Amazon Jumping into the Real Estate Business?

Amazon getting into the Real Estate business?

 

It appears Amazon is officially showing it’s cards and going into the real estate business this year. Amazon recently announced a partnership with Realtor.com (link). The deal was inked this Summer and it provides a mutually beneficial relationship where Amazon acts as basically a lead generation platform connecting potential home buyers with vetted real estate agents on Realtor.com’s platform. The move competes directly with Zillow with a $900 market cap which offers the same service for paying real estate agents. As a side note, Realtor is often used synonymously with “real estate agent,” but Realtor is actually the trademark of Realtor.com.

 

Surely competitors in the real estate industry, which represents 15% of US national GDP, have feared and hopefully prepared to have the Amazon stepping into the fray eventually. 

Looking back on 2018, Amazon hinted at getting into real estate at the time. They quietly tested and then removed (link) a site feature which essentially serves the same purpose as it’s new feature serves exclusively for Realtor.com. 

 

Additionally, in Q1 of last year Amazon partnered with Lennar Homes, the nation’s largest homebuilder (link) and launched “Amazon Experience Centers.” The partnership provides Lennar Homes with an excellent opportunity to introduce it’s potential home buyers with a real world experience of a fully functional smart home environment complete with all the bells and whistles of Amazon Alexa built-in to Lennar’s model homes. Clearly the benefits for both parties in this relationship makes sense. Lennar gets to show off it’s top of the line smart homes with all features built-in, while Amazon is able to introduce the power of Alexa’s capabilities in a real world home environment vs just seeing the devices on display in Amazon’s showrooms.

 

The partnership with Realtor.com may seem surprising in some respects given that Realtor.com represents the largest legacy company in the space. The company has seen its stock drop dramatically in recent years due to decreases in agent fees largely due to the proliferation of online marketplaces for finding homes. Zillow and Redfin are both key players in the space and represent viable platforms to Realtor.com’s largely legacy platform relying on more traditional and dated forms of shopping for a real estate agents. However, the partnership with Amazon provides them with a real opportunity to tap into the growing online marketplace.

 

The way it works…

 

Low risk on Amazon’s part given that Realtor.com will be paying the costs by compensating homebuyers with Amazon Services and smart home products. 

 

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