Real estate endangered? Not really, say experts
March 11, 2006
Insert "Park City home" and ebay spits out a listing for a remodeled Victorian home on Doc Holliday Drive.
To peruse six photos of the kitchen, living room and deck, click clear. No need, it seems, to contact a Realtor: to contact the seller, click here.
Is this the future of real estate transactions?
A New York Times Magazine article entitled "Endangered Species" suggested Realtors, like travel agents before them, could potentially face extinction in the near future.
Written by Steven D. Levitt and Stephen J. Dubner, the authors of the book "Freakonomics," the article argues new Web sites like zillow.com let anyone figure what a home is worth, and Web sites like craigslist.org have the ability to match buyers and sellers responsibilities traditionally left to members of the real estate industry.
"As those services and ones like them become more popular, it is hard to imagine that the market will allow Realtors to maintain their hefty commissions," the authors wrote.
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Michele Wallen, whose husband John posted their 3,600-square-foot home on ebay, says the Internet has not replaced their need for a Realtor, however.
The Wallens’ home has attracted a lot of interest since it appeared on the market last November, Wallen reports, since the house is so "easy to show." The calls she’s received concerning the home, however, have come from those driving by the house, and typically, they call the Realtor’s number they find at the front of the house.
The Realtor used the Internet as a resource as well, but Wallen has not heard of any offers coming directly simply from seeing an image on the Internet.
"We’ve listed our home with a Realtor as well and he posted the house online at Realtor.com and we didn’t have any activity from it," she said. "As far as I know, we didn’t have any activity from online [listings]."
Park City Board of Realtors President Betty Brown, does not dismiss the Internet. It’s a resource, she says, which helps to spread the world instantaneously throughout the United States and abroad.
"I view [the Internet] as a tool. I think it’s very helpful you reach so many buyers at one time when your properties are on the Internet," Brown said. "It’s a way of doing business for any business."
Brown could not say whether or not a seller would be effective if they simply posted a listing on the Internet. She was concerned, however, that sellers look at the risks involved in handling transactions themselves. In some cases Brown admits that selling a home without a Realtor works out fine, but in other cases it can be "totally disastrous."
"Obviously there are alternate business models. All I know is that people need to be aware of the liability associated with selling their home and where a real live Realtor can help over the Internet, versus people who are not trained in real estate," she said.
Online catalogues, according to Brown, will not replace Realtors.
"I’ve always known the value of a Realtor, but it’s taken me 28 years to really realize it. To actually have thought you’ve seen it all, and then find out there’s still more out there associated with risk that’s taken me years," she explained. "The internet cannot replace the human element in real estate. The Internet is a passive source of information."
But Brown recognizes that the real estate industry is changing because of the new technology.
"I don’t think you get a decision made about anything unless a person drives by a house, quite frankly. A virtual tour does not replace a physical inspection it’s a tool," she says. "A good Realtor uses the Internet for exposure and to help the buyer and in turn, that helps the seller."
In response to "Endangered Species," the National Association of Realtors President Thomas M. Stevens wrote a letter to the editor of the New York Times Magazine, arguing the article a "vicious attack" on real estate agents. The article, he said, carried errors in fact and assumptions.
Stevens recalled a decade ago Bill Gates’ The Road Ahead, in which Gates predicted the Internet would reduce the number of real estate agents in half. Instead, Stevens countered, that the National Association of Realtors has gained a third more members since the book was published.
"The real estate industry adapted to the Information Age and changed the way we work to meet consumers’ needs. That’s why studies have consistently shown that homebuyers who use the Internet to search from a home are more likely to work with a professional than those who don’t," Stevens wrote in his letter. " What real estate agents do is very different from travel agents or securities brokers. Every piece of real estate is unique, the transaction process is complex."