Technology has forever changed how Americans shop for homes. Thanks to sites like Zillow, Trulia and the dozens of others like them, buyers can now brown se listings, find homes and narrow their search all on their own—without ever calling in an agent.
And with online mortgage lenders cropping up left and right, they can even take it a step further, getting pre-qualified for a loan long before they’ve honed in on that dream home.
But though tech has allowed homebuyers to do all this legwork themselves, in most cases, they’re still forced to go through agents to finalize the transaction. And those agents? They get the same 3% commission they did decades ago—for seemingly doing a fraction of the work.
It’s a situation that baffles many first-time buyers, particularly those of the Millennial cohort who have grown up buying everything from cars to mattresses to groceries completely online and all on their own.
But are agents actually doing less work with all this tech? Do they still offer value in exchange for that hefty commission? That depends on the agent, as well as the tech they’re taking advantage of.
The One-Yard Line
It’s no secret that buyers are doing most of the home search process themselves. They’re using apps, websites and digital platforms to find potential properties and even set up alerts for new listings that fit their needs.
But when they find that potential dream home, their power ends there. They need to call in an agent to open the door and show them the home—as well as craft and submit their offer. Evan Harney, president and CEO at PadXchange, calls this getting to the “one-yard line.”
“With all of the information that’s out there, buyers can get the process pretty far down the field on their own,” Harney said. “Then they call in the agent to write up the offer, and the agent basically pushes them over the goal line and gets their commission.”
Harney, who previously owned a traditional real estate brokerage in Beverly Hills, said he’s seen tech transform the industry over the last decade—not to mention, shrink the role of the traditional realtor.
“Basically, the time that the agent is involved in the process is shorter,” Harney said. “We wanted to provide a solution where we could empower buyers to take the ball over the goal line themselves with our support.”
So Harney, along with Navy veteran Josh Hinkson, created PadXChange, a digital platform that helps buyers finalize those last few steps all on their own. With an Uber-like system, PadX lets buyers set up showings on the fly with available agents in the area. Then, when they find that dream home, its tools help them write their offer, submit it and keep track of their closing process—all digitally and on their own. They also get a commission refund once the transaction is over—usually around 1.25% of the sales price”
“Buyers already have all the data,” Hinkson said. “Most of them are doing the majority of their research to find out the areas and the school systems they want their kids to go to. And then, it’s just unfortunate that the only way for them to get into the door is for them to call a real estate agent, and they’ll write up an offer with them, and give away 2.5 to 3% of the entire total of what the home purchase was.”
Other firms have taken a similar approach, stepping in with traditional agent-like services but for a fraction of the cost. Redfin agents, for example, offer discounted commissions, while platforms like REX Real Estate offers a commission refund.
More Than Just the Home Search
It’s true that buyers today are doing most of the legwork when it comes to actually finding listings. But according to Nick Bailey, president and CEO of Century 21 Real Estate, that initial search is only a small portion of the overall home buying process.
“Historically, buyers and sellers needed data,” Bailey said. “They needed to know what’s on the market, the price and property specifics. Today, consumers need access to see properties and then help analyzing the data and negotiating through a process that is the most complex it’s ever been.”
In fact, according to New York broker Jed Lewin, the “real work” doesn’t even begin until a property is under contract—when things like negotiating, inspections and, in Lewin’s case, dealing with co-op boards come into play.
Still, having buyers already knowledgeable about the market can make the process easier—for both parties.
“Online listings completely changed the way that people interact with their home search, and has led to buyers and sellers being much more sophisticated about the market, which is a great thing,” Lewin said. “People conducting their own searches means that buyers are better informed and therefore more realistic about what their budget will allow, and sellers are more attuned to what their properties are worth.”
At the end of the day though, buyers generally still need assistance navigating the process. Throw in today’s red-hot market and historically low inventory levels, and having an agent’s expertise might be more important than ever.
“It’s clear that while homebuyers are embracing technology, most still require the guidance of an agent to help save them time, keep them organized, and successfully take them through the closing process to get the best deal,” said Daniel Maloney, head of sales at Owners.com. “Technology will continue to revolutionize the real estate market, but consumers still value and rely on their real estate agent.”
Leveraging Tech to Better Serve Buyers
While technology may allow buyers to take on some of the more traditional agent responsibilities themselves, it doesn’t have to serve as a full-on replacement for a realtor. According to Hinkson, it can actually allow agents to do their business better—and make more money in the process.
Hinkson said it’s about “Asking ‘How could I use this technology to be more efficient?’ and ‘How can we use this technology to actually make me more money or make me different money?’”
Presumably, leveraging the right technologies can allow agents to be more effective—to serve more buyers in less time, and therefore make more cash. Added efficiencies might also improve client satisfaction, another way to boost business.
“If you’re doing it the traditional way, it’s hard to be able to service any sort of volume,” Harney said. “Whereas with technology like ours, we can help agents serve a lot more people at the same time.”
Using tech can also help agents ease the stress of home-buying for their clients.
“In this competitive market where consumers need to move faster than ever, agents are embracing new technologies because it’s making the home-buying process more efficient and less stressful,” Maloney said. “Mobile apps have revolutionized other industries, and they are making it easier for agents to keep their clients organized, get them into home showings more quickly and communicate directly.”
According to Roy Dekel, CEO at SetSchedule, a tool that connects real estate agents with qualified buyers and sellers, today’s tech can also give agents more data. That data can power better decisions and provide more opportunity.
“While transparency and accessibility to information by buyers, investors and home shoppers are at an all-time high in the industry, tools available to agents are also much more effective,” Dekel said. “From new forms of payment like Bitcoin or the use of artificial intelligence, big data and machine learning, we can look at the industry from a vantage point never seen before.”
And ultimately, that’s what buyers want. A recent Owners.com survey found that 33% of homebuyers wish their agent had leveraged technology to better streamline the process.
“With many homebuyers conducting their search on-the-go, agents should embrace tech-based tools to keep homebuyers organized and save them time,” Maloney said. “The rise of mobile apps has made it easier for agents and homebuyers to communicate directly, schedule showings, and ultimately make the process simpler.”
Knowledge & Negotiation Skills
Using the right tech can certainly help agents stay relevant with today’s digitally-driven buyers, but that’s not the only way realtors can differentiate themselves. According to Lewin, it’s about “providing value in other ways.”
This might mean having expert negotiation skills—and therefore getting buyers better deals—or it could be an agent’s network of attorneys, lenders, inspectors and other helpful parties that sets them apart.
Having drilled-down expertise in a specific market or area of the business can also help.
“Agents that are able to offer very specialized knowledge and have a niche, they can provide real value there,” Harney said. “Whether they know their city or town better than anybody else, or if they are expert negotiators, they can really provide value in that part of the process. I think that those specialized skills, you’re going to see really come into play as technology continues to advance.”
At the end of the day, and despite all the tech that’s out there, that’s what it all comes down to: what the agent can offer above and beyond the confines of the web.
“While the internet is replete with information, it’s the agent’s knowledge that makes the difference between mediocrity and extraordinary,” Bailey said. “The irony is that the digital revolution has helped scale the importance of human knowledge and shared experiences. Technology is constantly evolving and so, too, must the agent and the real estate company.”