3 Reasons This is the Beginning of the End of Real Estate as We Know it

by | BiggerPockets.com

The world as it stands today is moving at a rapid pace, and if you’re not willing to adapt, you’re probably going to lose.

Adapt or Be Left Behind

The first message here is you have to adapt to the current economic climate. We’ve now seeing things like augmented reality, virtual reality, artificial intelligence, and robotics. Amazon, Uber, Airbnb, and more are taking over. It’s truly revolutionary. Even the cryptocurrency world is a factor.

Still, one industry that has yet to be fully disrupted is real estate. Yes, there are a lot of apps in the real estate world, but it really has not been disrupted. If you look at how a transaction has been done for hundreds and hundreds of years it’s kind of the same, right? You have a real estate agent who lists and sells your home. The real estate agent has to peg their name to a broker, and then the title company performs the transaction. There’s no rocket science here. It’s pretty much status quo. I think that is going to change quickly. Here are the top three changes that I see happening.

3 Reasons This is the Beginning of the End of Real Estate as We Know it

1. Title companies will go out of business in the next five to 10 years.

That’s right, title companies are done. And you know what is taking over? Blockchain. Now, everyone is caught up in the bitcoin frenzy. I personally do not believe in bitcoin or any other cryptocurrency, and let me tell you why. During the dot com bust, you a ton of websites went out of business and the dot com bubble exploded, but there were still companies like Amazon and eBay that thrived and are still killing it. Now, which cryptocurrency is going to last through the crypto bust? I don’t know, but one thing is for certain: Blockchain is here to stay.

The blockchain is an honest, centralized system. It’s a higher force that can’t be manipulated and is less likely to be hacked. So many title companies make a lot of mistakes, take a long time to pull the title, and aren’t streamlined or accurate. Blockchain, in my opinion, could help eliminate those uncertainties. It will help ensure everything gets done in live time. You will be able to pull the deed to a property immediately. Everything will be done virtually, without error, and it won’t be controlled by anyone in particular.

Related: 4 Ways Technology is Shaking Up Commercial Real Estate (& Why Multifamily Will Pull Ahead)

2. Brokerages will become extinct in 10 to 20 years.

Why? Well, it’s quite simple. Have you met an agent who likes their broker? The majority of agents say, “They give me nothing, but they take away everything.” Guys, brokerages are taking their agents for granted. They offer them this big brand, but they don’t really provide any value, give any support, offer any training, and there are still a lot of agents out there who don’t know how to do their business successfully. Then agents started getting a bad reputation.

There is a big stigma out there that consumers don’t like real estate agents. So I think that there is going to be a company just like Uber that is going to go into every city and state and changing the legislation. In most states, Uber changed the law to where the average citizen can be a taxi driver. Mind-boggling, right? A similar type of model is going to revolutionize the real estate industry and they’re going to lobby to change the legislation to where brokers will be extinct. You are not going to have to put your real estate license under a brokerage. That is my prediction. I know it sounds crazy, but hey, you heard it here first. I think there is going to be some sort or online tech or app or platform that will make sure agents are honest and compliant. But look, brokers are done. They are the middleman, and everyone wants to get the middleman out of the picture. They take their agents for granted, and they don’t offer them any value. So, it is just a matter of time before brokers are completely extinct.

3. Real estate agents are going to be out of business in 20 to 30 years.

Let me tell you why. A lot of real estate agents are now seen as second-hand car salesman. It sucks because I have a lot of buddies that are real estate agents, and I actually own a brokerage, but I think that is the trend in the market right now. If we look at the higher tech markets like San Francisco and New York City, we can already see companies and startups that are allowing sellers to list their house online for a dirt cheap discounted rate. Buyers are able to open up the lockbox because they were allowed access through an online app. They also can submit an offer through the app.

And Zillow, the agent’s best friend, actually started their company because they wanted to completely eliminate agents out of the equation. Granted, I’m a big believer in people. People still buy from people. Good agents sell homes. So I don’t think that agents are going to be out of business anytime soon, but I do believe over the next 20 to 30 years, this could potentially happen. Again, I do believe that buyers and sellers are going to flock to a new, revolutionary platform.

Those are my predictions. Think I’m crazy?

Comment below. I’d love to hear your thoughts.

About Author

Engelo Rumora

Engelo Rumora “The Real Estate Dingo" is a successful property investor, motivational speaker and serial entrepreneur that quit school at the age of 14 and played professional soccer at 18. He is also a soon to be published author along with becoming a TV personality in his very own real estate house flipping show. To find out more go to engelorumora.com . Engelo Rumora has been involved in over 400 real estate deals and founded five businesses in Ohio. The most successful is Ohio Cashflow, a company that specializes in providing turnkey properties in several Ohio markets. The newest venture is List’n Sell Realty, a real estate brokerage based in Toledo, Ohio and soon to be known as the #1 discount broker in the country.

33 Comments

  1. Tammy Vitale

    Well, I love my broker. He has not one but 3 administrative people dedicated to helping his 135 and climbing agents be successful. He runs weekly trainings and bi monthly bootcamps. He is a lawyer with a team of lawyers and they are all available to agents who have questions (even on their personal properties). He sees his agents as his clients. If an agent stays with a broker she doesn’t like, you can’t blame the broker. The good ones are out there. Go find one. Or be one.

    That said, I don’t disagree that agents and brokers both will be mostly obsolete in 20 years for the general public. Those with high dollar properies will hire because they don’t want to deal with it.

    As for technology – when technology makes a mistake it’s usually a BIG one, with lots of people affected. Not sure I’d want my largest expense in the hands of a machine. Title companies are human and make errors but you can talk to he people there and get them corrected. More often than not they correct themselves.

    What really needs to happen is to educated people as part of, say, high school curriculum, as to the players in a real estate transaction and how they’re supposed to play together. I didn’t know until I became an agent. THAT would be a very helpful change.

    • Engelo Rumora

      Thanks for your comment Tammy,

      The good brokers are unfortunately a dime a dozen.

      Also, I’d trust a “machine” to do a better job than a person.

      I love people but tech truly is taking over and there is not much we can do about it.

      Much success

  2. I tend to agree (and I’m a licensed broker). I recently bought a home through a major online auction site (Hubzu), no brokers or agents needed. After bidding and winning, it was a 30 day close, boom, done. To be fair, I was probably more comfortable with the process than a first-time home-buyer (because of my real estate background), because there wasn’t any hand-holding during the process. However, the deal was amazing, quick and efficient. So, I agree, technology is going to continue to eat away at the “old” real estate sales model and may eventually totally replace it.

    • Engelo Rumora

      Thanks for your comment Kat,

      I’ve bought quite a few properties from Hubzu.

      The only issue with them is they outsource the closing process to off-shore personnel.

      Hubzu is just one of the many platforms.

      Google “Blockhain Real Estate Startups” if you really want to frea out lol

      Much success

    • Curt Smith

      Don’t forget the gorrila in the room auction shop, auction.com

      They’re farthest along with bringing retail directly into buying their primary residence.

      True, today auction.com look and feel is targetting investor buyers with their too visible trustee auction houses being too hard to differentiate from REO bank owned. When the roll out (??) retail listings targeting retail buyers with financing, they will need a look and feel change. But they’ve already have the transaction plateform, something zillow hasn’t even started. Zillow is nice even essential but whats needed is the automation to handle the value determining process, the bidding process for retail. Needs hooks into closing attorneys/title offices and of course the lenders have to get comfortable with the P&S coming out of an auction site.

      I doubt these guessed time frames will in reality take that long. I’m hoping it’ll happen faster and I bet a lot of folks are too. IE there’s forces pushing, and its helpful to have demand pulling these changes too.

  3. karen rittenhouse

    Engelo:
    I love this post. I’ve been saying this for years.

    And I actually believe brokerages and real estate agents will be gone even sooner. Agents are dinosaurs and need to be looking for an alternative career. More and more people (including my 28 year old son) are buying and selling without agents. There is no need for a middle man to contact closing attorneys and inspectors for us. There is no more mystery in real estate that needs to be handled by a “professional”.

    Agreed, this is just the beginning of the disruption.

    • Engelo Rumora

      Thanks Karen,

      I’ve bought and sold hundreds of deals without an agent or a broker lol

      Folks must keep an open mind to these coming changes and they must be willing to adapt.

      Who isn’t willing to adapt, will fail.

      Have a great day.

  4. Joel Owens

    Been hearing this for decades. Sky is falling,sky is falling! lol

    For my commercial real estate business I have been having record year after year. Most consumers are NOT investors. Especially on the residential side they might sell or buy a house once every 3 to 5 years or so. They do not stay on top of changes in the market or legal changes. They want someone to help with the process. The investor purchasing market is a small market overall in the U.S for homes sold. It grew bigger during the down cycle but now regular home sales are coming on strong for home owners.

    Over decades I have seen companies try to do this before and automate everything. Look up history and you can see many companies have tried before and failed. The average agent can easily be replaced because they provide little value to a transaction. Some automation should weed some of those people out. The top 20% are not going anywhere anytime soon.

    The clients I have are ultra wealthy so they want service and expertise. They do not want to do it themselves. They pay people with special sets of skills to do things for them. You can automate things till you are blue in the face but there is a human component to a relationship and a transaction that most buyers want.

  5. I have said agents and brokers will be gone as well (and I am one), and it will happen sooner than you think.

    I see it happening differently though. Title companies will continue to exist, but will absorb agent roles. As soon as the “showing” piece of the process becomes automated (and this is beginning now), then the entire offer, negotiation, and contract piece will be handled at title – when that piece is even needed. More and more people are figuring out how to deliver a contract to title themselves.

    The days of the independent (and amazingly, still unlinked), MLS will be over. NAR will cease to exist, and 6% commissions will die. It will all be flat fee, similar to how title companies operate now. With the showing piece removed from the equation, those flat fees will be quite low. This death of the commission structure is what will allow title companies to survive, at least for awhile. Yes, at some point blockchain could revolutionize how title is verified/insured, but I don’t see that eliminating title companies completely… until (dreaded) Gov’t fully takes over titles role at the county assessor/recorder office.

    All IMO of course.

  6. You’ve thrown a lot of (stuff) on the wall and waiting 20-30 years to see if some of it sticks…….
    As a long time real estate investor I never understood how you had to pay an agent up to 6 percent to sale a 100,000 house which would be up to 6k and the same 6 percent to sale a 700,000 house which would be up to 42k and they are doing the same exact amount of work. In the Oakland Bay Area we have firms that will sale any house for a flat fee or assist you in selling your property for a flat fee. There is even a site where a licensed agent will list your home on the MLS for 200 bucks supply all the forms and make sure you are in compliance but they will not negotiate or answer any questions from any buying side agents on your behalf, they refer all those calls directly to the seller. You can then pay the buyer’s side agent 2-3 percent and thus you have saved 50% or so on commissions, but I recommend this for savvy investors only.
    I do believer agents will always have a place in this business as they provide a valuable service for first time home buyers ,those that require a lot of hand holding, and those that enjoy having a knowledgeable professional at there side. Like most of us that sell/buy Multiple houses per year I have cultivated a relationship with an agent who has agreed to sell my properties at 1.5% and then I pay the buyer’s agent 2.5 percent so I pay 4% maximum and I can live with that most of the time.

  7. Federico Gutierrez

    So points #2 and #3 will directly impact Engelo as he owns his own Brokerage with 7agents….. I think this is FEAR advertising. Out-of-state investors can’t but without a middle man as they need boots on the ground to walk them through the process, provide feedback.

    • Engelo Rumora

      Thanks Frederico but I’m disappointed you think so little of me lol

      I’m invested across numerous companies and industries so I can’t really get affected that easily by “minor” changes like a brokerage or real estate agents becoming extinct.

      Also, my brokerage is actually not a cliche type “real estate brokerage” and is more of a tech company so you’re research there is a bit wrong.

      Out of state investors shouldn’t solely rely on a real estate agent.

      I’ve seen how that goes where the real estate agent just want’s to flog product to make a commission and then the investors are left hanging trying to find a property management company, maintenance people, etc…

      Out of state investors should only be buying turnkey through a reputable company as that is their best chance of success.

      Just my opinion.

      Much success

  8. The industry has already changed radically since I started in the early 90s. At the time we were transitioning from MLS books to a DOS based dial up MLS.

    I agree 110% with this article

  9. Jonny Reck

    I would love to see more disruption, but federal and state governments are so deeply entrenched in real estate that I’m cynical about anything happening soon. New companies can create incredible cheaper and creative solutions, but if dinosaur government policies won’t foster innovation then it’s a long road ahead. Also, the NAR’s powerful lobbying will do everything it can to make sure that disruptions don’t take place regarding brokerages.

  10. Billy San Roman

    Aloha everyone! I am a newbie to investing (if you can even call it that) and to further my knowledge of the industry and the “ins and outs” I thought that it may be a good idea to study and get my real estate license. Even if I do not practice as an active agent this could give me some good knowledge. Given that it seems agents may eventually be phased out (like cabs, love the Uber comparison) would you recommend this as a good strategy? Any other reasons why this would or wouldn’t be the best way to start?

  11. Richard Porter

    I think the extinction of Brokers and Agents is up for grabs – people “hate” dealing with people right up until there are no people to talk to. So, while in the short term it may swing towards automation, my guess is it will swing back. the Brokers and agents won’t just sit back and let extinction happen.

    HOWEVER!!!! – Title Companies… God Forbid they disappear.
    1. On a practical level, would you really want to do a real estate deal without and “escrow” company. I am working in a state without formal Escrow Company laws and after having them in California which does, not having a separate Escrow Company always feels like I’m doing “work around” – Title Companies are my preferred way of doing that. Not sure I’d want to try to do that function solely online.
    2. At the ripe old age of 68 I feel there is a false sense of security concerning the digital universe. Don’t get me wrong, I put up a commerce website in the early 90’s so I am familiar with the upsides. Now, maybe there has been some new tech development I haven’t heard of [I hope there is], but my understanding is that on the downside [hacking aside] all it take is one major sun spot and all the digital info is gone – poof! I’m glad the cities and states hard copy record everything so we have it, but can you imagine trying to do all the re-keying of all that if the servers get wiped? Even if I am wrong, I feel there is wisdom in keeping hard copy backups of everything.
    Take away: Even if working with some people is a pain, don’t get too comfortable relying solely on the “tech”. The veneer of technology [and civilization for that matter] is much thinner that most people think… just as Porto Rico. People will always have to ultimately relay on each other.

  12. Kevin Gomes

    I don’t think any of these professions are going to disappear anytime soon. They have been saying the same thing about the accounting profession but the demand for qualified accountants exceeds the available accountants.

    Real Estate is complicated. Most people in America do not know how to invest and analyze. We are the 1% (or 5%) in knowledge. Real Estate is a service industry and there are people who who need these services. Like all generations, there are Millennials who like to be catered to, and there are those who like to do things themselves (Newer bigger pockets members).

  13. Jason V.

    Look, I like technology as much as the next guy (my full-time job is an Automation Engineer) but I’m becoming more and more convinced that ‘Blockchain’ is just the next buzzword ‘Startups’ are using to sucker money out of ‘Venture Capitalists.’ It’s Blockchain everything. It’s mortgages with Blockchain, it’s eBay with Blockchain, it’s Blue Apron with Blockchain.

    I remember listening to an interview with Ken McElroy a while back where he talked about investing in startups and said “I feel like the hardest any of them worked was to get my investment.” Now all they have to do is say ‘Blockchain’ during their presentation and ‘investors’ just throw money at them.

    That pretty much sums up my entire view about ‘disruptive technology companies.’ For every Uber there’s a thousand Jawbones, Juiceros, and Beepis. And despite the changes in the market Uber has caused, there are still traditional car services – A lot of which has to do with restrictive government regulations, something that’s even more prevalent in the lending sector. So a change that might happen in 3 years in an open market could take 10 or more in a super restrictive market. Or I’m totally wrong, and at the end of the day, even if the real estate market changes drastically, the way I invest in it won’t.

  14. Marshall Hooper

    I like that BP is starting to talk more about blockchain, but even from this article, there is still a lot of bad information going around. Maybe you misspoke, but blockchain is not “centralized”, it’s “decentralized”. It’s the opposite of centralized.

    This technology, buzzword or not, is going to have a profound effect on almost everything we currently do. Mainly because it’s going to eliminate a lot of jobs and save big companies, big money. Blockchain is definitely a buzz word right now, it’s just simply a fancy term for “distributed ledger”.

    • brendon woirhaye

      The “centralized” vs “decentralized” was what inspired me to leave a comment. You beat me to it.

      Blockchains are distributed, open, and transparent. It doesn’t go away if a company’s servers go down, it doesn’t get manipulated by a fraudster behind the scenes, anyone can see the transaction on the chain.*

      That said, they are not a panacea to every problem in the world. They may be a good solution to current slow and private transaction processing systems.

      * in theory – certainly blockchain tech could have defects, a blockchain can theoretically be subverted if the majority of nodes all cheat together, the definition of “everyone” may be limited due to technical know how.

  15. Aaron Peeler

    It takes just one UberEATS experience to know that model canNOT be applied to all services. I can’t possibly say enough terrible things about the service they provide. I was in New York City when I tried it too – the issue was not that the market was not yet developed.

    If food can’t even be reliably ordered and delivered through an app, I’m not optimistic about the prospect off purchasing a home that way.

    Full Disclosure: I own stock in a virtual real estate firm that I work for and I DO plan to sell it all well before the extinction timeline for real estate brokerages proposed here. I do NOT, however, think that Indian customer service reps are going to sell the majority of American real estate any time during my life.

  16. Mary White

    It seems to me that when a new technology takes over, the old one still tends to exist (at least for some time). That being said, my most recent purchase was a cash foreclosure through a bank and I dealt directly with the banker and title company to close on it. My former real estate agent got commission but all he did was submit my offer and hand me the keys. He actually tried to persuade me not to buy the property, which I later found out was because a good friend of his was trying to buy it. I got it on a last minute (highest and best) offer that only got submitted because I called him and demanded that he get it in. I would love to have a non-biased app or other program to deal with over a person that I can’t trust. That being said I now have an honest and hardworking agent and I’m happy to pay commission for her services. I can’t see them going away completely, just evolving.

  17. Karl B.

    I think it depends on the realtor. 10% of realtors sell 90% of the properties. We’ve all heard that. And it’s true, IMO. If a realtor brings an investor good deals, they’ll flourish (both of them). Yet most realtors (in the area I invest in, anyways) fail to do this. I find 100% of my deals on my own. It’s amazing as the last deal had a selling agent (who became the dual agent and enjoyed that 6% commission) and I told him to contact me with more deals and I haven’t heard back from him.

    I would of course embrace any realtor who brought me killer deals in my area.

    With technology and super teams, the realtors who are driven will continue to sell more properties, furthering their success and reputation. And the typical, lazier realtors will be left in their dust.

  18. John Murray

    I was sitting in First American Title yesterday. The big screen TV was giving the history of the company started during the Gilded Age in Southern Ca. As I signed the boring documents once again for the I don’t know how many times, recorded funded and blah, blah. Discussing IRS tracing rules once again and the Title Officer knowing nothing about them. She has 25 years there and I was not surprised by the ignorance. I always have this conversation, with other subjects like electronic recording, sub prime crash, Deeds of Trusts and the like. I think the Title Company function is necessary, most do want a Warranty Deed but the masses and the Tile Company employees are just that employees. I don’t think Title Company employees know that their livelihood is in danger, although all the ladies were dressed nice in holiday attire. Oh well I’ll swing by and get my money.

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here