The Internet Will Replace Realtors - The Fatal Flaw.....

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Services for Real Estate Pros with LifeOhm - Life Coaching for Real Estate Professionals

The Internet Will Replace Realtors - The Fatal Flaw.....

Relationships Are KeyMany of you remember the concern and controversy that came up several years ago when sites like Zillow and Redfin came on the real estate scene. They aren't very involved in our state but it still made local headline news.

Some people said, and still say, "the internet will replace Realtors" and "Real Estate Services will become a commodity."The theory was that people could appraise their home online and then buy and sell themselves, saving money by cutting real estate agents out of the equation.

This theory had a fatal flaw however,as Redfin discovered with its Internet Only approach to real estate. The real estate buying and selling process is often an emotional one, and is rarely "cut and dried".

While consumers like data and like to be able to research real estate and the market themselves online, they value relationships more. And, in the end, they turn to a Realtor (R) that they know and trust.

Redfin is a great example of this point, even during the recession, their user numbers continued to increase. However, they found that an increase in users did not necessarily translate into more paying customers. When people are ready to buy, they generally work with a Realtor(R).

So, in February of this year, Redfin announced a marketplace for agents with data-driven agent profiles. They will work to combine both data for consumers and the personal relationship of working with an agent.

While companies like Redfin and Zillow won't replace real estate agents, they do provide a valuable service in helping to educate consumers, and helping to make Realtors(R) better. The new scoring system that Redfin is creating will be an interesting study. Their goals are altruistic in trying to use data to benefit consumers and they have become a good resource for agents.

With all of the changes in the real estate and mortgage environment, using data to help all of us improve can only be a good thing.

To Read More:

Redfin Creates A Marketplace for Agents

Scarlet Letters and Dying by the Sword

Video clips of Redfin.com CEO Glenn Kelman from the BloodhoundBlog Unchained preview event in Seattle

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Re-Blogged 5 times:

Re-Blogged By Re-Blogged At
  1. Sandy Childs 03/17/2009 10:13 PM
  2. Jean Terry 03/17/2009 10:26 PM
  3. Donald Bradbury 03/18/2009 06:36 PM
  4. Donald Bradbury 03/18/2009 06:36 PM
  5. Elliot Sirota 03/18/2009 09:30 PM
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Rainer
67,429
Russell Benson
Prudential Alliance Realty-OKC, OK - Moore, OK

These 3rd party websites are always hot to trot when they first come out but like all sites they discover they need revenue to sustain themselves so along comes the products for agents/Realtors, most of which are overpriced and worthless.  Realtor.com is a prime example.  They used to be great and have since lost their luster yet want to charge us more.  HouseValues.com is another excellent example.  I made a lot of money from them until they decided they wanted to change things (translation:charge more/give less) and now look where they are.

The bottom line is the experienced agents who work hard, have a great website and are proficient with technology and Internet marketing will succeed without having to shell out lots of money to 3rd party websites.  I personally stopped using Realtor.com, print advertising, Homesok.com (local) and have not missed out on anything.  A wise Broker and very dear friend told me long ago that these companies want to catch our leads upstream and then sell them back to us.  I think we really just need to move further up than they are.

Mar 18, 2009 09:30 PM #62
Ambassador
884,011
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

I think that reports of the death of real estate agency are premature and greatly exaggerated. 

Mar 18, 2009 09:32 PM #63
Rainmaker
414,460
Regina P. Brown
California Coast & Country Homes, Inc. - San Luis Obispo, CA
e-Pro Realtor

Kevin & Monica, you bring up a HOT topic, Zillow.  Other than brand-new cookie-cutter houses, each home is so unique that an automated appraisal system will never work.  As you know, there is only ONE true measure of a property's value:  what a qualified buyer is willing to pay for it on the open market at a specific point in time.  That's it.  Appraisals, BPO's, CMA's, and other valuations mean nothing more than a piece of paper, if a buyer is not buying the property for that price.  The best test of a property's value is to put it on the open market and get

Join my new AR group and post your blog at http://activerain.com/groups/virtualoffice

Regina P. Brown

Mar 18, 2009 10:46 PM #64
Rainer
138,826
Tony Hager
United Realty Texas - Denton, TX
Broker

Zillow is so far off base it is unreal, I don't see how they will ever be able to provide accurate appraisals.  All they go by is tax data, they miss my area so bad comparing homes that shouldn't be and so forth.  Kind of like new agents do when they just sit and do CMA's from the mls without any drive by's.  Pictures can be so misleading sometimes.  I don't see the internet replacing us anytime soon.  My other opinion is, Why do we give away our data to these people in the first place.  We need to draw "Our" date back in and do the advertising ourselves as agents and stop letting all these sites have free listings to show off to try and hook us into paying a referral fee for customers that would have come straight to our own websites had we not given our data away to these third party websites, Realtor.com included.  We pay dues only to be hijacked by our own association and expects us to pay even more to upgrade our listing on our associations website. 

Mar 18, 2009 11:20 PM #65
Rainmaker
319,937
Don Anthony
Don Anthony Realty ~ www.DonAnthonyRealty.com - Charlotte, NC
Charlotte & Triangle NC For Sale By Owner Agent & Discount Realtor

Although I believe the number of people who don't use an agent will continue to grow, since homes aren't bought and sold that often by the majority of the public, the "fear factor" will keep most people from selling their home on their own for many years to come. 

Mar 19, 2009 12:40 AM #66
Anonymous
Anonymous

These are great comments.  I think the internet, Zillow, Redfin, etc., will and does help the Real Estate Agent.  I think that as the public becomes more involved with internet searches more specific questions will be asked of us.  Basically I think we already know the answers to these questions because of our own search and investigative capabilities.  So actually it's putting our work to better use.  I welcome the education of the public and my own education.  It can only help.  And the FSBO lowering  the selling price, I'm not experiencing that in southern California.  I've been following FSBO prices for 3 months and see that most of their listing prices are 10 to 15 percent higher than what's listed on the MLS.  The edge with an FSBO is in negotiating a "owner carry deal" or lower deposit and that requires an agent. 

Mar 19, 2009 03:21 AM #67
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2,447,791
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Only people who do not understand real estate brokerage would think that a company like RedFin, which deminishes fiduciary or Zillow which is an advertising portal, could replace real estate brokers and licensed practitioners.

Not going to happen for the forseeable future.

Each of these Internet entities focus on one facet of real estate brokers.  Zillow focuses on valuation and does that very poorly with a fatally flawed model.  Redfin focuses on commissions, which deminishes the value of the driving force behind real estate brokers, the agents. 

We're fine.

 

Mar 19, 2009 04:47 AM #68
Rainer
15,305
John Palmisano
Keller Williams Properties Weston, FL - Weston, FL

Hi Kevin and Monica,

     The Internet and sites like Redfin are a tool for education, marketing, or both. The home buying process is still an emotional process, and consumers will still turn to professionals to help them. You need to look at your own buying process. I will research a purchase on the Internet, but I still purchase at the store most of the time, and I believe most people do the same. SO to repeat what has been said. The Internet or sites like Redfin will not replace Realtors.

Mar 19, 2009 06:48 AM #69
Rainer
46,726
Lucien Vaillancourt
Native Sun Realty, Inc. - Jacksonville, FL
Jacksonville Florida Real Estate

Many interesting comments here.  I read that "REALTOR's do not control the MLS" by Jon Zolsky.  That is a true statement, we (REALTOR's) provide the information and own it.  We choose to share it.  Without an MLS provided by REALTOR's internet based companies such as Redfin would have no listings to display on their website and hence be denied an opportunity to bash the very people who enable them to exist.

Lenn Harley also made a good point.  Without a REALTOR buyers and sellers may not be aware of disclosure requirements and the protections afforded each party in a transaction.  A REALTOR can ensure these requirements are met and reduce the liklihood of future litigation.

Yes, the internet has become a valuable tool for REALTOR's and consumers alike.  If REALTOR's and their MLS data were to disappear today would Redfin still be able to operate?  No!  If Redfin were to disappear would REALTOR's still be doing business with consumers?  Absolutely.  I rest my case.

Mar 19, 2009 08:23 AM #70
Rainmaker
181,555
Sara Bonert
Zillow - Atlanta, GA
Real Estate Internet Marketing

Just read thru the comments, and you all got it, but wanted to reinforce - Zillow is a website with information and functionality that helps people come to together to talk about real estate.  Our revenue model is media or advertising based - not transactional.  We just help get the conversation started, Realtors are who take it to the finish line.  We have no desire or intention to get involved in the real estate transaction itself. 

As for Redfin,business model aside, they do have a very nice site.  They have developed some great technology around the online home shopping process.  I can see why so many use the site - but then use a competent Realtor when it comes time to transact.

So, of course the answer is that the internet will not replace Realtors. In fact, in my opinion, it greatly helps Realtors.

Mar 19, 2009 09:20 AM #71
Ambassador
158,390
LifeOhm
LifeOhm - Life Coaching for Real Estate Professionals - Portland, OR
Monica at LifeOhm

Hi Mark - good point, a good agent can add a lot of value.

Thank you John.

Andrew, the Redfin change was a recent announcement, the links at the bottom of the post give the details.

Jon - you're right, some people are not willing to work with an agent simply due to commission.

Hi Brien - I've heard that same statement from several other agents, it's just taken a little time to see how they would affect the industry, but they don't seem to hurt agents.

Hi Matt - Good to see you on our blog :) I agree with your analogy, you can't replace the storyteller.

Jim - Good point.

Hi Ashton - thanks for sharing the link to that post, I think there is a misperception that it only takes Realtors(R) a few hours work to sell a property. I wish! There are many, many hours of continuing ed, marketing, and promotion. Not to mention risk mitigation, a good Realtor can save both the buyer and seller from potential lawsuits for disclosure, fair housing, and more.

Harrison - you are so right, transparency and honesty are critical in this profession, if you can't do those two things, you should find a new line of business.

Hi Alice and Jim - Thank you :)

Mar 19, 2009 10:17 AM #72
Ambassador
158,390
LifeOhm
LifeOhm - Life Coaching for Real Estate Professionals - Portland, OR
Monica at LifeOhm

Marian - I love that too when a client has "Googled" us :). And I like it when they have done some research online.

Kathy - good philosophy, I agree. Only 7% of agents are blogging according to several recent studies.

Anthony - there is definitely power in The Blog!

Bill - I like that - "Its always more fun to go with a knowlegable and friendly guide!"

Thank you Christopher and Stephanie - good to see you here :)

Russell - don't get me started on Realtor.com, it's a real pet peeve of mine.

Lane - I love it! "I think that reports of the death of real estate agency are premature and greatly exaggerated." Too funny :)

 

 

Mar 19, 2009 10:24 AM #73
Ambassador
158,390
LifeOhm
LifeOhm - Life Coaching for Real Estate Professionals - Portland, OR
Monica at LifeOhm

Hi Regina - good point, especially in our area. Comps can sometimes be from 20 miles away. It's really hard to "estimate the value".

Tony, interesting comment. I agree about Realtor.com especially.

Don -there is definitely a fear factor, there are so many details in real estate, it is hard for the average homeowner to be aware of everything. We spend many hours in continuing ed and are still learning everyday.

Charles - you're right, they need to have realistic pricing to be successful as a FSBO.

Lenn - Great wisdom :)

John - I agree.

Lucien - Bravo, well said.

Hi Sara - thanks for visiting our post :). I agree, Zillow and Redfin are good resources and will help all of us get better.

 

Mar 19, 2009 10:32 AM #74
Rainmaker
235,483
Jenny Durling
L.A. Property Solutions - Los Angeles, CA
For Los Angeles real estate help 213-215-4758

Redfin actually has a great search engine- it works better than our own Los Angeles are MLS. I had so many clients sending me listings they found on Redfin that were not in the correct MLS (therefore I didn't know about them!) that I finally signed up at Redfin myself!  I get notification of new listings, open houses, price changes, etc for ALL of the mls in the L.A. area. I wish our local mls would take a lesson from the site. I do think alot of buyers are taking advantage of the online brokerage in order to get 1/2 of the buyer-side commission back at the close. My loyal clients search Redfin but still work with me.  I think there are some buyers who will go with Redfin for the sake of finances while others will go with an agent they "know".

Mar 19, 2009 02:04 PM #75
Rainmaker
239,816
Benjamin Clark
Homebuyer Representation, Inc. - Salt Lake City, UT
Buyer's Agent - Certified Negotiation Expert

What you don't get from a computer is protection... or any real form of representation. You get data. And lots of it. And it only takes garbage in to get garbage out. A computer doesn't know or care if it is spitting out something ridiculous. It doesn't consider anything other than what is fed to it.

Mar 20, 2009 12:38 AM #76
Rainer
41,043
Kathy Booth, Setting the Stage
Setting the Stage - Newmarket, ON
Home Staging and ReDesign Professional

Clients that want to be educated with data is one thing but it cannot replace face to face contact.

Mar 20, 2009 08:18 AM #77
Rainmaker
19,586
Winston Westbrook
Westbrook National Real Estate Co - Victorville, CA

Great post guys. I hope we never get replaced by some websites but if we do then we will have to start a Zillow of our own lol

Mar 21, 2009 11:49 AM #78
Rainer
54,776
Kelsey Barklow
Evans & Evans Real Estate - Johnson City, TN
423/948-9154, Marne Drinnon 423/202-2277

Excellent customer service is still alive and well. Thanks for your post.

Mar 21, 2009 07:39 PM #79
Ambassador
158,390
LifeOhm
LifeOhm - Life Coaching for Real Estate Professionals - Portland, OR
Monica at LifeOhm

Hi Jenny - sounds like Redfin is a great resource in your area, very cool.

Benjamin - good point.

Thanks Winston & Kelsey :)

Mar 23, 2009 07:08 PM #80
Rainmaker
83,101
Winter Baserva
Seasons Realty Group of Solid Source Realty, Inc. - Atlanta, GA
Realtor -Homes For Sale, Atlanta, GA

Also, one of the things I think consumers are becoming more aware of is that A LOT of the information out on Zillow and Redfin is inaccurate. Since there is no TRUE regulation, after they drive by a few homes that are listed "for sale" only to find out there are new owners living in them, they turn to the professional who knows the most accurate info.

Apr 08, 2009 12:04 PM #81
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