Why buyers and sellers aren’t ready to trade agents for tech
While consumers have disrupted services like travel and transportation, that’s less likely to happen in the real estate industry, research suggests.
Key points:
- Consumers embrace technology that solves an everyday problem. Because most people interact with the real industry infrequently, they aren’t often thinking about how to change it.
- That’s one reason the industry has remained resilient, even in the wake of major changes, says 1000WATT CEO Brian Boero.
- But real estate professionals should be paying more attention to consumers' needs, because they “have the power to shape … how they make choices,” Boero noted.
FRISCO, Texas — There's a recurring fear in the industry that consumers will eventually move away from working with real estate agents and turn to technology to buy and sell houses. After all, they now use websites like Expedia to purchase airline tickets and apps like Uber when they need a ride — making travel agents and cab drivers a dying breed. Could the same thing happen in real estate?
Probably not, according to Brian Boero, CEO of 1000WATT — but the industry should be paying more attention to today's consumers and what they want.
After seeing home sellers drive change through the commissions lawsuits, some in the industry became concerned that consumers could disrupt the industry in other ways. At the T3 Leadership Summit on May 20, Boero shared recent research from his real estate consulting and marketing firm that suggests a major disruption isn't likely anytime soon. (Note: Real Estate News is an editorially independent division of T3 Sixty.)
Why the real estate business is more durable
So far, agents — and commission rates — don't appear to have been greatly impacted by NAR's rule changes, just as the rise of home search portals and advancements in technology haven't sidelined real estate professionals. Consumers generally still want the expertise of an agent and are willing to pay about as much for those services as they have for decades.
Why has real estate's business model remained so durable?
Because it's different from other industries that have endured significant disruption, Boero explained. For instance, getting a taxi was an everyday headache for some urban dwellers. At the same time, technology was improving and consumer expectations were changing, leading to the birth of ride-sharing apps.
"We as consumers drove change because somebody gave us a solution [to a problem] that we felt routinely, chronically," Boero said.
But buying or selling a home is not a routine occurrence. "We enter into real estate awareness, we do our transaction and we move on," Boero said. "People just don't spend that much time in our world."
And when consumers do enter that world, they have one goal in mind: "The average person when they want to sell or buy a home does not set out to change the real estate industry. What they want is to get through the transaction successfully," Boero said.
The industry is resilient, but it doesn't always meet consumers' needs
Through interviews and surveys, 1000WATT has captured some findings that Boero thinks the industry should be paying closer attention to: Consumers have a clear idea of what "home" means to them, but they are often confused and stressed about the real estate process.
For example, many of those surveyed had difficulty choosing an agent. When asked why, Boero said nearly half admitted they didn't know what qualities they should be looking for.
"People don't really know what they want when it comes to the details of buying or selling. They know what they feel, but don't know what they think or want about the process," Boero said.
What does that mean for real estate agents and the industry?
"We have the power to shape how they think about the transaction and how they make choices," Boero said. "And that power should be used with great care and responsibility."