Are real estate agents an endangered species?
Despite the threat of websites and apps assuming their role, agents remain confident.
As real estate agents increasingly adapt digital tools in advertising, it is more and more common that homebuyers use a variety of online interfaces to search for their dream abodes. Yet when a Chinese investor recently bought a $13 million unit of the luxury Baccarat Hotels & Residences in Midtown Manhattan without visiting New York – merely communicating with his agent through social media platforms – an extreme question presented itself: Can real estate agents be replaced by online technology?
In fact, digital tools and the Internet have reshaped each section of our daily lives and penetrated deeply into the real estate industry – with no face-time required. The California Association of Realtors recently released a study showing that over 77 percent of homebuyers used social media in 2014 in their home shopping process, 1.5 times more than in 2011.
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Fredrick Eklund, a Douglas Elliman's broker, also known as a star of Bravo's reality show "Million Dollar Listing New York," previously told real estate magazine The Real Deal that social media tools such as Facebook, Twitter and Instagram contributed to nearly a quarter of his home-selling business.
Homebuying behaviors are apparently being affected by mobile apps because of economic incentives to avoid a broker fee. For real estate agents who mostly depend on the 6 percent commission, direct home selling that's conducted only between homeowners and buyers would also further endanger their relevance and value in the real estate realm.
"Anything could be done without the middleman — that's a reality," says Sissy Lappin, author of the book Simple and Sold. "With technology and social media, real estate firms are fighting back with very desperate moves."
A study conducted by Northwestern University in 2010 found that homeowners who sold their houses on their own can gain 4 percent on the selling price than those who hired brokers to sell the same properties. In a report published last September called "The Future of Employment: How Susceptible are Jobs to Computerisation?" developed by University of Oxford to examine the expected impacts of future computerization on the U.S. labor market, "real estate broker" was listed as an occupation with a 97 percent probability of being replaced by means of computer-controlled equipment. "Real estate sales agent," the person in a brokerage who acts as a sales representative in a real estate transaction, has an 86 percent probability of being phased out by technology.
"We used to ask travel agents [to help us make travel plans], but now all we need is Expedia," Lappin says. Having recently cofounded a website called ListingDoor.com, which helps homeowners to list their housing information, she hopes to provide a bridge to connect sellers with buyers without the need for broker interaction.
Despite the fact that the transition of the industry brought on by technology could be revolutionary, real estate agents remain positive about the outlook of their profession in the face of a potential threat.
Sheryl Thornton, 52, director of residential real estate at Calabasas, Calif.-based Rodeo Realty, says that she thinks the role of real estate agents is significant and irreplaceable.
"Selling and buying homes involves so much paperwork," she says. "There is always a point that you really need experts to protect you from financial and legal risks."
As a real estate agent for 20 years, she has witnessed the constant change of the industry in selling houses.
"Real estate agents used to take 'floor time' which means taking turns sitting at their desks waiting for the phone to ring from buyers and sellers who were looking through the Saturday and Sunday L.A. Times," she says. "The difference now is that people don't read the paper, and the phone no longer rings much."
Elizabeth Perea, a real estate trainer at NYC Real Estate Advisors, sees the force that resulted from the innovation but disagrees that the role of real estate agents would be rendered obsolete by technology. Rather, she thinks knowing how to use social media and integrate technology into work is an essential skill for real estate agents.
"Real estate isn't about property; it's always about relationships," she says. "[That's why] social media is helpful, but it's only a means for real estate agents to communicate with their clients."
For a large number of agents who are middle-aged and non-tech savvy, Perea says that lacking confidence to use social media blocks real estate agents from being engaged with the Internet.
As a result, she suggested that real estate agents should increase their engagement online with potential buyers by sharing comments and posting images on social media. It's an adapt-or-die-out situation.
"Social media is networking," she says. "[Meanwhile,] being a leader who truly cares is the best way to build relationships — anywhere, even online."
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Years ago, the only way to get your home listed on the "Multiple Listing Service" was through a Real Estate broker. The Multiple listing service was the way that all the other realtors got specs and photos of your home. They would then show the home to perspective buyers.
That is all history now. The internet has Zillow and many others sites that have replaced the need for MLS. Thus the need for real estate salespeople is dramatically less and the quality has diminished to "hobbyists and part - timers". Sure there are some professionals....but they are a minority.
Best bet - sell you own home and pocket thousands in savings!!
These are obviously owned by banks who have no interest or time to sell these properties and even if they did, they'd have to have someone from the bank to sell it so someone would get paid anyway. Second, these banks are from all over the country, so of course they need to hire someone locally to do the work.
As far as how much work we do...it's painstaking and long. First, there are many problems with these homes. We need to first make sure they're vacant and if not, we have to either offer cash for keys or begin the eviction process. The banks send notices which the owners ignore, so I have to make multiple visits to possibly hostile people to find out when or if they plan to move out. Once the property is vacant, we need to get in there and inspect the place. First we have to note obvious and immediate problems (leaks, animals, squatters) A few days ago we encountered a beehive with about 25 bees swarming the front door. That has to be taken care of ASAP and a professional called. Assuming there are no immediate problems, and with these types of houses there usually are, we have to get in there and give estimates on what we think the bank needs to do at a bare minimum. The banks sell these properties as is but they are still required by law to have certain things operating (there was a gas leak in one house. I had to call Con Ed and be there to let them in to fix the leak). Once we tell them what we feel is the bare minimum, we get contractors in there for estimates and then the work gets done. we also have to hire people to gut the place because it's usually filled with trash, broken doors, furniture left behind, mold, etc etc. That takes time, and we have to rent a dumpster because you can't throw that stuff on the street. More time.
THEN we go in there and take photos, do a comprehensive market analysis and suggest a price. Then we advertise, do showings, etc. If you think once the buyer buys the house and we're gone, you're also mistaken. Like I said a few times, foreclosures are often huge messes. There are always problems I need to either have the problem fixed or find a quick fix so the buyer can get a mortgage. We have to get permits, land surveys (one house claimed the side lawn belonged to the house the neighbor claimed it was his) and so many other problems arise.
I had one house that took nine months to close because of all the problems.
On top of the fact I take a risk every time I go into these homes because I don't know if there are squatters, angry homeowners or bees waiting to attack.
If I make a "quick" sale for "putting up a sign and getting it sold in two days" I don't feel bad about it. Because if you look at the bigger picture, I spend months working on a co-op that I make $500 on because they are low value. I work for less than minimum wage on those units. So it evens out.
If you think for one second I don't bust my **** every day and earn what I make you are mistaken!!!!
Realtors must meet local, state and federal requirements on licensing and practicing, and continuing education is ongoing regarding Fair Housing, Ethics and new legislation. While there are opportunists in every field, I have found that thoughtful people who chose real estate - and stayed with it - had a keen understanding of the need to provide great service to earn referrals from happy clients, the critical component to staying in business. We all work to earn a living ...Realtors do it without the guarantee of a paycheck. It only happens once there's a sale, and the road to a sale can be months long ...sometimes not at all. This can be very disheartening to a new agent, but with hard work and confidence, and a true desire to help a client (not just a customer anymore), real estate can be a very rewarding career.
As a Realtor for nearly 30 years in a fast-paced and diverse market near the Nation's Capital, I see professionalism every where I turn in my business. It's more evident than ever before because the industry has helped the consumer to become better educated. Helping the buyer or seller understand what is a "comp" (comparable sale) and how an appraiser arrives at a price. Factors such as location, space, condition and age (effective and actual), and much more, goes into pricing. A seller should ask an agent before they make an improvement to make sure they don't over improve. Likewise, an agent can be invaluable in helping the seller understand the buyer mindset that deferred maintenance will cost the seller much more than the actual cost to repair.
Regarding the fee, it's negotiable, has always been negotiable and that is the legal and ethical way to describe it. Some services justify a higher fee. Buyers and sellers don't have to pay upfront, but the agent is working usually long before the house goes on the market, or the buyer locates the right house. Then the work begins in coordinating the sale with all entities involved in the transaction. If the sale is rocky, it's usually the agent who saves a deal from going south. And there are times when the sale just wasn't meant to be and the seller and buyer need to part ways. If a scuffle ensues, it's then the time to bring in a legal person to sort it out.
For most of us, buying or selling a home is the most important financial transaction we will realize. I'm a seasoned agent, but I'd never consider buying my own home in a new area without an expert. Finding an expert who is friendly and personable, and who really cares about my welfare is my job before I buy or sell. This job is alot easier than the agent's. Know too that an agent will steer clear of people who think bashing agents in general is acceptable. Naysayers who have never worked in a self-employment field for a livelihood have no credibilitty in condemning Realtors or any other "salesperson". A great salesperson is also great at service in any sales field. Zillow can pretend to price property. A great agent knows better.
I blame the National Association of Realtors. They're so obsessed with 'Power in Numbers' that they've lobbied the criteria for becoming an agent down to the point where any idiot can do it. So we now have millions of people walking around selling houses that have absolutely no idea what they're doing. And with so many agents scrambling for their share of the pie, the commissions need to be higher since the sales per agent is so low. NAR has hurt consumers in so many ways and destroyed the reputation of what should be a noble profession. Agents facilitate most people's largest financial transactions they'll ever undertake in their lives.
To all the realtors patting themselves on the back in these threads for all the services they provide, most of the services you're taking credit for providing are actually provided by lawyers, inspectors, and title companies...all still needed even WITH a real estate agent. Real estate agents are an unnecessary middle man. 6% to take pictures, post them on the internet, sit back and wait, and then suggest you lower the price until someone bites seems like a pretty hefty price tag.