market is “being revolutionized.” Either watch as big players acquire agents and brokers and companies and market share. Or join forces with other brokerages to unlock agents and data and consumers that no one new player into the market could ever do.
Either way, according to Flachner, now is the time to capture your market share, seize it and maintain “your” market.