Agents becoming extinct?
The news cycle is at it again with threats of the real estate agent becoming extinct, often perpetuated by self deprecating agents themselves1. People fear change, whine about making less money, and that consumers are being fed too much information.
Our human story is always changing while continuing to be joined to common threads. For tens of thousand of years, humans have breathed air, eaten food, worked, lived and died. The ways in which this happens changes over time. We used to hunt food and pierce fish. Now we eat fois gras bedside in a fancy hotel and our perfectly round, genetically modified, red apples are what our kids think are normal.
So take the full time licensed agent and brokerage. They began as small neighborhood agencies then large corporate entities. No agency law, no MLS and hand written pocket listing cards to now virtual offices, electronic signatures, paperless transactions and transparent information on the Internet of every sale in many areas. But agents are still around, despite changes.
Tying the past to the present
What are the common threads? Payment structure, knowledge of homes before they enter the MLS, agents helping consumers, managing negotiations, and generally still more knowledge of home buying process than the consumer. A person buys a home maybe twice in their first ten years of home ownership. Then again maybe 10-15 years later. So, maybe three to four times in their lives.
I personally became licensed after my first home buying experience. I didn’t have an agent, I bought an owner financed home from my grandfather, and there was no home inspection, negotiations, cma, or even a title search. My grandfather was one of those who thought he could sell it himself, along with everything else in life. After just showing up at an attorney’s office one afternoon and signing some papers, I owned a home. Several years later, lots of money fixing the half self-installed roof, a five gallon bucket used as a basement sump pump pit and more, I took licensing classes. Lucky for me, my grandfather didn’t do any CMA’s and had he used an agent, perhaps he wouldn’t have been as surprised as he was when the house was “worth” two years later way more than what he felt was the value when he priced it himself.
Why industries change
Industries typically change when the consumer starts demanding more. They haven’t forgotten about their experiences in buying a home and have recently realized the need for change. When the real estate boom of the early 2000’s started, things started changing once again and real estate seemed to be on everyone’s minds.
In 2003, MRIS (our local multiple listing system) only allowed 6 photos. Around 2006, 20 more were added for an additional fee to the agent. In 2010, agents started paying photographers to take better photos. In 2012, maybe 35% of photos are being shot with professional equipment but there are still million dollar homes with agents taking the photos… and they are still bad.
Zillow, Trulia, Zip Realty, Redfin, and independent brokerages began popping up more and more. People were waiting for and talking about this new revolution wherein agents would become extinct for fear of the virtual agent or FSBOs banding together and *gasp* selling their own houses. Flat fee service companies have emerged and threatened to take business from the full service agent. Clients got burned, they didn’t feel like they got attention from limited services, and ultimately some of these systems weren’t in their best interest.
The Silicon Valley mentality
All of these companies started out with one mission, realized that their models needed to change and have done just that. Redfin tried salaried agents, ZipRealty tried rebates and both have realized while it may be a great idea theoretically, to change a way an industry works is just not sustainable. It’s about finding the balance of traditional services, cutting edge technology and client care. The majority of the country is not located or even has the mentality of Silicon Valley, so to oust all agents everywhere in revolt – that just isn’t going to happen overnight.
While all this is going on, most successful agents are still out there selling homes and working with consumers. They have kept up enough with technology to be able to text, know the main sites that consumers are searching, and have a facebook page, but their main priority isn’t the radical change happening around them, it’s their clients.
The consumer now knows about the big sites to search, and after that, they research how to buy homes, make their lists of what they think they want/need, go to some open houses and then call an agent who (hopefully) knows the areas, home styles, prices and all the rest of the intricacies of buying or selling a home. But once this experience is over, most consumers turn off the real estate radar and probably won’t be too concerned about real estate again for another several years and then, they will check to see what the newest search sites are.
But why are we agents still in existence in 2012? Hmmm.
Calm down, agents aren’t going anywhere
Perhaps the original intention was there to change everything, but from where I sit, today there are a lot of amazing people making huge advances to the real estate business but not making anyone extinct. The agent isn’t going anywhere. Calm down. There will always be consumers who can “do it themselves,” and why not let them? If they have the motivation, skills and knowledge, why not? It’s never going to be the norm because the average person doesn’t have the time, can’t keep up with trends or laws or just has no interest in taking on one more thing in their lives.
Laws change, marketing changes, contracts change, photo quality changes, technology changes, and consumer behavior changes. But for most people dealing with a home purchase a mere 4-5 times in an entire life, keeping up with these changes is not feasible. Broken pieces get fixed or enhanced and the real reasons for helping people find a home in which to live continues to remain. There always needs to be a common thread. There will be a future in real estate, and the agent will continue to be there. Perhaps in different roles, but still there.
mikec (@blogboy2)
March 21, 2012 at 3:28 pm
Customer care will always be needed. And only a real estate “human being” can really offer that. Thank you, Amanda
Lesley Lambert
March 21, 2012 at 11:36 pm
I have been doing this since we had to pick up our MLS book at the Board (for 23 years now) and it was 2 weeks or more out of date. I love the technology that has developed and have never felt that any of it was going to replace me or put my career in jeopardy.
I am not a door opener or a gate keeper. I am a negotiator, a trusted advisor. I am an expert and a resource. I am a professional who knows more about buying and selling real estate than any individual can know. I am a skilled negotiator who will, assuredly, make a better deal than anyone else could. I am a tiger in my field and I cannot be replaced by any program. I am not worried.
Ted
March 22, 2012 at 12:40 am
The short answer is NO. Most of the taunting I see about how technology is going to kill the real estate agent is usually from the same people who jump from one MLM to the next and try to sell real estate at the same time. Always convinced they can make 10K a month in their spare time, looking for the magic lead fountain.
Houses don’t sell themselves, houses wont sell themselves and Government requires a license because sellers and buyers do bad things to each other when left unsupervised. Will some models change? Sure and for the better, but probably one of the more larger examples of why Brokerage will continue is looking at Keller Williams. KW is out-pacing the big nationals each year of the down market while the big nationals are mimicking the numbers out of NAR. You can change the model – but commission sales is commission sales.
Even if sellers agreed to an upfront retainer for real estate services the top agents would still command the market, just like the top in any field and the retainers for the top would cost more than the retainers for those not at the top.
Look at the stock trading industry and financial planning …. Has eTrade put the traditional Stock broker out of business? Has eTrade abolished the need for licensed security dealers? Nope.
Norm Fisher
March 25, 2012 at 12:34 am
If this Internet thing ever catches on, we’re done!
Some of the world’s brightest minds have tried to displace agents and they’ve failed. Real estate agents have been around a long time and they aren’t going anywhere soon.
Mike Muranetz
March 26, 2012 at 11:34 am
Greta post Amanda! We REALTORS® have to welcome change. I love technology & gen X & Y people do, too. As a baby boomer, they like it when I can relate to them including social media. Still, many believe they can sell/buy on their own using the internet but little do they know, marketing is only part of the process. Here in Edmonton, less than 10% of homes are sold privately which also includes family members selling to other family members. Those are pretty low results! Saying all that, we REALTORS® will still be needed for a long, long time.
ladygolfer
March 28, 2012 at 4:22 pm
The only real estate agents that will become extinct are the agents who don’t know how to sell property “to customers”, or “for customers”. After all, the whole purpose of hiring a real estate agent is to either buy a property or sell a property and in some instances manage a property. I have a lot of friends who are real estate agents. They all know how to show real estate but not all of them know how to sell real estate. I know which ones I would call if I was selling my home or buying a home. It’s the agent with a sales strategy. It’s the agent who doesn’t offer excuses for why a home hasn’t sold, but offers advice to facilitate a sale. Excuses such as “it’s a slow market”, “its tough for anyone to get financing”, or “the other homes in the neighborhood have lowered their price” are merely a way of saying they are not competent enough to sell real estate. I will hire the agent who hasn’t had a sign on a property I have driven past every day on the way to work for the last three years. (how long has that sign been in front of your neighbors house?) I would never call an agent who complains about the customers they are serving for either taking up so much of their time or not being willing to lower their price, nor would I hire an agent who doesn’t know the benefits of every neighborhood they have a listing in. If they can’t name the benefits of living in my neighborhood before I give them the listing then they won’t be marketing the benefits after I give them the listing. Its easy to sell a trendy neighborhood but takes sales skills to sell the average neighborhood with cookie cutter houses which is what most of us live in. I would not use an agent that doesn’t serve both buyers and sellers so they understand both perspectives. The agents I would contact usually have a house sold within 45 days or less regardless of the market conditions, and they know the market so well they can find the right house for a buyer in 45 days or less. They don’t have to continually lower the price to get a property sold because they priced it right to begin with. If a seller doesn’t like the price the agent recommends then the agent I would hire would have the integrity to not put their name on the listing because they know they wouldn’t be able to sell it. These agents know the values and benefits of the properties they are selling and showing, and they point out those values and benefits to potential buyers and their agents. They get out and look at every new listing in the neighborhoods they specialize in regardless of whose sign is in the yard. They do this to understand the competition and to also know the properties that are out there for buyers. They give the right advice to sellers so the home will show best, and aren’t afraid to be critical when a property doesn’t show well. They take good pictures that show the homes best assets. The description of the home is accurate and interesting so it stands out among the many homes competing to be sold in the same price range. (How many times have you seen the phrase “stainless steel appliances” in a description? yawn…) Unfortunately, the sales strategy of a lot of real estate agents for home sellers is to place it on the MLS, put a brochure with pictures and information in a box in the front yard, stick a real estate sign in the ground and a lock box on the door, and then keep dropping the price until someone buys it. They do not attend the showings when an agent brings a potential buyer and they rely solely on the information the MLS regurgitates to market the home to the buyer’s agent. They do not network with buyers agents outside of their own office nor do they have a network of potential real estate investors that may buy the home as an investment. They do not drive by their listings to make sure the yard looks appealing or offer advice for creating more home appeal. They wait for a seller to call to refresh/refill the brochure box. In other word’s they don’t work the listing! An agents’ strategy for working with home buyers is to check the MLS, print out brochures of potential homes, schedule the showings, take the buyer to the home, open the door, and walk around with them offering no knowledge of the home other than what was shoveled into the MLS by the listing agent. These are NOT- repeat NOT-sales strategies! Any home seller or buyer is capable of doing the same thing, which is why so many real estate agents will become extinct. Their extinction will be the result of their own choices in how they approach their job, improve their sales skills, and work their listings. Anyone can sell a home in a booming economy, but it takes a real salesperson to sell a home either to a customer or for a customer in a down economy like we have now. The reason so many homes still remain unsold is because the agents don’t have any sales skills other than lowering the price. Meanwhile, home sellers have figured this out and see no reason to give 6% and 6 months to an agent when they can lower the price of the house themselves to move the house faster and make more money on the sale. Using the strategy of lowering the price until a home sells damages a real estate agent’s credibility and business. Relying only on lowering the price to sell a house means smaller commissions. It also the hinders an agent’s ability to acquire future listings from home sellers in the same neighborhood. Home sellers never hire the agent who sells for the “least amount”-they hire the agents who sell in the “least amount of TIME” for the highest price. Lowering the price also hinders the buyers ability to get financing because the comp sets for the market area have been lowered by agents who continually lowered prices on homes sold previously. The next person in the neighborhood who wants to sell a home must now start with a lower price. The agents are cannibalizing themselves out of existence. If an agent is only selling PRICE then they are not a “real” real estate agent.The customers you are working with-whether buyers or sellers-have changed in the last twenty years. Unfortunately, a lot of real estate agents sales capabilities and skills have not changed in that same time period. If a real estate agent isn’t offering services that customers can’t do for themselves then they are redundant. Anyone who isn’t willing to admit this is trying to believe their own propaganda. The way homes sold twenty years ago doesn’t work in today’s world. Twenty years ago our parents had very few technical skills. Only 2% did their own research or had access to the tools to find homes or sell homes on their own. Not every home had a computer and a printer with which to develop brochures. Many did not have access to the internet with it’s MLS research and marketing capabilities, and even fewer had cell phones so that an interested buyer could contact them direct any time day or night to ask questions, schedule a showing, co-op with an agent, etc. Most home buyers and sellers have access to all of this now. Today, 77% of all buyers research homes on the internet before contacting either the home seller direct or the listing agent. Those exponentially rising percentages will make most real estate agents extinct-especially those without any selling skills. There’s no excuse for a real estate agent to not have sales skills today because anyone can take a sales course or do research for better selling on the internet. The home sellers and home buyers have done just that. This is not rocket science.
Ray Pepper
March 31, 2012 at 6:43 pm
Seattle is a bit ABOVE AND BEYOND the rest of the country in technology and consumer saavy. I assure you the real estate Agent, as we know it, is coming to an end because the consumer is demanding it. Our numbers along with so many other differnet type technology driven Real Estate offices are taking market share while rebating the consumer for their assistance in their purchase or sale.
Good Luck to all you Dinosaurs because the Buffet is coming to an end and don’t be caught at the end of the line or there will be no food left!
Gord McCormick
April 9, 2012 at 8:20 am
great article! reminds of the of the mid-late ’90’s predictions from the experts that traditional retail stores were going the way of the dinosaur with the advent of the internet….it doesn’t appear that has happened…
be_shh
May 22, 2012 at 4:02 am
https://www.myteamruby.com is a top Raleigh real estate agent. If you want to know more about realtors there’s a helpful blog on her site.
Ryan
September 23, 2018 at 9:00 pm
In a fast appreciating market, when selling a home is considerably easier, these types of questions get asked and “disruptors” pop-up. When times get tough and skill is needed to sell a house, those agents with the skills will always be called upon.
Computer modeling and “zestimates” can only take you so far. You need, and will always need, an impartial third party who knows the market and market trends to accurately price a property.