Why Real Estate Agents Have Thrived in an Internet World

by Shilpi Paul

Why Real Estate Agents Have Thrived in an Internet World: Figure 1

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.

Why Real Estate Agents Have Thrived in an Internet World: Figure 2
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.

See other articles related to: redfin, real estate agents

This article originally published at https://dc.urbanturf.com/articles/blog/why_real_estate_agents_have_thrived_in_an_internet_world/7494


  1. weird said at 1:02 pm on Friday August 23, 2013:
    It is weird. You would think in a place like DC, where houses pretty much sell themselves, people would not bother with a real estate agent. Or at least people would say to realtors, "this whole idea of you getting a percentage of the sale price is for the birds. we'll pay you $500 or some flat fee and that's it."
  1. Caroline said at 1:33 pm on Friday August 23, 2013:
    Lets be clear. Homes do not sell themselves. My home recently sold and my agent worked tirelessly on my behalf and more than earned his commission. The home sold for above our asking price and that was after it spent over a month on the market.
  1. weird said at 2:21 pm on Friday August 23, 2013:
    I'm skeptical. I go to open houses and there are people everywhere (and not because of the realtor -- I mean, we're there and we dont have any idea who the realtor is that's showing the place nor do we care.) We usually dont even bother talking to realtors because half the time they can't even tell you basic facts like how far the nearest subway or grocery is. And everyone knows buyers have to put in a bid asap because houses are selling like hotcakes (and again not because of the realtor, but because that's just how the market is). Yet if you broke down realtors' fees by the hour, my guess is some of them make more than some surgeons. And for what? What is it that they contributed to this transaction? It's hard to figure out. If a house on the market for a month in Washington, D.C., well, you're obviously doing something wrong -- I'm going out on a limb and say the price was too high. Maybe they should look at recent prices of similar homes in their area and respond accordingly. It's not rocket science.
  1. DE said at 2:52 pm on Friday August 23, 2013:
    as a first time buyer, having a realtor was helping with everything expect finding the actual houses. we were looking in a small area, would find the houses ourselves online, then she would set up the viewing times. she also walked us through all of the paperwork and let us know what to expect from the process. like the infographic above says - there is no internet equivalent for that assistance. additionally, as a buyer, having a realtor that is familiar with the area and the market in that area could help increase your chances of getting what you want.
  1. p.a. white said at 7:17 pm on Friday August 23, 2013:
    we still use agents because the system is set up to require them and i'm sure the industry has made sure it stays that way. i bought an investment condo 3 years ago. i found the place on my own but needed a real estate agent to call for the lock box code so i could do a walk through. i still had to do all the research, most of the paperwork, manage the inspection, schedule closing, etc. my agent showed up for closing and then hit me with an extra fee because she felt she had done a lot of extra work. i told her absolutely NO. it's a scam. if some buyers feel more comfortable with an agent, they should have the option to hire one but the rest of us should not be required to pay extra for them.
  1. Internet said at 2:24 am on Saturday August 24, 2013:
    The National Association of Realtors makes sure their "Realtors" hold on to their 5% cut. I went to a couple of viewings this year and granted, one was RedFin, but I found they were not knowledgeable about the building, the structure, etc. When I was a first time home buyer, not only my agent didn't reduce my buying price but they pressured me into transacting faster and told me things about the unit which were not true. I think it's only a matter of time before consumers have more access to the listings databases, and the cut agents make will be reduced. Like stock brokers, transaction fees have to come down, even when the product may be complex.
  1. Maria said at 11:05 am on Saturday August 24, 2013:
    Hi Shilpi, great blog shared above. Ya, internet has become a great help to real estate agents. Its very easy to search for a property through internet. Thanks for sharing this informative post. Awaiting for more blogs like this.

DC Real Estate Guides

Short guides to navigating the DC-area real estate market

We've collected all our helpful guides for buying, selling and renting in and around Washington, DC in one place. Visit guides.urbanturf.com or start browsing below!

Northern Virginia

Profiles of 14 neighborhoods across Northern Virginia

Looking to Give People A Reason to Stay Past 6pm
Happily Straddling the Line Between City and Suburb
Columbia Pike
Arlington’s Neglected Stepchild is Getting a Makeover
Crystal City
Turning Lemons into Lemonade
Lyon Village
Developing An Air of Exclusivity?
Hitting Its Growth Spurt
An Urban Village Hitting Its Stride
Del Ray
Virginia’s Small Town Near the Big City
Eisenhower Avenue
The Vibrancy Might Take a Few Years
The Quiet Neighborhood By the Beltway
Old Town
Mayberry By The Potomac
132 Commerical-Free Acres
Downtown Falls Church
Staying the Same in the Midst of Change
Tysons Corner
Radical Change Could Be On The Way

See more Northern Virginia »


Profiles of 14 neighborhoods in suburban Maryland

Small-Town Living in the State Capital
Bedroom Community Gets Buzzing Cache
Cabin John
In With The New While Maintaining the Old
Chevy Chase
Affluence, Green Lawns and Pricey Homes
Downtown Silver Spring
Experiencing a Resurgence After a Bumpy History
A Suburb on Steroids
Rockville Town Square
Despite the Dynamism, Still Somewhat Generic
Takoma Park
More Than a Little Bit Quirky
A Foodie Magnet on the Verge of Change
Capitol Heights
Kudzu, Front Porches and Crime
Glass Half Full or Half Empty?
Mount Rainier
Artists, Affordable Homes and A Silo Full of Corn
National Harbor
A Development Rises Next to the Potomac
Riverdale Park
A Town Looking For Its Identity

See more Maryland »

Northwest DC

30+ neighborhood profiles for the city's biggest quadrant

16th Street Heights
DC's Sleeper Neighborhood
Where (Almost) Everyone Knows Your Name
AU Park
One of DC’s Last Frontiers Before the Suburbs
DC’s Northern Neighborhood on the Cusp
DC’s 535 House Neighborhood
Cathedral Heights
Do You Know Where That Is?
Chevy Chase DC
Not to Be Confused With the Other Chevy Chase
Cleveland Park
Coming Back After A Rough Year
Columbia Heights
DC’s Most Diverse Neighborhood, But For How Long?
An Island of Serenity East of the Park
Dupont Circle
The Best of DC (For a Price)
Foggy Bottom & West End
Where the Institutional Meets the International
Forest Hills
Ambassadors and Adventurous Architecture
Foxhall Village
350 Homes Just West of Georgetown
Friendship Heights
A Shopping Mecca With a Few Places to Live
History, Hoyas and H&M
Glover Park
One of DC’s Preppier and More Family-Friendly Neighborhoods
A Posh View From Embassy Row
LeDroit Park
A Quiet Enclave in the Middle of the City
Logan Circle
Trendy Now, But Not By Accident
Mount Pleasant
Sought-After Homes Surround Main Street in Transition
Mount Vernon Triangle
From Seedy to Sought-After
The Long, Skinny Neighborhood at the City’s Northwest Edge
Park View
It’s Not Petworth
Penn Quarter/Chinatown
DC’s Go-Go-Go Neighborhood
Getting a Vibrancy of Its Own
The Duke’s Former Stomping Ground
Shepherd Park
DC’s Garden of Diversity
Spring Valley
A Suburb With a DC Zip Code
Not To Be Confused With Takoma Park
Not Quite Like Its Neighbors
U Street Corridor
The Difference a Decade Makes
Woodley Park
Deceptively Residential
Adams Morgan
No Longer DC’s Hippest Neighborhood, But Still Loved by Residents

See more Northwest DC »

Southwest DC

The little quadrant that could

Southwest Waterfront
A Neighborhood Where A Change Is Gonna Come

See more Southwest DC »

Northeast DC

Profiles of 10 neighborhoods in NE

New Development Could Shake Up Pastoral Peace
A Little Bit of Country Just Inside the District’s Borders
Not to Be Confused With Bloomingdale
Fort Totten
Five Years Could Make a Big Difference
H Street
A Place To Party, and To Settle Down
The Northeast Neighborhood That Few Know About
Michigan Park
A Newsletter-On-Your-Doorstep Community
Evolving from a Brand to a Neighborhood
Ripe for Investment Right About Now
The Difference 5 Years Makes
Big Houses, A Dusty Commercial Strip and Potential

See more Northeast DC »

Southeast DC

6 neighborhoods from Capitol Hill to East of the River

Capitol Riverfront
Still Growing
Hill East
Capitol Hill’s Lesser Known Neighbor
Congress Heights
Gradually Rising
Notable for Its Neighborliness
Historic Anacostia
Future Promise Breeds Cautious Optimism
Eastern Market
A More European Way of Living

See more Southeast DC »