Real Estate Professionals occasionally approach me with concerns about the increasing amount of free information being made available online. Things like:
- If consumers find all the real estate information online, why would they need me? Or why would they pay a “full” commission?
- Why do you display crime rates for cities and neighborhoods? That does no good for my marketing efforts!
- If buyers see the average home price for a given region, what do they think of the home I’m selling that is above/below average? It can’t be good for sales.
- Why should I display the complete address of my listing? Consumers will find the home by themselves and have no reason to contact me, the listing agent.
- Consumers can now go and list their home on Craigslist, for free! How can I justify my service fees?
These concerns are all legitimate. Part of the agent value proposition to a buyer in the past included access to (otherwise unavailable) information, like a weekly print out of the latest for sale listings. For those selling their home, the agent could do his/her marketing magic and list the home with the ultimate marketing tool (at least in a seller’s market): the MLS.
Now, with the ability to view hundreds of thousands of web sites with IDX listing search capabilities, the Internet has practically commoditized “access to listings” as part of the real estate equation. Now you can search price comparables from numerous broker sites (e,g., check out www.johnlscott.com for fresh comps directly from the MLS) and information ranging from past sales transactions to schools to crime rates can be found on thousands of Web sites.
Also factor in the mindset of the latest group of home buyers, the Gen Xers (30-41 years) and their Gen Y (12-29 years) followers, who are hungry for information online. They are called a “fiercely independent” group that thinks they can learn to fly a space shuttle over a weekend given access to Google and enough coffee. Maybe.
So there are two trends developing: free access to information and a generation that wants to do it themselves. Are doctors in trouble because you can find information about any disease or drug online? No. Are agents in trouble? Not at all.
The dissemination of information doesn’t devalue the “traditional” agent; rather, it’s about acknowledging that the agent value proposition is evolving. Online sites with listings search and market data allow agents to focus on what they do best—to be the neighborhood expert who understands the market, provides advice and handles all legal and backend aspects—with more time to get more customers.
When agents think about winning value propositions for information-hungry consumers, particularly us do-it-ourselves Gen Xers, it’s now about: “Let me show you the best tools and information you can use to familiarize yourself about the market, and I will use my sophisticated marketing, pricing and negotiating skills to maximize the value you get from your home sale/purchase.”
Yes, the value proposition is changing, but this is great news for the industry. A well educated, hard-working real estate professional will come out as the winner in the middle of all this change - and be more productive than ever.
Popularity: 9% [?]
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October 30th, 2006 at 12:34 pm
An agent’s market knowledge and experience won’t be replaced by online information.
October 30th, 2006 at 2:27 pm
Sounds to me like you have been talking to insecure agents. Change is upon us in this biz, we all better accept it and embrace it. My gut feeling says that it will make the industry better and therefore the clients happier with the service they are paying for.
October 30th, 2006 at 5:30 pm
When I started I was fortunate enough to spend a great deal of time with an agent whose business was fueled by his website. He helped me accomplish my online goal - to not have a website just to have one but to have a website that would drive my business as well.
Those who fear the technological changes are doomed to be run over by them in time. Those who embrace them will remain vital and continue adding value for their clients.
October 30th, 2006 at 8:42 pm
Speaking as a Gen-Xer and freshly minted agent, it’s basically incomprehensible that there is not a national MLS, and that the public can search listings completely. I’ve see agents in my brokerages using typewriters for pete’s sake.
October 31st, 2006 at 12:38 pm
It’s about time that agents and brokers realized that the days of being ‘the holders’ of information are over. Consumers will demand this information and we need to provide these services to them or we will become obsolete. I, for one, am happy with the change and look forward to continuing to provide my client base with the best information I have.
October 31st, 2006 at 4:36 pm
Hi, this is Sami from Trulia. Thank you all for the replies. I agree with each and every comment. It seems to me there must be some self-selection in play: those agents/brokers who are reading and replying to blogs like this, are the ones who already utilize the latest tools, understand the changing agent value proposition and will come out as winners in the middle of all the change - more productive and successful than ever. Well done!
October 31st, 2006 at 8:34 pm
The more information we can get into the hands of the consumer the better! I want my clients to be able to do their own research and make informed decisions. my value as an agent is my level of experience and my ability to put information to good use. It is not my job to be a gate keeper. I am always available to help provide information and do not charge for the service.
November 6th, 2006 at 6:05 pm
Like any career, the ability to adapt to change is essential to make it in real estate. And it’s true what you say about agents better positioning their negotation skills now that information is so accessible — many buyers & sellers feel better knowing that they have a knowledgable agent to take care of that part of the process.
November 15th, 2006 at 9:12 pm
Call me. I largely disagree with the majority of comments herein.
I have been an Investor/Broker in the market for 28+ years.
It seems to me that the online RE community has missed the obvious calling of the new emerging market place. Lets talk 512-775-2817. Sorry, I’m not am online kind of guy. Too impersonal.
December 14th, 2006 at 6:39 pm
You tell ‘em Jay Otto….Who needs all this
fancy schmancey internet nonsense. Just like on
that movie American Beauty, “the KING of Real ESTATE
December 14th, 2006 at 6:45 pm
is all homeseeker really needs!
April 23rd, 2007 at 6:14 pm
Americans will spend about $1.14 trillion buying 6 million homes this year—both records. Yet the flat commissions paid to the realtors who handle the vast majority of those sales, averaging 5.1 percent, act as an enormous tax on the transaction process, taking wealth from both buyers and sellers in what for both is often the biggest financial transaction of their lives. It’s true that selling a house is a complex task. But so is writing a will, and an attorney doesn’t ask for 5 percent or 6 percent of your net worth as compensation.
And what do Americans receive in exchange for that commission, which can total up to $24,000 on a $400,000 home? In many cases, not much. A realtor’s license can be had after as little as 50 or 60 hours of training (the person who cuts your hair probably has 1,000 hours or more). I’ve dealt with a half-dozen realtors during the past seven years, while selling two homes and buying three others. Last year, for instance, we sold a home in the $500,000 price range in the town of Newcastle, east of Seattle. It wasn’t a perfect home—a typical suburban place with too much garage, not enough yard—but a very nice one, including a full theater room and a fantastic home office. We wanted to sell to make a move to Port Townsend, a little town in the northwest corner of Washington. One realtor we used to sell it was utterly incapable of articulating how our house differed from nearby, newer ones that basically were thrown up overnight and had cheap interior finishings. Another was clueless as to how to market a house in our price range, printing a cheap single-sheet black-and-white information flyer. (Our experiences were generally better on the buy side, except for one seller’s agent who sought to discredit a skilled building inspector we hired who found that the foundation of a circa-1880 home was a rat’s nest of rotting wood, faulty concrete, falling insulation and, well, rats’ nests.)
But the real knock on realtors is a bit of simple economics that many people don’t understand. Whether you’re buying or selling, they rarely work in your interest. For the buyer, a realtor may seem like a dream—a “free” home-finding chauffeur, who then negotiates the best possible price. But the service isn’t free—the sellers have likely factored the buyer’s agent’s 2.5 percent or 3 percent of the take into their price. Moreover, it’s in the buyer’s agent’s interest to have you pay the most that you’re willing to pay. After all, the higher the price, the larger their commission.