(Above) Ryan Schneider, President & CEO, Realogy (Photo by Joseph Jerman)
How Ryan Schneider Is Transforming America’s Largest Residential Real Estate Company
Editor’s Note: This is the cover story in the December issue of RISMedia’s Real Estate magazine. Subscribe today.
With change happening too fast to keep up with, trying to hold onto the real estate business as we know it could be a short road to demise.
That’s why, with six franchise residential real estate brands—Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Corcoran Group®, ERA® and Sotheby’s International Realty®—and more than 300,000 affiliated agents within his purview, Realogy President and CEO Ryan Schneider is fast-tracking transformation at the country’s largest provider of residential real estate services.
Although he stepped into the CEO role less than two years ago, Schneider is no stranger to steering corporate giants through consumer-driven change, thanks to his years at Capital One. Perhaps it’s this outsider’s perspective that has helped him to clearly see just how and why the real estate industry has evolved to where it stands today.
“Consumers are increasingly raising the bar in our industry and others by wanting more, faster, better in whatever experience they’re having, including the home-buying experience,” says Schneider. “The real estate experience needs to be better for the consumer, because that will make agents better.”
And according to Schneider, no one is better positioned than Realogy to help agents deliver the experiences consumers are now demanding.
“First, we have the scale,” he explains. “We have a very large presence nationally that allows us to partner with people who also want to be national. We also have the diversity of brands to try different things to appeal to agents and consumers. We also have an incredibly strong financial position that gives us the ability to invest in and support technology. We have all the pieces to make agents more successful.”
Redesigning Real Estate for Consumers Realogy’s intent is not change for the sake of change. On the contrary, Schneider is leading the transformation of the company based on three critical factors that are converging to drive change. Not surprisingly, they all lead back to the consumer.
“First, despite all the predictions about the demise of the agent, consumers are using agents at higher rates than ever because of the complexity, rarity and financial size of the house transaction,” explains Schneider. “Consumers are placing more value than ever on the agent who can shepherd them through this rare transaction.”
The second factor involves technology…or the lack thereof.
“Bluntly, real estate is behind so many industries,” says Schneider. “We should be using technology to support the agent and the consumer and create a better, easier and faster transaction. We need to deliver products and innovations that help both consumers and agents have a better experience.”
The lag in technology, in fact, has fueled much of the disruption the industry currently contends with; but Schneider sees that as a good thing. “This industry has a lot more opportunity to provide great products and help agents do things faster and more efficiently. We want to be the leader in that kind of disruption.”
On the other hand, financial disruption from big-capital investors is bad for the industry and bad for the consumer, says Schneider. “It’s had a negative outcome for the consumer in the form of higher fees and lower bids on houses. Half of the six biggest real estate companies operate at a loss, and, over time, that can’t be good for agents and consumers. You can’t be sustainable if you’re not profitable.”
“The top five brokerage firms have less than 15 percent marketshare. If you look at the top five of anything in any industry, there is usually much more consolidation. I believe there will be more consolidation in the residential real estate industry, as well.”
With the landscape thus laid out, Schneider is ready.
“We’re excited to compete,” he says. “We believe the things we’re doing on the product side and the technology side combined with our strength as a company financially will create a winning formula as the industry goes through consolidation and growth.”
Jumpstarting Change With Revolutionary Partnerships To help fast-track transformation, Realogy has introduced a quick succession of high-level partnerships—many with big-name consumer brands—over the last several months. According to Schneider, these unique alliances are designed to create higher quality lead generation and give agents the ability to deliver a better experience for consumers.
“In the industry to-date, companies have focused on either consumers or agents,” says NRT President and CEO, and incoming Coldwell Banker CEO, Ryan Gorman. “We know we serve agents, but because of our size and scale and technology prowess, we’re able to deliver incredible value for the agent to give to the consumer.”
Realogy’s collaboration with Amazon to create the TurnKey program is a perfect example of delivering value to the consumer via the agent. TurnKey matches up potential homebuyers with a select Realogy brand agent. If the consumer purchases a home with that agent, they receive up to $5,000 worth of Amazon Home Services (gift card) and smart home products (delivered directly to their new property and installed).
“You have to leverage what is uniquely you…what no one else can replicate,” explains Realogy Franchise Group President and CEO John Peyton. “And what’s unique about Realogy is its size and scale. Companies like Amazon want to do business with us, and that opens up new channels to consumers.”
TurnKey is also Realogy’s way of bringing lead generation to the next level.
“Leads that come from portals like Zillow are low quality, typically converting at 1 percent,” says Peyton. “The new phase of lead generation involves partnering with firms where technology not only helps us identify the lead, but helps us nurture them so that when they’re assigned to the agent, they’re higher converting.”
In 2020, Realogy will also begin rolling out its recently announced affinity partnership with AARP, incentivizing the organization’s 38 million members with a cash-back reward (or commission discount or gift card) for working with a Realogy brand agent when they buy or sell a home.
Again, Realogy’s size and scale comes into play as a distinct advantage. As Schneider says, “The benefit of being large around brand, technology and data, and being able to deliver products or benefits, is important because people like Amazon or AARP are going to want to partner with only those companies that can reach members.”
“These programs give our agents something brand new to talk about and bring to the listing presentation,” adds Peyton. “They’re designed to generate new, higher-converting leads. With TurnKey, for example, we’re pleased to see that the conversion rate is already significantly higher than 1 percent.”
According to Head of Realogy Product and Innovation Group Simon Chen, Realogy’s partnerships are also designed to build relationships between agents and consumers—and according to the statistics, that’s urgently needed.
“In 2011, about $30 million was invested in what is now known as proptech,” says Chen. “In 2018, that number jumped to $12 billion.”
But the more compelling statistic for broker/owners should be the one that comes from the National Association of REALTORS®, says Chen: 90 percent of consumers say they would use the same real estate agent again, but only 12 percent do.
“We want to build solutions to help agents stay connected more meaningfully over the tenure of the homeownership cycle,” Chen explains. “Technology that helps them create a higher level of engagement.”
Technology programs like these are not just designed to offer a unique service to consumers, but to position agents as a resource outside of the transaction.
“We have to transform the agent’s website to something much more immersive,” says Chen. “The agent’s website must become the persistent online homeownership resource as opposed to a transaction-based experience. There are a lot of relationships that can be teed up for the consumer that can be literally anything related to homeownership. That way we expand the real estate agent’s role and theater of operation across the homeownership lifecycle.”
Transforming the iBuyer Experience While the industry debated the intent and ramifications of iBuyer programs, Realogy went to work on creating a solution it felt served the needs of all parties involved: consumers, agents and brokers.
“For some relatively small, but important segment of consumers, there is an extreme need and willingness to pay for a different experience when selling a property,” explains Gorman. “We entered the iBuying space and began to learn more about consumers’ needs. What we learned was that a vast majority of home sellers have a high desire for the peace of mind that comes with a cash offer, but they are best served by a traditional real estate agent.”
To create this best-of-both worlds scenario, Realogy teamed up with Home Partners of America to launch RealSure this past October. With two components aimed at both the home-selling and home-buying consumer—RealSure Sell and RealSure Mortgage—Gorman says the program is a “natural evolution of the iBuyer experiment.”
RealSure Sell aims to safeguard the consumer in the iBuyer situation by providing a cash offer while still allowing agents to list the home during a 45-day timeframe to gauge the best value. If the home does not receive a higher offer while on the market during this timeframe, sellers can either accept the cash offer or reject it and continue with the traditional listing methods. On the other side of the transaction, RealSure Mortgage allows consumers to leverage their RealSure Sell cash offer to make an offer on their next home even before their existing property is sold.
“Listing agents are excellent advisors on how to position a home at the right price to sell it in the shortest time,” he explains. “Sometimes homeowners are reluctant to invest in ways that will maximize income from the transaction. In those instances, RealVitalize allows the agent to step in and leverage Realogy’s relationship with HomeAdvisor to help make the property ready to sell, and save the home seller from the financial burden until liquidity.”
Through RealVitalize, a homeowner who lists their home for sale with a participating brokerage company will have the option to make non-structural home improvements and repairs using a service professional from the HomeAdvisor network. The brokerage will cover the upfront costs of the repairs, which will be repaid by the seller when the property sale closes, or the listing expires.
Programs like RealSure and RealVitalize, while providing very specific benefits for consumers, provide Realogy affiliated real estate professionals with important competitive differentiation.
As Gorman says, “An agent’s best advantage is themselves—their experience in the market. Programs like these allow them to bring value to consumers in ways that are surprising and delighting.”
Redesigning the Tech Engine
Behind Realogy’s programs and product launches is a revamped technology engine designed to enhance—not compete with—the agent’s relationship with consumers.
“Technology doesn’t replace high-value, complex things like real estate agents shepherding people through a transaction that happens only once every 5-10 years,” explains Schneider. “A lot of technology actually makes people into superheroes.”
In order to create an environment in which the best technology solutions can be created and thrive, Realogy has embraced an open architecture platform. The goal is simple: provide the necessary flexibility for brokers and agents to personalize technology for their individual needs.
“At our size, you can’t build something that will work for 100 percent of the people,” says Chen. “We are building an open framework API so other offerings will work with the Realogy platform. This will give our brands a lot of flexibility. We’re enabling brokers and agents so they can grow their business their way. That’s our role as an operator—to provide the tools to help them succeed.”
Fueling the effectiveness of Realogy’s technology offerings is the depth and breadth of its data. “We’ve learned that no matter how magical or dynamic your product is, if it’s garbage in, it’s garbage out from a data perspective,” says Chen. “That’s why organizations like Upstream and RESO are trying to create consistent data. But from our perspective, because of our scale and reach, we’re able to leverage the most accurate, timely data in the industry so that our brokers and agents won’t have the issue of garbage in, garbage out. In effect, we have our own version of Upstream.”
The End Game: Transforming the Experience for Agents and Consumers
At the end of the day, Realogy’s partnerships, programs and technology strategies are aimed at one thing: giving franchisees and agents what they need to create a relevant value proposition and enhanced experience for today’s consumer.
“Realogy has deep roots in serving agents and owners with tools, technology and marketing to make agents more productive and profitable,” says Peyton. “Whether it’s AARP or Amazon or Home Partners of America, these large national partners offer agents a way to get closer to the consumer in a way that I think only Realogy can.”
“A lot of what we rolled out surprised agents and franchisees,” says Gorman. “They are surprised that we are innovating so rapidly and taking risks, and moving the industry forward as quickly as we are. They view the company as helping them differentiate themselves and serve the consumer in ways no one else has been able to.”
“Our agents are fighting for consumers every day,” says Schneider. “We are creating more tools to help them fight, to help them stand out.”