I’ve bought and sold two homes since 2001 so I am no expert, but it seems to me that there is alot of room in the industry for technology to create more efficient and lower cost processes. Here’s some ideas off the top of my head where money will be saved:
1) ‘The search’ – Realtor.com and other sites are making it easier to search without a realtor. Online videos, photos, comps, neighborhood photos, tax data, school data, crime data etc. are changing the landscape. I am confident that I can go to any city in the U.S. and figure out everything I need to know about an area online and via my own research. Realtors will still perform this function, but in a much more limited fashion for a more select audience.
2) ‘The negotiation’ – We are now armed with more and more data regarding what homes should cost in a given area and in many cases don’t need realtors to give us comps, inside sales data etc. Also, online systems will evolve and offer negotiation functions over time. EG: If I see a house I like on Zillow, perhaps I make an online offer, they counter, I counter back and say I’ll pay closing costs and we have a deal. If the negotiation process for a home purchase were as utterly complex as many realtors say it is then something other than a high school diploma and a one month course would be required to do it.
3) ‘The paperwork’ – Online resources are lacking right now, and unless you belong to the CAR you basically have to go to Staples and buy outdated, generic forms. This is another area where online resources will grow and already have. I can go online today and find someone to do the paperwork for a couple hundred $, and if I am paranoid I can pay a lawyer to look it over for a few hundred more. I’m sure many lawyers will offer online RE review services in the future. Why pay a realtor $15,000 for this function?
4) ‘The Escrow’ – Resources to track and conduct escrow online will continue to increase. Less paperwork, more streamlined processes = less costly and easier for Joe on the street to keep track of what is going on. EG: Here’s your escrow web link, and on this page you will see all actions taken and also POCs for everyone involved. Would you like automated emails sent to your cell when each milestone is completed?
I’m sure I missed a whole bunch of issues, but clearly things are going to continue to change regardless of whether a few discount realtors go out of business. Already today, but especially in the coming years, many of the traditional functions performed by realtors and used to justify high commissions will be done online. Still, there will always be a need for good realtors, just not as we know them today IMO.
