A real estate CSO discusses the prospects for the housing market, innovation and the magic of big data

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Today we speak to Eric Chesin, Chief Strategy Officer at Anywhere Real Estate (formerly known as Realogy), the Fortune 500 parent company of some of the world’s top real estate brokerage brands and services companies. In this role, Chesin oversees the development and execution of the company’s corporate strategy.

David Benjamin: Tell us about yourself. How did you come to the residential real estate strategy?

Eric Chesin: After starting my career at McKinsey and learning a lot across many sectors and functions, I entered the start-up world, focused on disruptive innovation and got the nerve for industries ripe for redesign. When I landed in my current position, I initially had no experience in residential real estate, but quickly realized that it is an exciting space to move into, with many opportunities for creativity and disruption. I was drawn to the greater purpose that exists in this space – to help individuals and families become or remain homeowners, and to support a community of real estate agents who are essentially independent contractors working in a true meritocracy to build businesses for themselves and to grow legacies for their families.

Benjamin: What do you think will happen in the housing market in the short term and in the future due to the pandemic and other factors?

Chessin: People ask me about predictions all the time and unfortunately there are too many interdependent variables to predict. We try to put blinkers on short-term market swings and focus on the longer-term and things we can control.

The near-term impact of the pandemic was unexpected, but the accelerated dynamic of working from home and living anywhere feels real and is likely to continue. This momentum will continue to be very supportive of the industry and the idea of ​​homeownership as they further emphasize the importance of home ownership and the benefits of home ownership, and will drive new transactions despite short-term volatility as people keep moving to the places where they want to live. It will also result in a shift in the types of homes people are looking for, creating even more reasons for them to buy and sell homes. This is good for both the industry and some of the underlying drivers of the economy.

Another big influencer on the market is the very large millennial generation and their growing purchasing power. Their homeownership rate has been low compared to previous generations of the same age, but that’s only because millennials are buying houses later, not because they don’t buy houses. We see plenty of evidence for this, including the fact that the oldest cohorts have already achieved the same level of home ownership as previous generations. And that points to real tailwinds: Within the next five years, the five largest millennial age cohorts will turn 35, which is about when we see them most likely to start home buying. That means we have a lot of catching up to do, which is good if you’re a homeowner, seller, or builder. The hope is that demand will also unleash inventory problems, which are currently at truly historic lows.

Because of all of these factors, there is potential for a perfect storm in the industry, which gives us a lot of confidence in the longer-term prospects.

Benjamin: As the CSO of a very large established industrial company, how do you look for signs of disruption in your market and how do you help your company to innovate and respond accordingly?

Chessin: When I decided to join the company I now work for, I was excited about the opportunity to lead disruption within an established player in the industry. Since then, however, I’ve learned that the work I’ve undertaken with my colleagues is less about disruption and more about focusing on how to improve the doing business experience. This focus will inevitably lead to both innovation and ultimately positive change for consumers and those in the industry value chain. The key is to constantly seek better answers, look for opportunities to innovate, and embrace progress.

It also means searching the universe for where innovation is happening outside of your company’s four walls, because the best ideas can come from anywhere. Be on the lookout for the innovations that are gaining a foothold in the market and if, based on your knowledge and experience, you see that the innovation is profitable, better for consumers and the right answer, be there; If not, if it doesn’t feel sustainable, or if it feels like chasing shadows, then before you jump on the bandwagon, beware. Instead of making defensive adjustments and getting distracted by your long game, sticking with your guns (pursuing better answers and better experiences) is usually the best decision.

It can boil down to an equation of having the right people around you, plus access to the right information and analysis at the right time, and a bit of luck!

Benjamin: Up to this point, can you share your knowledge of big data and how to get the right insights at the right time? Have you discovered a “secret sauce”?

Chessin: I think data is the most amazing business asset. I’m not a data scientist, but I’ve been fortunate to work with some really smart people who are, and it opened my eyes to what can seem truly magical. I’ve seen firsthand that the things that can be predicted with accuracy are fascinating and often counterintuitive when you have access to a sufficient amount of good, clean, and well-curated data. However, what has struck me is that you cannot unleash the magic of big data without a smart business strategy. It’s not just about bringing in the necessary skills and building the right tech stack and infrastructure; True value comes from knowing what questions to ask, what predictions to make, and how and where to apply them.

For example, much of my company’s success is driven by recruiting and retaining excellent real estate agents, and we must work hard to attract the best with our superior value proposition. To do this, we built a model that predicts which agents are likely to grow their business the fastest over the next three years, so we can focus our recruiting efforts on them. The model had millions and millions of data inputs — some obvious and some not, some public and some proprietary — and we ended up using it to rank a list of 600,000 agents and choose who to target based on those predictions should concentrate. Tie these into the CRM our managers use and set up business incentives for these agents and bonuses for our employees based on their success with them. Three years later, we sampled the group of agents that the model predicted would grow the fastest, and they actually grew 80% faster than the rest.

That magic of Big Data is that you cannot know what factors formed the basis of the predictions, but that they were very accurate. That energy, but comes from knowing the insights you need, the business application of those insights, and how to fit them into your processes to achieve a result. If we didn’t use levers like incentives and bonuses to ensure we were targeting the right agents, if we didn’t communicate strategy well with managers and set up a CRM system to help them apply it, without all that would be magical this prediction would not have had any impact on the business.

Benjamin: Do you have any parting thoughts you’d like to share?

Chessin: Our company just hosted an investor day, and in preparation, our CEO and I talked about how we could host a full day focused on the next five years when short-term volatility is such a hot topic and everyone is talking about the next one would like five minutes instead. His approach, which he took publicly with investors and privately with our team, was: “We will leave the headlines behind to focus on what matters”.

I find this approach very down to earth. Focus on what you can control, keep your head in the game, cut out the noise, and don’t let the distractions of the moment throw you off course.

This interview has been edited and shortened for clarity

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