Change Provides Key to Staying Vital for Real Estate Agents
Over the last few years, real estate agents have been dealing with challenges in multiple areas of the industry. Today’s agents struggle to reconcile with changes such as new real-estate technology, industry disruptors and shifting roles in home transactions. For the most successful agents, the key to remaining relevant and competitive lies in mining opportunity out of an ever-changing market landscape.
The Real Estate Tech Deluge
National Association of Realtor (NAR) data shows that commissions are subject to downward pressure, while home sales are increasingly concentrated among a group of high-performing agents. These factors make having a competitive marketing advantage — both to find clients and to sell properties — all the more important. For many agents, staying competitive means turning to emerging industry technologies. But with tech rolling out so fast, that alone is a challenge.
It’s hard to believe, but the ubiquitous iPad launched only six years ago. Even the iPhone and its many apps are still less than a decade old, despite surpassing one billion devices worldwide. And the technological deluge has only gotten more intense.
A recent article on Inman warned that real estate agents need to keep up with the times, even if that’s a challenge because technology is already changing the way agents do business. Consider video conferencing, Zillow, Trulia, cloud document storage, scanners, CRMs, virtual assistants, digital marketing, and of course social media. These are all relatively new technologies — and the median career tenure for Realtors is reportedly ten years — meaning many tools have come online since agents were trained in the field. To remain competitive, agents are expected to pick them up and put them to use in the field.
The Industry Disruption Surge
One of the factors driving agents to work for a technological competitive advantage has to do with innovators “disrupting” the industry. Here, both agent sales volumes and commission rates are at risk.
“The ‘Uberization’ of real estate threatens agents the same way it did cab drivers,” wrote Stefan Swanepoel, an industry consultant and author of NAR’s 2015 “DANGER” Report. Swanepoel’s sweeping “Definitive Analysis of Negative Game Changers Emerging in Real Estate” report rocked the industry with revelations that lower commissions and new pricing models would be “commonplace” in the next five to 10 years.
A recent Washington Post piece lamented that once-common six percent home-sale commissions are likely on the way out. Real estate tech firm Redfin now offers a “thrifty” 1.5 percent commission rate, according to the Fresno Business Journal. And while that firm hasn’t grown much beyond a three percent market share, it’s already having an effect, with the trend likely to continue. The Post notes that other firms, such as SoloPro, ListingDoor.com, and Owners.com, are pushing into agent territory by offering “agent-lite” services to for-sale-by-owner (FSBO) clientele.
Agents’ Home Transaction Role Changes
However, all is not lost for real estate agents just yet. Just last month, Spencer Rascoff, CEO of top real estate data firm Zillow, told MarketWatch that even he thinks consumers should use a real estate agent. Rascoff had been in the news for selling one of his properties below its automated valuation “Zestimate” and buying another property for more than its algorithmic price estimate.
“We call it a Zestimate and not a ‘Zeppraisal’ and not a ‘Zeprice,'” he quipped. “It’s meant to be a starting point. To determine a more accurate opinion of a home’s value you should hire a real estate agent,” Rascoff added, emphasizing that the agent role was still “really important” for finding a home, understanding value, and strategizing an offer.
As for how the role of agents could adapt to this new technology and disruption-prone landscape, the only way out may be through. Susan Daimler, GM of StreetEasy, told Forbes that the tech factor was a double-edged sword.
“Tech advancements in the industry have provided more tools for real estate agents to remain connected,” she noted — important for hot markets. However, such technology also “raised the bar for what it means to be a good agent.” For Daimler, “Being real estate-savvy is no longer only about possession of information,” much of which is now publicly available to real estate consumers online, “but about being able to translate that information into useful insights.”
Real estate agents certainly have had to face many changes over the last decade. However, there does appear to be a way forward. While agents have little control over technological and commission changes, savvy individuals could still capitalize on the opportunities such changes provide. Homebuyers and sellers aren’t likely to give up anytime soon on the expert council of agents for what is typically the most important purchase of their lives. And despite its newness, more and more people are becoming comfortable with technology and using it to work more efficiently without too many growing pains. For the foreseeable future, real estate agents are likely to occupy an important and visible place in the industry.