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Are Realtors becoming extinct? Trendy new real estate sites like Zillow.com, Ziprealty.com and Craigslist.org have home buyers and sellers doing work that used to be the domain of Realtors. How do real estate agents stay relevant in a market where buyers and sellers can check out comparable sales records, view automated appraisals and research school districts without them?
It's popular today to predict that Realtors are going to lose their stranglehold over the real estate system and that homeowners are about to start buying and selling houses the same way they buy and sell anything else. That's not likely to happen for two reasons, says Chang-Tai Hsieh, associate professor of economics at the University of California, Berkeley. First, Realtors still control the multiple listing service data on current and prior sales, although the Department of Justice is trying to change that. Second, real estate transactions make people nervous. "A typical person buys or sells a house once or twice in a lifetime," he says. "It's by far their biggest financial asset. There's a huge amount of anxiety surrounding the transaction."
The mainstream press has overestimated the impact of sites like Redfin.com, which offers commission rebates to real estate customers, and Zillow.com, which offers online home price evaluations, says Blanche Evans, editor of Realty Times. "MSN has had online valuations for more than eight years," she says. "Despite what journalists have been told, none of these new models with funny new names are new, nor do they offer anything unique except some technology, which soon everyone will have to enhance their marketing, like satellite mapping.
Go Them One Better
The key to keeping up with these Internet Joneses is to pick up on the way they empower users, says Mark Lesswing, vice president of the National Association of Realtors Center for Realtor Technology, who adds that many of the newer players in the market are experienced dotcom hands, such as Zillow's Richard Barton who founded Expedia.com. "Understand these new mediums and how to use them to project your expertise," Lesswing says. "What captivates people about Zillow.com is that you can take a house and upgrade two bathrooms to see what happens [to the home value]. That's engaging. Unfortunately, the prices they come up with are faulty."
Real estate organizations such as the Houston Association of Realtors, have already begun launching counteroffensives by combining their vast databases with snazzy technology such as maps showing the location of comparable home sales.
Good News in Falling Prices?
Macroeconomic factors are also at work. With markets holding steady or cooling in many areas, consumers are finding there's more to selling a home than just posting a picture of it online. "When people are desperate to sell, they want professional services even more," Evans says. "The [trendy] sites will tend to do best in a seller's market and with consumers who have low equity in their homes or [who] are looking at their homes as an investment."
And, if home prices begin to fall, some speculate that the number of real estate agents fighting for market share will drop. Hsieh points to markets like Detroit where as home prices have fallen, so has the number of real estate agents. "Commissions are still relatively fixed, so as the number of real estate agents falls, the average Realtor sells more [property] in Detroit than they did 30 years ago," he says.
The idea that there might be fewer competitors with whom one has to share listings can be viewed only as good news given that membership in the National Association of Realtors rose from about 767,000 in 2000 to nearly 1.3 million in 2005. And fewer competitors also means you may be able to spend less time and money marketing yourself and more time doing what's most useful to consumers -- like fleshing out the real differences in comps, finding undisclosed easements and sharing your sense of the market.