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Real Estate Agent, the Web, & the Future
by Joel Walsh
http://www.ziprealty.com
Will the internet do to real estate agents what it's done to
travel agents? That question has incited fear among some in
the real estate world. The recent launch of a
do-it-yourself real estate website by one of the founders of
expedia.com has given new urgency to the discussion. Yet
the fact remains that we are well into the maturity of the
ecommerce age, with no end to the real estate agency
industry in site. Are real estate agents finally out of the
internet-competition woods?
What the Web Has Done to Travel Agents
In case you're not familiar with the effect the internet has
had on the consumer travel agent industry, just pay a visit
to your local travel agency. Very likely, you'll find
either a vacant storefront or another business. It is
widely believed that the internet~in particular,
do-it-yourself travel websites such as expedia, travelocity,
orbitz, and priceline~has proven more competition than most
travel agents could bear. How were the websites able to
beat the travel agents? There were arguably two big factors:
1.~Cost. Cost savings is the most commonly cited factor in
the decline of the consumer travel agency industry. This
was one case where "cutting out the middle man" wasn't just
a slogan. When the travel agent no longer had to be paid, a
trip usually got that much cheaper. But perhaps the biggest
challenge to travel agents wasn't the cost savings to
consumers, but to the airlines. The airlines aggressively
pushed the new travel websites, cutting agents' commissions
at the same time. It is widely believed that the airlines
saw they could get more money selling through the internet
than through agents.
2.~Knowledge. Travel agents had sold themselves to customers
largely on the basis of their knowledge of travel planning
and the locales to which they sold trips, and their ability
to find the lowest airfares and best-value hotel rooms. Yet
the internet put a great deal of that knowledge at people's
fingertips. For instance, airlines' published fares~and
even cut-rate "consolidator" fares~were now just a web
search away. Ditto for hotel rates, travelers' reports,
local profiles, and State Department advisories.
Real Estate Agents and the Web: Better Outlook?
The commercial mass-market world wide web is now over 10
years old, and unlike travel agents, real estate agents are
still going strong. In fact, the last few years have seen
the ranks of real estate agents swell with thousands of
people who found the field not only exciting but potentially
lucrative. Could it be that there are problems with the
comparison between travel agents and real estate agents?
*~Cost. At first, cost would seem to be a more important
factor for real estate agents than travel agents, given how
much money is involved. Yet money weighs in favor of real
estate agents as well as against them. Both buyers and
sellers stand to make more money if represented by real
estate agents, who can puff up or negotiate down the price
of a property.
*~Knowledge. Consumers have shown themselves quite willing
to do their own research for travel plans. The knowledge
needed to handle real estate transactions is arguably much
more daunting. Failing to dot all the i's and cross all the
t's can lead to quite a real estate headache, even legal or
tax problems. Meanwhile, the seller in the real estate
market is usually an individual person; in the travel
industry, the seller usually is a monolithic corporate giant
like Delta or Disney. For the average individual,
"branching out" into real estate by building up a wealth of
knowledge on the subject may not repay the investment.
*~Fun. Ultimately, planning your own travel can be fun: you
learn about different places and get to imagine what each
experience would be like. It's hard to see how selling or
buying a house is fun in the same way. Sure, there are the
exciting expectations for the future after the sale has
closed. But the buyer and seller are still involved enough
in the process even with a real estate agent that they
aren't missing anything but the stress.
Looking to the Future of Real Estate and the Web
What will the future hold for real estate agents? The new
website, zillow.com, founded by one of the founders of the
travel website expedia.com, may point the way. Despite all
the travel agent vs. real estate agent comparisons the site
excited, it does not actually allow visitors to buy or sell
real estate. At least for the moment, then, it does not
affect real estate agents on the important issue of costs.
Yet zillow.com may pose a real challenge to real estate
agents in the area of knowledge. As reported in the Los
Angeles Times, the site aims to be for real estate what
Kelley Blue Book is for automobiles: an easy way to find out
the value of a property. Simply type in the address, and
you get a number~even if the property is not on the market.
To be sure, many real estate agents quoted in the news
scoffed at the machine-generated property values provided by
the site. But the knowledge the internet offers buyers and
sellers~knowledge once only available from real estate
agents--will likely get better in the future. Will more
knowledgeable buyers and sellers choose to go it alone?
Will they just demand a better deal from real estate agents?
Or will agents be able to justify their current services
and fees?
One thing's likely: how real estate agents market themselves
is going to get quite a bit more complicated.
About the author: Joel Walsh writes for ZipRealty about
multiple listing services: http://www.ziprealty.com
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