A Brief History of the Realty Industry & iBuying
A Brief History of the Realty Industry & iBuying
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Realtors formed what became the modern mortgage and home sales marketplace.
Realtors formed what became the modern mortgage and home sales marketplace.
- In 1908 the National Association of Realtors is formed
- NAR had 120 founding members, 19 Boards, and one state association
- In 1916, NRA’s name is changed to The National Association of Real Estate Boards (NAREB), and the term “REALTOR,” is coined.
- Over the next 30-40 years, this group significantly consolidated power affecting policy and land development practices, specifically, they helped to create the FHA to their liking, who codified subdivision standards that privileged certain actors (NAREB’s community of builders).
"The most important institutional change during this time was in the area of real estate finance. Previously, people purchased homes with personal savings, but at the turn of the twentieth century the self-amortizing mortgage emerged."
As savings and loan associations, life insurance companies, and other financial institutions grew their businesses, members of the NAREB would bring prospective borrowers to these institutions, thus “brokering” the deals."
Today, NAR's membership increased to just under 1.4 million as of year end 2019. It claims to be the largest trade association, comprising real estate brokers, salespeople, property managers, appraisers, counselors as well as others in the real estate industry. Members belong to one or more of the 1,300 local associations/boards and 54 state and territory associations of Realtors or to one of 87 cooperating associations in 66 countries.
Enter iBuying: Traditional Brokers & Zillow Collaborate
Enter iBuying: Traditional Brokers & Zillow Collaborate
In 2017 residential commission revenue was close to $75 billion. Zillow (and others) wanted in on the action.
In 2017 residential commission revenue was close to $75 billion. Zillow (and others) wanted in on the action.
Zillow was started in 2005 by Rich Barton and Lloyd Frink. Drawing from their previous startup, Expedia Group Inc., they wanted to make home buying more transparent for consumers.
But transparency doesn't equal cheaper: Zillow charges 6 to 9 percent on commission.
Moreover, Zillow’s flagship revenue stream sells ad space on its site to traditional brokers. These ads, of course, are to be seen by visitors checking “zestimates.”
iBuying currently accounts for less than 1 percent of the $1.6 trillion worth of annual real estate transactions in the U.S., but that number is expected to rise.
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