I was out at lunch with a colleague who had sold his house here in London last year, and now so very smartly rents a house on the beach in Brighton four times the size for less than a quarter what he was paying in Chelsea.
He lamented that he had cut a check for 20,000 pounds to his estate agent (i.e. REALTORTM on this side of the pond), and another one for 1,000 pounds to his lawyer (they're involved in transactions here).
Why, he wondered, is the system so broken that a bloke with no education, no serious training, and no work ethic, getting a check for 20,000 pounds, when a guy who went to university for seven years, with serious and focused training, a brilliant mind and someone who did more work than the estate agent in terms of hours, getting a check for 1,000 pounds?
Shouldn't it be the other way around?
And of course, as the realtor profession will find out soon, the answer is yes, of course, it should be the other way around.
There's this thing called The Internet that will completely replace and eliminate the realtor profession. It will serve as one big MLS. That's really the only value realtors provide - access and awareness.
Homeowners will hire - by the hour - the professionals they need to close a sale - lawyers, title agents, whatever. There will be companies who will coordinate the transaction and bring in the pros, for a flat fee or hourly fee. FSBO will be the rule, not the exception.
Homebuyers will hire - by the hour - someone if they need to to get in their leased Lexus and drive them around and point out cabinets and bedrooms. I figure an 18 year old kid can provide that service. Homebuyers will pull their own listings and comps off of this thing called The Internet.
As house prices plummet, sellers will be looking for any way to cut costs, so they lose less. The few buyers out there will be sophisticated enough to do their own legwork.
This will take time, more here in the inefficient UK than in the hyper efficient US. But it'll spread worldwide.
Start thinking about that career change Osman. It's coming sooner than you expected.
May 12, 2006
The death of the realtor profession
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19 comments:
nice post - this can't come soon enough. i'm surprised it's taken this long, but with people making so much money these past few years, they didn't care that their realtor was screwing them.
now they will
If people made real estate purchase decisions based on economics this would be true. However, most home buyers make emotional decisions and are subject to sales techniques. 60% of the new car buyer's decision is based on COLOR, not engine efficiency, features, or reliability. The same is true of homes where the primary decision makers (and most of the sales force) is female. Just look at real estate sales advertising and you'll see that emotionalism plays the biggest role, not reason.
How about the new 50 year mortgages?? if your $300k house crashes and is only worth $150K in 3 years, then you're srewed! Very low equity, a worthless house, and a debt you'll never pay off.
I bought a house at the top of the 1990 bubble. My realtor bought me a plant and a stuffed animal for my newborn. Then she moved away so she wouldn't have to see my child loose her home and need that stuffed bear for comfort.
I too, can't believe realtors are still around. As the internet has done to travel agents, so too will it destroy realtors.
I recently sold some property and while I had to spend some time educating myself, it was no difficulty doing the whole transaction without a realtor. The escrow company does most of the heavy lifting.
BTW, the realtor doesn't get 6%. That usually gets split in quarters: Selling realtor, selling office, buyer's realtor, buyer's office. It's still far too much for what they do, but 1.5% is not as startling as 6%.
There are plenty of folks in the housing market who can do deals for themselves, I agree and have no problem.
I also agree that the traditional ways of REALTORS is coming to an end. But that's not to say that the REALTOR industry will die.
I already offer services for fees and did so througout the hottest times in the market the last couple of years.
I already have buyers sign a buyer and broker agreement for my time and service (in the event that the client chooses to buy from an unrepresented seller). Clients are doing this.
If there really is going to be a glut of homes on the market (like there is compared to markets in the early 2000's), the home/property is still going to have to be marketed. Still something a REALTOR can do more effectively (and for less cost) than a home owner can do.
I understand the loathing of REALTORS on this site, but it doesn't phase me or my business. I have no problem dealing with unrepresented buyers or sellers. When I tell would be clients and even clients already in a written agreement with me that I'll walk away from the deal... no one takes me up on it. I still get paid.
When unrepresented buyers call me to buy a listing that I am representing, I mostly tell them that I have no intention of representing them in the transaction, and that they are free to negotiate with another REALTOR or make an offer unrepresented. If that buyer chooses to represent him/herself, I lower the commission rate (if its a % rate) accordingly for the seller to the work I do. Clients think it is fair. I don't do both sides of transactions unless it's a land deal for cash (after written permission from both parties of course).
REALTORS will have to be creative to stay in the business.
Don't REALTORS know it really creeps people out that they use all caps for REALTOR (and then that damn TM too!)
Like
I have to go to the DOCTOR's office today, becuase I need a DOCTOR to get a prescription
Or
I asked my BARTENDER for a drink
What a joke. But it shows a few things
1) they're obnoxious, always YELLING about something
2) they're meek and want some ATTENTION
3) They know their profession is a joke, and want it to STAND OUT vs. belittled
I agree with the entertained realtor.
There are plenty of folks out there who can do their own real estate transactions and it's been that way for a long time. However, I don't agree that the majority will ever engage in the practice of going FSBO. A r/t airline ticket and a hotel room is hardly one of the largest, most stressful financial transactions people face.
Didn't we argue this one weeks or months ago? I thought the horse was thoroughly dead already. Keith, you must be running out of ideas or something. Talk about trolling for a little debate...
In any case, entertained realtor, I think you're right on the money with being creative. The future for real estate professionals is about increasing the value proposition for clients and non clients alike. One of the reasons I take time to blog.
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Amen. What I like to add is, with places on the Internet like emongoo.com, who needs a realtor? With places like this you can get your home or property viewed my millions all over the world and most of them are free, with things like photos and video tours of your home.
"Amen. What I like to add is, with places on the Internet like emongoo.com, who needs a realtor? With places like this you can get your home or property viewed my millions all over the world and most of them are free, with things like photos and video tours of your home."
Yes, YOU can do that. Millions of people will view your homes. YOU will take photo's and upload them. YOU will produce your own video tours.
emongoo.com is only one of dozens of sites YOU will have the option of placing your home on. YOU will take the phone calls. YOU will set the appointments. YOU will do it all.
Have at it.
After beating up my realtor and the buyers realtor several times before we sold our house. I started to question what a realtor was. The answer; not necessary.
I will not use a realtor again to purchase or sell a property, and they can't stop me.
Alot of guys are correct, but most of you are the everyday Joe Dicksuckers that think you know better than any realtor. For you saps that live in a market with a "bubble", my condolences on your local economy and the jackasses that operate it. As a real estate professional I see tons of buttfucks trying to be realtors every month. THose are the one that are not needed.
You put a buyer in front of me, I will matvch them up with a house. Without Realtors, The MLS is nonexistent.
You can sell a house FSBO. Its not that hard. But can you prequalify buyers? Are you flexible to show your home to buyers? Do you understand title policys? do you know all the proper disclosures needed? Are you experienced in negotiating issues when something comes up on an inspection?
Do oyu have time to write your own realestate ads? Do oyu have a website and time to upload your home and maintain data on it?
DO it all, you can do everything you own. Your own car repair, your own dental work, your own lawn care, your own accoutning.
You are capable of doing everything, but there are reasons why people hire professionals that know what htey are doing(excluding all the seemingly bronze metal special olympic reators) to handle something as important as a transaction involving hundreds of thousands of dollars. I would sell my home myself because I know realestate inside and out.
Its too bad there are so many narrow minded people on this thread.
I'm an Ohioian.
10 years ago, I took all the college courses required by Ohio law (took a few months at Hondros College), paid a fee and passed the State test to obtain a real estate salesperson license which when 'hung' with a broker allowed me to represent the broker as the broker's agent in the broker's transactions.
REALTOR (TM) is a registred trademark, and to call yourself a REALTOR you had to PAY DUES to the BOARD OF REALTORS. Heck they made agents pay memebership fees, had additional fees for putting listings in the MLS books, and at that time the Internet was just coming online. All told each agent working for a broker had to shell out some $2000 to $3000 per year in dues and fees; just for the right to try to get listings and sell buyers. The whole thing was a sham and apx 90% of the new agents coming into the industry each year washed out. The brokers would recruit newbies, him'em with upfront fees and charges for everything... then tell them to make lists of 100 or more people freinds, relitives, old neighbors... then buy the brokers intro package and mail out junk mail with their picture and the brokers name/logo.
The newbies would pay outragous fees upwards of $2.50 per item mailed out to the warm-leads on thier hot lists of 100 or so contacts. This would be done as often as possible as the broker was receiving free advertizing at the expense of the newbie.
Most newbies could get 1 or 2 listings or buyers out of thier hot lists during thier first three to six months in the business. The broker would get 1/2 or more of all fees earned; the newbies net earnings would be horrible as even 1.5% commission the newbie would get these hot list transactions would not cover the newbies total expenses of licensing fees, REALTOR board fees and dues, Broker marketing fees, etc. So after the newbies hotlist dried up... the newbie faced the reality that real estate is real hard to break into and without a steady stream of new listings or buyers they are busted out of the profession.
IT TOOK ME 1 MONTH INSIDE THIS INDUSTRY to realize that you had to get a broker's license to make any real money. All the cards in the deck are stacked against the agents, who are litte more than self-employed salepeople who represent the broker's interest.
But guess what, the state law had been written to make it almost impossible to get a brokers license. The law in Ohio required a minimum of 2 years experience as an agent with another broker and required you to be involved in at least 24 transactions in the previous year prior to applying for your broker's license.
This hurdle was absurd, it literly forced you to make your existing broker rich while you tried to close 2 transactions per month for 12 consecutive months. Any broker who wanted to keep a productive agent could eaisly monitor the agents transactions and throw up enough road blocks to prevent an agent from ever hitting this requirement.
At the time, the oldest and best agents averaged less than 2 transactions per month and were considered successful agents. So what was this law really all about?
MONOLOPY of the REAL ESTATE BROKER profession. Where the real money is.
The whole industry is a sham. I left after 1 month of figuring this out. Bought a real business and have since become a self-made millionare. I would never ever hire a REALTOR to represent the sale of my property. I would however hire a real estate attorney to draw up the legal papers and pay a title company to close the transaction.
Best of luck to everyone.
The fact is that you still used a realtor for the aformentioned transaction. I definitely think that it is possible the Internet will play a bigger role in the MLS system in the future, but unless the government forces it to happen then it will take a long time to change.
The reason the existing MLS system works so well is that it offers such a huge incentive for all these would be competitors to come together and cooperate.
So in the meantime I think we will continue to see more and more hybrid models such as Flat Fee MLS listings for sellers and Flat Fee buyer representation such as that offered by Redfin and others.
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