Consumer-driven websites are good for the industry
(This article was originally published by Inman.)
If you work in real estate, you have likely heard or spoken this sentence: “Zillow is killing the industry.”
Well, here’s a controversial opinion: In spite of the prevailing opinion, our industry is actually thriving in the age of consumer-driven, third-party real estate websites — and I can prove it.
According to the National Association of Realtors’ Study of Home Buyers and Sellers, 69 percent of buyers purchased homes using real estate agents in 2001. By 2013, that number had grown to 88 percent!
You might ask, “But how can that be? Buyers can search available homes online. Why do they need us?” Let us look at another statistic for an answer.
According to the same study, it took seven weeks (on average) for a buyer to find his or her new home in 2001. The search had expanded to 12 weeks in 2013.
“OK,” you say. “Buyers might still need us. But Zillow and discount agencies are forcing us to discount our commissions.” Not quite. Between 2008 and 2011, the average commission had increased from 5 percent to 5.4 percent.
In Jeff Jarvis’ 2009 book, “What Would Google Do?” he suggested that real estate agents would become nearly extinct, just like travel agents. But as Mark Twain once said, “The reports of my death are greatly exaggerated.” Mr. Jarvis may be a brilliant guy. But in this case, he was dead wrong. Here’s why:
Travel agents mostly sell “widgets.” One seat on a plane is no different from another (with the exception of first class). Travelocity, Orbitz and the like have squashed travel agents because these sites allow us to buy our own widgets at cheaper prices. Hotel rooms can now be judged from afar, as well. A combination of consumer photos, interactive maps and reviews have given us all the information we need to choose wisely. And if we are not happy with our hotel choice, we have lost nothing but the cost of the room for the night.
Buying a home is very different from buying a plane ticket or reserving a hotel room. First of all, the average person will buy only a few homes in his or her lifetime — it’s not a regular enough occurrence to make it commonplace. Then, each home is very different in features, conditions, location and other factors. Homebuying and selling are also two of the more important financial and legal transactions we will undertake in life. Next, a home is often the most valuable asset we own. Lastly, a home is an expression of the way we live. It is a container for our family and treasured belongings. This makes buying or selling an emotional process. For these reasons, this process is not something that most people want to navigate without a professional.
There is no doubt our industry has seen many changes in the last 10 to 15 years. But what is perhaps more important is how our business has not changed. Let us count the ways:
1. Most people still select their agent through a personal connection. NAR says that 50 percent were referred, 12 percent used the agent they used in the past, 6 percent met the agent at an open house, and 3 percent were personally contacted by the agent. This is a total of 71 percent of buyers selecting an agent because of a personal connection.
2. Buyers still need the same skills from us. Though more than 90 percent of buyers are using the Internet to search for homes, 53 percent of those polled wanted help finding the right home. They are perhaps spoiled for choice, and so they are in need of expert guidance in specific areas: 23 percent of buyers wanted help with negotiating, 8 percent wanted help with determining the sale price of comparable homes, and 7 percent wanted help with paperwork.
3. They still rank our honesty, reputation and skill as important when selecting us. When polled, trustworthiness (25 percent), reputation (21 percent), personal connections (16 percent) and knowledge (8 percent) were the most important factors in choosing an agent.
4. Buyers note multiple benefits in using an agent. Those polled said the agent provided many benefits, including help with understanding the process (59 percent), pointing out unnoticed features/faults of the property (53 percent), negotiating better contract terms (44 percent) and knowledge of search areas (44 percent).
So let buyers search on Zillow, Trulia and other websites. That allows them to come to us with a better idea of what they want and do not want. Then, do what you do best: Connect personally, offer guidance, educate them and be a resource. After all, that is why they hire us.
Just remember to maintain that relationship after the sale … that is, if you want them to hire you again.