Real Estate Still Needs That Human Touch
November 16, 2021
Much of life moved online during the pandemic. That became true for even the most tangible of goods—real estate.
Over the past 18 months, virtual walkthroughs and three-dimensional tours have replaced many in-person showings and open houses. Even closing paperwork has moved online, propelling the industry through the pandemic.
This new environment has led some to ask whether the real-estate agent profession is becoming obsolete. Why should someone pay an agent when they can browse properties online or reach buyers directly through an app?
The reality, however, is that modern technology is making agents and brokers more essential, not less.
Before the pandemic, homebuyers and sellers were experimenting with a new, online model of real estate—instant buying, or “iBuying.”
Some “iBuyers,” like Opendoor and Redfin, are household names. After a seller uploads pictures and basic details about their home to one of these sites, the company makes an offer. When the seller agrees, they can sell their home to the iBuyer without having to show their house or close on a deal.
But do-it-yourself home-buying and selling can be overwhelming. The iBuyers and the widespread proliferation of real-estate technology has overloaded consumers with massive amounts of information. Knowing what to do with that information is a different matter.
Hiring an expert with deep knowledge of a local market is the best—and perhaps only—way for a buyer to win a bidding war or avoid overpaying for a home. In a 2020 study, more than half of buyers said that agents helped them glean more information than they otherwise would have from online portals, saving significant amounts of time, money, and stress.
Sellers, meanwhile, have learned that a real-estate professional can stage their property elegantly and market it more effectively to a far wider pool of prospective buyers than they can reach on their own—even through an established iBuyer. Real-estate agents wielding the latest technology—from drone photography to targeted, digital advertising—can ensure a seller gets the best price possible.
The difference can be thousands and thousands of dollars. A Collateral Analytics study found that iBuyers charge more in fees and garner lower-priced sales than agents. That ends up costing the seller up to 15% of a home’s price. In contrast, typical broker fees cost a seller less than half that.
At the same time, some iBuyers are finding that they can’t respond fast enough to shifts in the real-estate market. Zillow shuttered its home-buying business last week after determining that it was “unable to predict future pricing of homes to a level of accuracy that makes this a safe business,” in the words of its CEO.
It’s tough for an algorithm to predict that a Tudor will receive 22 offers before selling for $150,000 above its asking price, as recently happened in Silver Spring, Md. Or that a house bought for $1.35 million at the beginning of the pandemic in the Hudson Valley of New York would go for $2 million just over a year later.
It’s no wonder the vast majority of people who hire agents are glad to have done so. According to survey research conducted last year by my organization, the National Association of Realtors, 91% of homebuyers said they would either use their Realtor again or refer them to a friend. The same was true for sellers. Nearly nine in ten sellers said they would “definitely” recommend the Realtor they used.
Two decades ago, at the height of the dot-com boom, the conventional wisdom held that technology would render real-estate agents obsolete. Realtors responded by launching realtor.com, which has become one of the top websites for consumers buying or selling homes. (The site is now owned by NewsCorp, which also owns Barron’s.)
Through Second Century Ventures, Realtors have also seeded more than 150 technology companies. They engage in everything from digital title and escrow transfers to virtual-staging tools and automated-marketing campaigns. Premier e-signature services provider DocuSign and remote-notarization platform Notarize are among the firms backed by SCV, NAR’s strategic investment arm.
Then there’s REACH, NAR’s own technology growth program, which has helped more than five dozen small companies scale up over the last decade. REACH’s game-changing startups include BoxBrownie.com and Immoviewer—which specialize in 3D 360 tours and floor plan renders—and AI-powered consumer data companies, like Propic.
Major venture investments like these illustrate that real estate professionals will continue to be at the center of the real estate market of the future—not rendered obsolete by iBuyers or other supposed technological disruptors.
Source: Real Estate Still Needs That Human Touch Barron's (Bob Goldberg) November 12, 2021