« Are Real Estate Agents on the Brink of Extinction? »

10 years ago you would have had to depend on a real estate agent. 5 years ago it was likely you still needed their services. Today, with the plethora of alternative options, you could reasonably buy and sell your house on your own, without ever setting foot in a real estate office.


I’ve never had any success with an agent helping me to find a place. And now, I’ve gotten pretty good at taking advantage of easy tools to let me sell houses on my own. The only person you can’t cut out of the real estate equation is the lawyer. :-)


MLS.ca does a decent job of showing houses on the market, but now there are a magnitude of similar sites - some better, some worse, but all getting into the on-line property game.

Facebook’s Neighbourhoods application has partnered with Point2Homes, showcasing houses that are for sale in your neighbourhood, and allows you to browse other neighbourhoods! Virtual tours, digital photography, ubiquitous internet access all mesh to reduce our dependency on agents. Who wants to spend an afternoon with a stranger, looking at houses that *they* think you will like? Aren’t you the best judge of that?


If you want to *sell* your house, there are still many options, and most of them are painless. Social networking sites like Facebook, eBay, Craigslist. You name it, you can sell it. People in the market for a new house have no problem being interested in cutting out the 5% of the sale price that has to be inflated to cover the cost of the agent.


Historically, the value that real estate agents brought to the table was one of audience. Agents controlled the audience of people looking to buy and looking to sell. There were no alternatives to easily discover houses for sale (unless you spent countless hours driving through the neighbourhoods you were interested in). There were no alternatives to advertise your home for sale either. Now both of those activities are easily subbed out to various different internet applications.

The value of the real estate agent today? Administrative paper-pushing. Agents know what paperwork needs to be filled out. I recently sold a condo on my own. A few google searches, and wham… I had all the paperwork I needed. The other value that an agent brings to the table: mediation. People are generally uncomfortable with negotiating the price of their home. It’s an emotional sale. But if you can wrap your head around dealing with a little personal discomfort to save $15,000 or more, it’s a worthwhile pain.


:-)


How are you going to buy or sell your next house?

Comments

[Ed Kohler]

Great points. If all agents bring to the table is access to information, their time is certainly limited in a world where information is becoming free.

However, there are plenty of industries where information already is free yet people make a ton of money through professional consulting. Since people only buy/sell properties a handful of times during their life, they never get particularly good at it. Put that together with the money involves, and I think most people will continue to seek out professional representation.

[Heather]

I hate to burst your bubble, but most homes on Point2Homes and other similar websites are listed with real estate agents. There is no shame in dealing with a Realtor. They often know things about what's going on in the area, zoning issues, environmental issues and more that the average consumer doesn't think about but that could influence the property they're either selling or thinking of buying.

Its also a statistical fact that even today, most seller's make more money using an agent than not (they don't save the commission). Most buyers assume that they can save the commission off the price, while most seller's do NOT plan on giving the commission they're trying to save to the buyer.

AND, when using an agent as a seller, your property shows up on multiple sites that people use everyday like Realtor.com, Home Gain, Trulia and many many more, that the average seller has to pay to market on. Plus, don't you also have a job, family to take care of, chores to do, and more? Why not use someone who that's all they do all day is try to get your property sold?

[Nick M.]

I actually work for a Virtual Tour company, so you may think that i'm talking crazy talk...but I don't think that Real Estate Agents will ever go away. Yes there are several services and new technology that benefit the buyer/seller. But the big thing that you are forgetting to mention is the amount of time that it takes to buy and especially sell a home. Most people don't have the time available that is required to sell a home. Now I know that a couple of years ago, in most markets, you could put a sign out in front of your house and it would sell in two minutes. But now that the market has come back down to earth, selling your home takes time, patience, and a know-how of technology and the internet. Now-a-days most real estate agents have been forced to learn technology to better serve their clients, and because of this, agents may be more valuable today then they were several years ago. As Ed mentioned in the previous post, buying and selling a home is the most improtant decision that a perons/couple will make throughout their lives. And in most cases they will seek the professional assistance that Real Estate Agents give them.

[Nathan]

The future of the real estate agent is as a consultant. Those agents that don't know more about the area than the buyer/seller, might be phased out. More agents are realizing this and are changing the way they do business. We know better than anyone which sites are beneficial to buyers and sellers and so we accept that we no longer have a monopoly on that information. Same thing has happened in other industries, yet the 'consultants' continue to thrive.

[jules]

Hi there Ed and Nathan,
I was actually thinking consulting may be the perfect venue. Perhaps even especially with regards to commercial properties.

One point to note - I'm sure that it will take the next 5-7 years for the general public to get comfortable with the idea of using the internet to buy and sell their homes. Agents will still play an important role during that transition phase for the *average* property buyer/seller.

Heather - I think in the next 5 years, tools will become more freely available so that the public doesn't have to rely on agents as the *in* to get their houses listed. I would imagine that a competitive site to mls.ca that allows non-agents to advertise would become a significant player. I'm not convinced that there's anything an agent is currently doing that would warrant paying out $15k for, certainly not babysitting my house, or doing showings.

I'd love to know if there are stats on the number of housing sales that actually have 2 agents now, I would think the vast majority of the sales are 1 agent only - agent for the sellers.

[buy houses]

If you are going to do a bargain you need to make sure you can stop one. The best way to do this is update daily on the market. Make sure you know what homes are going for in the area you want to buy a house.