This article originally appeared in the August 2015 issue of the REAL Trends Newsletter and is reprinted with permission of REAL Trends Inc. Copyright 2015.
The More Things Change; The More They Stay the Same
Sure, technology is changing the industry, but some things remain the same.
- By Steve Murray, publisher
Recently, a software firm based in Boulder, Colo., announced that they have an app that enables buyers and sellers to navigate the housing market and the process of buying and selling homes. A local business writer for the Denver newspaper called me to get some perspective.
In the interview, I explained that there was little evidence that Millennials, or Gen-Xers, were bailing on the use of real estate professionals. However, there are those who may use such technologies to have a greater sense of control or involvement in the process. The founder of the new app disagreed and said he strongly feels that his system of combining mobile technology and traditional agents at a discounted price (of course) would begin to take market share from the incumbents.
Some Things Never Change
Let’s be clear. After a few billion dollars of real estate technology development, our industry amazingly looks like it did 20 and 30 years ago. The percentage of buyers and sellers using an agent hasn’t changed much and how consumers find and use agents hasn’t changed much either. Transaction processing, home search, and communications have changed hugely, and it could be that someday soon someone will crack the code, and we will see massive erosion in agent market shares of buyers and sellers of homes. However, there is no evidence that it is happening today or that it will anytime soon.
A recent study done by Digital Risk of 1,344 Millennials showed that 60.42 percent of them found agents most helpful in their search for a home versus 57.52 percent who said the Web was most helpful. Some 47.49 percent said they found the home they bought through an agent versus 29.82 percent who found it online; and 56.73 percent of Millennials said they prefer to search for homes with an agent versus 43.27 percent who said they prefer to do so independently. Interesting, right?
Agents vs. Online
Do agents have a significant lead over online? Not as much as they once did, but even this young, Web-savvy hip generation gets the value of the use of a real estate agent. Will this industry have to fight to keep its market share as high as it is now? Absolutely, there is no doubt about it.
As we said over a year ago in our book, “Game Changers,” and through the knowledge we obtain through our consulting work with brokerage firms, we firmly believe that the next major impact will be the spread of agent reviews and ratings.
In our own research on consumers in 2014, the percentage of recent buyers and sellers who used ratings and reviews and where it affected their ultimate choice of an agent was astounding. Agents who have experience and who have reviews, testimonials and ratings will get and keep a large share of the business in the next few years. They will matter.
Apart from that, we think that all of the great apps and all of the ideas that such technology will enable consumers to lower costs or do away with agents altogether is something that, even today, is far into the future.