The vast majority of buyers still purchase homes through a real estate agent, but many begin their search online, where people browse listings and look at pictures and fiddle with tax and mortgage calculators to get a sense of what they can afford. This has prompted a number of companies to start nudging buyers and sellers toward online transactions as well.
Companies like Zillow, Redfin and Opendoor have started “instant buying” programs that offer cash and a quick close to sellers, cutting real estate agents out of the process. Redfin, the Seattle-based real estate brokerage firm, said in May that it would let buyers bid on properties on its website — “a buy button for real estate,” according the company’s chief executive, Glenn Kelman.
Realogy has an instant buying program, too, but still has a lot riding on the traditional brokerage model. The company’s stock has plunged by more than half over the past year as it faces competition from instant buying programs and start-up brokerage firms like Compass that are lowering the commission splits that traditional brokerage agents make their living on.
The TurnKey program, which is similar to incentive deals that retailers like Costco and others started offering decades ago, is what people in the real estate business call “lead generation.” Real estate brokers generate a little over $100 billion a year in commissions, and buyers who close are worth several thousand dollars to an agent’s bottom line. The problem is, most home shoppers do not close but burn up time that brokers could be dedicating to more determined buyers.
As the early stages of home buying have moved online, many agents have dispatched with the old bus-bench ads and instead put more of their marketing into campaigns on Zillow and elsewhere. That company takes in about $900 million a year in revenue from its “premier agent” program, in which agents pay to have their name and email displayed next to listings.
The partnership could bolster Amazon’s aggressive push into smart homes, which it believes will become an increasingly important tool to interact with shoppers. The company had once hoped to establish stronger ties to its customers through a smartphone, the Kindle phone, but it flopped. So when its Echo speakers and Alexa voice assistant found early success, Amazon poured resources into building a first-mover advantage in voice assistants and smart homes.
Google and Apple have competing products, but about 70 percent of people who own smart speakers have an Echo device, according to a February estimate from Consumer Intelligence Research Partners. Because the confusion of connecting smart home devices can make some people reluctant to buy them, Amazon has been building a network of technicians to install the systems in homes for a fee, which will be waived for TurnKey customers.
The company also offers other home services, like installing TVs or painting rooms, though it has not stood out in the crowded field of labor marketplaces and referral sites, like TaskRabbit, Porch and Angie’s List. Two years ago, Amazon briefly had a “Hire a Realtor” page on its website, but the company took it down after it was spotted by a real estate trade publication. That news report knocked more than 3 percent off Zillow’s share price.