Realogy has jumped into bed with Amazon to roll out a new program it hopes will simplify homebuying — and it’s paying for the privilege.
The company on Tuesday unveiled “TurnKey,” a program that offers homebuyers support in finding a new home using Realogy-affiliated brokers, and provides incentives in the form of up to $5,000 worth of Amazon products and home services.
Realogy’s head of strategy, Eric Chesin, would not reveal how long TurnKey had been in development but said a pilot was quietly tested in Orlando, Florida, some months ago. On its website, Realogy claims TurnKey agents will help close a transaction in “15 percent fewer days.”
It’s not Amazon’s first foray into residential real estate. Last summer, the e-tailer teamed up with Realogy-owner brokerage the Corcoran Group to set up a brokerage-curated page on Amazon that also fed referrals to agents. The previous year, Amazon briefly launched an initiative called “Hire a Realtor.”
But for Realogy — which has been hemorrhaging money — it’s a step in a new direction. When Ryan Schneider was tapped as CEO more than a year ago, the former banking exec was tasked with reassessing the company’s financial priorities.
Realogy will be paying for the Amazon partnership through the commissions it earns from the home sales, according to the company. The news of the partnership already gave a boost to its stock and market cap, which in May dropped below $1 billion — a first since the company went public. Amazon declined to comment on its financial investment in TurnKey.
Here’s what you need to know about the terms of Amazon and Realogy’s new program.
How it works
— Homebuyers sign up for the TurnKey program on Amazon’s website and get partnered with pre-vetted agents affiliated with Realogy’s participating brokerages: Sotheby’s International Realty, Coldwell Banker, Century 21, Better Homes and Gardens and ERA Real Estate.
[The Corcoran Group is not currently participating in TurnKey, which Chesin said was because the brokerage was not currently operating in the 15 cities where the program was launched. Corcoran declined to comment.]
— On TurnKey’s website, Realogy claims that only 11 percent of its eligible agents qualify to participate in the program. While Chesin declined to detail the exact criteria, he said there were “very stringent standards for how to qualify,” and said all agents must have strong customer service records, and expertise in their local markets.
— Amazon steps in after the home closes. As part of TurnKey, the tech giant is providing buyers with a package of freebies including Amazon Home Services, which offers cleaning and repairs, a series of smart-home products, and gift vouchers for Amazon Move, a service and series of products meant to people relocate. Altogether, the free products and services are worth between $1,000 to $5,000. Realogy will pay for the Amazon benefits from the commissions it earns from the home sale transactions, a spokesperson for Realogy said.
— The size of the package is linked to the price customers spent on their new homes, with a minimum purchase of $150,000 and a ceiling of $700,000.
What it means
The new collaboration has been characterized as “a win” for Realogy, due to the “proprietary lead generation” that seems likely to come from Amazon’s “brand and wide-ranging consumer connectivity,” according to an analysis Barclays Capital released Tuesday.
And there’s evidence that this formula can work. Realogy received 88,000 leads from its subsidiary, Cartus, a corporate relocation business, according to Barclays analysts Matthew Bouley and Christina Chiu. Realogy receives a higher split of agent commissions. “The bull case would be this [Amazon] partnership drives something similar or greater,” they noted.
However, they raised questions about how much the new partnership will cut into Realogy’s bottom-line, and questioned whether TurnKey could address the bigger landscape punctuated by traditional and nontraditional competitors, including the likes of Compass and the widespread proliferation of iBuyers. Compass, the rapidly-expanding tech brokerage that Realogy recently sued, is seeking 20 percent market share in the top 20 U.S. cities by next year.
“The question I would ask as an agent is how am I protected?” Leonard Steinberg, chief evangelist and broker at Compass said of the Realogy-Amazon partnership. “How is my future protected? How is my data protected? How is my clientele protected?”
Chesin said that agents’ sales information was not inputted into the program and consumer data was treated no differently to any other part of Realogy’s business. “Our information security is taken very, very seriously,” he said. However, once the consumer inputs their promotional code into Amazon’s website — a necessary step to access their benefits — they enter into a consumer relationship with the tech giant. It was not immediately clear how that data was stored or used.
Steinberg added that TurnKey clearly represents “a tremendous, tremendous value-add for Amazon, who really wants to be in the home of its consumer,” but he wondered “how is Realogy the beneficiary of this?”