Amazon is branching into real estate through a partnership with Realogy, the nation’s biggest residential real estate broker, the company announced Tuesday.
Through the new TurnKey program, would-be homebuyers in 15 markets will be able to use an Amazon portal to connect with a Realogy agent. Upon closing, buyers will be rewarded with a bundle of Amazon benefits worth as much as $5,000 – from smart home devices to cleaning, painting and furniture assembly services.
It’s a somewhat unlikely match: The biggest disruptor in retail pairing up with an ailing legacy company. But the partnership is positioned to compete with the likes of Zillow, Redfin and Opendoor, which have shaken up the real estate world with their “instant buying” algorithms and streamlined home-buying processes.
But the deal gives Amazon a sought-after foothold in the real estate market, as well as a chance to push its stable of home services and smart products, such as Alexa speakers and Ring doorbells. And it’s a lifeline for Realogy, which has been hammered by disruption in the residential brokerage industry and a slowdown in the housing market.
“For Amazon this is a free way to experiment with attracting customers,” Craig-Hallum analyst Brad Berning wrote in a recent research note. “For Realogy, we believe this is desperation to improve their broker platform which has structural headwinds and a levered balance sheet.”
The company, which includes Coldwell Banker, Century 21 Real Estate and Sotheby’s International Realty among its brands, has seen its stock sink 65 percent this year. Realogy’s market cap has shrunk to about $600 million, after peaking at more than $7 billion in 2013. Realogy’s shares rose 35 percent, to $7, after the partnership with Amazon was announced. (Amazon founder Jeff Bezos owns The Washington Post.)
Realogy has much to gain from teaming up with Amazon, and the e-commerce giant has little to lose, regardless of whether TurnKey takes off: it’s Realogy, not Amazon, that foots the bill for customers’ benefits bundles.
“Amazon likes to experiment, and this to us seems like a “throwing spaghetti at the wall” kind of thing,” Berning said. “Our scepticism is whether they can really scale an interest in finding an agent through their website.”
TurnKey will launch with 3,000 participating real estate agents in Washington, San Francisco, Chicago, Dallas/Fort Worth, Atlanta, Denver, Tampa, Orlando, Minneapolis/St. Paul, Charlotte, North Carolina, Los Angeles and Sacramento.
Effectively, TurnKey serves as a lead-generation program for Realogy brokers and agents, similar to Zillow. The popular real estate search engine uses algorithms to make “Zestimates” on home valuations, and helps connect buyers with local agents who have paid to get their names and faces on the site. Zillow’s Premier Agent Program garnered nearly $900 million in revenue last year.
In May 2018, Zillow took its services a few steps further, creating an “instant offers” business in which the company buys and resells houses, fast-tracking the often messy home-buying process while collecting a 6 to 9 percent fee – higher than the industry standard commission.
The Amazon benefits that buyers earn are tied to the home price. All bundles will come with at least two Echo smart speakers, equipped with Alexa home-assistant capabilities, a Ring doorbell camera (with installation by Amazon professionals) and a credit of at least $450 for home services. To reap the full $5,000 value, customers must buy a home worth at least $700,000.
“Customers can be overwhelmed when moving, and we’re excited to be working with Realogy to offer homebuyers a simplified way to settle into a new home,” Pat Bigatel, director of Amazon Home Services, said in a statement. “The Amazon Move-In Benefit will enable homebuyers to adapt the offering to their needs – from help assembling furniture, to assisting with smart home device set up, to a deep clean, and more.”