Vol 7 No. 50 - September 5, 2007

Real estate industry embraces Internet

By Louise Bolger
sun staff writer

To say that the real estate business is in a transitional phase would be the understatement of at least the decade. In 1987, when I first acquired a real estate license, there was no Internet and the only computer in the sales office was for keeping track of your customers and hardly used. New listing sheets were delivered daily, and every realtor’s vehicle was layered with coffee stained listing sheets. Potential clients actually waited for you to return their call and understood if you were unavailable.

Well, those days have been over for a long time, and the full impact of technology is still having an affect on the industry and will for some time to come. Because of this, several models of doing business are being tested in the market place, all of them with pros and cons.

Traditional full-service firms, some with national prominence and others local independent brokers, have set the standard for the industry. They have a proven system and can offer valuable experience and service to buyers and sellers. Because of their financial resources, these firms have embraced technology and have excellent Web sites and online access. However, in order to compete in a shifting industry, they may need to start being more flexible in their fee structure, amenities and systems.

For sale by owner Web sites have been popping up for the past five years. Basically these Web sites are just an inexpensive advertising portal for people who want to sell their properties without paying Realtor commissions. However, whether you’re placing a for sale by owner sign in your front yard or going more high tech on the Internet, most homeowners still need professional advice, especially when it comes to pricing correctly. The National Association of Realtors’ statistics show that just 7 percent of for sale by owners sold their house without the help of a licensed professional.

Flat fee companies are inexpensive, but really don’t offer too much more than for sale by owner Web sites. They generally have a scale of fees available for more service and are licensed, but essentially you’re not offered much advice.

Discounters also offer tiered services with the goal of providing clients options not offered by traditional brokers. It could be a way to save some commission if you’re confident you’re getting an appropriate level of service, but remember you always get what you pay for.

Refunding commissions to buyers is a new business model we’re starting to see around the country. However, since buyers don’t perceive that they are the ones paying the commission, listing your home with refunders may not actually attract buyers. All they’re really doing is giving up part of their selling commission as an inducement to recruit buyers. The buyers may ultimately suffer in the level of service received.

Virtual brokers have also materialized on the real estate scene in the last couple of years. If you’re comfortable doing business totally within the confines of a computer, go for it. It’s inexpensive and certainly an interesting concept, but I doubt it will ever take the place of local knowledge.

The business of brokering real estate isn’t going anywhere soon, but the reality is that buyers and sellers are looking for a more efficient and less expensive way to achieve their goals. When the industry finds its comfort level, the outcome will probably be a hybrid of all of the above. Options and commissions based on levels of service that will accommodate everyone from committed for sale by owners to clients who want their broker to handle it all, soup to nuts. In order to keep up, everyone will need to be willing to change. Too bad, I really looked forward to those daily listing sheets.

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