I regularly read articles about the imminent demise of real estate agents. Youâ€™ve seen them too. They go like this:
The internet is changing how real estate is bought and sold; see websites A, B and C. Consumers now have access to information they never had before. As more folks peer behind the curtain, real estate agents are going to suffer from fewer deals and lower commissions. The end is near!
Although I agree with much of the standard template, there are usually two critical assumptions that get glossed over, resulting in a conclusion (real estate agents are the next dodo bird) that I disagree with.
The first implicit assumption is that the only thing real estate agents do is match buyers and sellers. Thatâ€™s the most visible part, but thereâ€™s actually more to it than that. Weâ€™ll save that story for another day.
The second implicit assumption is that real estate agents will ignore the internet revolution and cling to the status quo. Hopefully this blog is evidence enough that at least some agents are working hard to evolve their business to capture the best features of the internet.
Recent history has provided two examples of service industries that have been reshaped by the internet; travel agencies and stock brokerages.
Our family used to buy plane tickets through a travel agent â€“ there was no other option. Now, nearly everyone that I know uses the internet to book their own trips. Yet travel agents remain. Successful agencies seem to focus on corporate travel, where the agency is able to manage and report on the travel of a diverse group of people, or packaged trips and other value-added services that capitalize on an agentâ€™s unique knowledge. Travel agencies seemed at especially high risk for significant change because of the small transaction sizes, the relatively frequent purchases and the standardized products (all flights are basically the same).
In a similar way, stock brokers used to be the only access point to the financial markets. The internet was able to open the investment world to dramatically more participants, and the industry evolved in response. Today, financial advisors focus more on providing strategy and advice and less on gathering data and executing transactions. One could argue that financial services firms have benefited greatly from the internet because they are now able to provide higher-margin services to a more sophisticated and knowledgeable set of clients.
The real estate market will also evolve with technology, just like the travel agencies and stock brokerages. Despite the regular proclamations that the apocalypse is upon us, real estate agents will continue to play an important role for the foreseeable future. Buyers and sellers will continue to seek out professional advice forÂ their very large and infrequent transactions that involve a completely unique property.
Like the NBC public service announcements, the more you know the better. Technology helps buyers and sellers know more about the markets and the process. Technology also helps agents stay on top of their markets more effectively. Most importantly, technology reduces busywork so that real estate agents can provide a higher level of service and advice, becoming more of an advisor throughout the transaction.Â As Michael Scott would be happy to report, it’s aÂ win, win, win!