The internet has made searching for a home much easier. Prospective buyers can now narrow down their preferences, look up comparable sales, find a lender, and educate themselves on topics like adjustable rate mortgages, tasks normally accomplished with the help of a real estate agent, all without leaving their computers.
A few years ago, many wondered if technology might lead to the end of the real estate agent, much as it essentially killed off the travel agent. But these days, it looks like real estate brokers are doing just fine in the new reality.
On Thursday, former Housing Complex reporter Lydia DePillis, currently at the Washington Post, examined why real estate agents are thriving despite the internet and DIY-ers. (Earlier this year, Bloomberg Businessweek also investigated the same topic.) The brokerage RE/MAX is doing so well that they filed an IPO earlier this week. The overall number of agents took a dive after the housing crash, but has been on a steady increase for the past three years. And in 2012, noted DePillis, 89 percent of buyers retained an agent, up from 69 percent in 2001.
DePillis put forth a few theories to explain why. Perhaps acquiring financing and navigating the complicated contracts in the buying process has become more complex and necessitate the advice of an experienced advisor. DePillis also noted that agents are now able to market themselves online and work from home and are less dependent on brokerages, which may reduce overall office-related costs. The fact that the internet has increased productivity may have been good for the agents, as well as buyers.
Courtesy of Bloomberg BusinessWeek.
Ultimately, it seems like though the internet has changed the relationship between buyer and agent, it has not obviated the need for a guiding adviser.
Even Redfin has pulled back on its DIY ethos. Initially, the site employed a team of brokers to work with buyers in a minimalist manner. Less experienced agents would meet buyers on the ground to unlock doors for them, while others would take on the task of helping buyers make an offer and navigate the settlement process. A buyer going through Redfin might see one agent on a house tour, communicate with another while writing their offer, and see a third at the closing table. The agents were given a salary, rather than earning a commission.
But last year, Redfin decided to revamp their system. They now operate more like a traditional brokerage, allowing buyers to work with one agent for most of the process. The agent and buyer form more of a relationship, and the agent is able to offer personalized recommendations and to physically be there for more of the process. As a result, Redfin reduced, but did not eliminate, the commission refund given to the buyer.
Additional start-ups are springing up that are working to give credit to the work that a potential buyer does on his/her own. Recently, we wrote about Jason’s House, a website where actively involved, DIY-type home buyers can negotiate with agents to try and receive monetary compensation for their hard work.
This article originally published at http://dc.urbanturf.com/articles/blog/why_real_estate_agents_have_thrived_in_an_internet_world/7494
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