HOUSINGNEWS REPORT
DATA-FED DISRUPTION IN REAL ESTATE
VENTURE CAPITAL DOLLAR VOLUME IN REAL ESTATE TECH
$12,600,000,000
$4,200,000,000
$1,800,000,000
2015
2016
2017
SOURCE: RE: TECH REAL ESTATE TECH ANNUAL REPORT 2017
in partnership with agents and brokers,” he says of the Instant Offers initiative. Rascoff also provides an example of how the company could conceivably generate $1 billion in profit from Instant Offers. “Given the enormity of the U.S. residential real estate market, the potential total addressable market for providing homesellers with a service such as this is significant. There are 5.5 million annual home sales at $1.8 trillion in annual sale volume,” reads the Rascoff statement. “It’s too early to estimate how many sellers might choose to sell in this way or what our typical net profit per transaction might be, but as an example, if 5 percent of sellers select this method, that is 275,000 transactions. For illustrative purposes at scale, using $250,000 as the typical home value, a $3,500 net profit per transaction would result in a nearly $1 billion profit opportunity annually.”
“We sell ads, not houses.”
IN 2015
“We purchase the home, do all the work a seller would do, and put it back on the market in short order, in partnership with agents and brokers.”
SPENCER RASCOFF CEO OF ZILLOW
IN 2018
That $3,500 net profit may be a bit ambitious based on Zillow’s first home purchase, which is now listed for sale with an asking price of $425,000 — just $15,000 above the purchase price. A listing commission of just 3.5 percent would alone wipe out any profits, not to mention any needed renovation costs and carrying costs such as property taxes. But it’s the bigger picture represented by the $1.8 trillion in annual home transaction volume attracting disruptive business models and the capital funding those disruptive models. Total funding to real estate tech startups in 2017 was $12.6
billion in 347 deals — up 200 percent from $4.2 billion in 2016, according to RE:Tech, real estate tech research marketing agency. Highlighted below are four companies representing four distinct business models threatening to disrupt the predictive listing models, and off-MLS marketplaces. Although each company is disrupting a different niche of the marketplace, the common theme among all four companies is the heavy use of data and technology to fuel the disruption. traditional real estate industry: iBuyers, discount brokerages,
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JUNE 2018 | ATTOM DATA SOLUTIONS
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