Realtor-haters and Internet-fearing-Realtors may not love each other, and they may not have much in common, but they do agree on one key thing: the Internet is the death knell of our profession, about to consign all of us to the same sad scrap heap of history on which travel agents were once summarily, and somewhat brutally, tossed.
It is therefore perhaps ironic that on this one issue, the only issue on which these two diametrically, almost pathologically, opposed groups agree, they are both wrong. Sorry, folks, the Internet ain’t gonna put us out of business, no matter how badly the first group wishes it would, and the second group hopes it won’t.
To both groups I say, in my best James Carville-inspired Clinton-esque campaign trail voice, “It’s the relationship, stupid!”
Before I explain, let me clarify what I don’t mean, in the interest of avoiding a winged-monkeys flame war.
- First, I don’t mean that the Internet hasn’t had, isn’t having, and won’t have a large impact on the way real estate business is done. Quite the contrary, the Internet has changed and continues to change the industry in many ways, most of them good for the consumer.
- Secondly, I don’t mean that an average Realtor, or a top-producing one for that matter, wouldn’t benefit from becoming more Internet-savvy. Quite the opposite — the rich efficiency-and-effectiveness-enhancing fruits of the Internet are there for all to feast.
So, what then do I mean by, “It’s the relationship, stupid!”
What I mean is this: the real estate business is not really about homes, and transactions, and escrows, and mortgages. It’s not about negotiation, and home inspections, and contracts, and deadlines. It is, instead, primarily a business of relationships, and of the dreams that such relationships can achieve.
When clients engage a Realtor to help them buy or sell a home, they are entrusting that person to guide them through what for most of them is the biggest financial transaction of their lives, a roller coaster of elation and disappointment, of happiness and sadness, of agreements and arguments, of satisfaction and stress. It is, in short, a relationship, and the success of the whole process depends to a large extent on how well that Realtor cultivates and manages that relationship.
Similar relationships are also found in other “intermediary” professions in which an agent acts on behalf of a principal. The extent and strength of that relationship is, I posit, directly correlated to the difficulty in disintermediating it.
Why has the Internet been so successful in driving the travel agent industry to near extinction? A big reason — not the only one, to be sure — is that most people never thought of their travel agent in the same way they did of their attorney, their Realtor, their accountant, or their private money manager. A travel agent was simply the person on the other end of the line who helped you buy a ticket from Peoria to Pretoria. The next time you called the 800 number, or dropped by the travel office, you would often deal with a completely different person. Consumers never really developed a deep relationship with travel agents, because the travel agent industry was not one in which relationships were key to being a successful intermediary, so when a cheaper, more efficient way came about to get tickets, consumers did so.
Back to the original question — will the Internet disintermediate Realtors? It might, for that relatively small percentage of folks for whom this relationship simply isn’t that important — the die-hard do-it-yourselfers, the inveterate Realtor-haters, or more benignly, investors who buy and sell frequently and simply don’t need the hand-holding.
For the rest of the population, those who appreciate the need for guidance, for counsel, for support — for the relationship — Realtors will always be around and needed.
Winged monkeys, go home, and please leave us alone.
Internet-fearing Realtors, take a deep breath. The Internet will not cut you out of the business, unless you deserve it, unless your client relationship skills are so bad that your clients prefer no relationship to one with you. If that’s the case, then you, my friend, have a much bigger problem than the Internet.
Tags: Disintermediation, Real estate
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25 responses so far ↓
1 fubar kahn // Nov 10, 2006 at 11:01 am
You’re fooling yourself. There IS no relationship. The realtor(r) puts up with the odious herd of buyers and sellers because of the prospect of fat, juicy commissions achieved with little work and less skill. The herd of buyers and sellers tolerate the realtor(r) because his union has acquired control over the real estate transaction and maintains this control with a death-grip. All parties to this travesty of human relationships try to smile and act polite. Because it is painful to admit to yourself that your livelihood is founded on control over access to information, you repeat over and over that the business of real estate agency is “instead, primarily a business of relationships, and of the dreams that such relationships can achieve.” Balderdash. If you actually believe that, you’re in more trouble than you are capable of imagining.
2 Kevin Boer, Three Oceans Real Estate // Nov 10, 2006 at 12:10 pm
Fubar, thanks for dropping by.
Clearly we disagree on a few things. One of them is that ‘my livelihood is founded on control over access to information.’ That, unfortunately, has been the case for much of this industry’s existence, and many Realtors still believe it to be the case. If you’ll poke around my blog, however, you’ll see that I’m a strong advocate of opening up our industry’s information. If my competitive advantage was indeed access to that information, you’d be right, I’m toast.
Thanks to the Internet, I now have access to much of the same information that tax accountants do, and I’m quite handy with TurboTax. I’ve chosen to do my taxes up until the 2006 tax year, but now my situation is getting complicated enough, and I just don’t have the time, so I’ll soon be hiring an accountant. It’s not that I can’t do it; it’s that I don’t have the time, and the complexities of my tax situation make me more comfortable leaving it in the hands of a professional.
You’re probably a real do-it-yourself’er — and more power to you for that. You may not need a Realtor to help you with your home needs. That’s fine!
A challenge to you: if this profession is indeed one of “fat, juicy commissions achieved with little work and less skill,” then perhaps you should get your real estate license and practice on the side.
3 True Gotham // Nov 13, 2006 at 8:34 am
The Carnival of Real Estate…
Dozens and dozens of really good submissions, and cutting it down to eleven (I snuck two into #4) took lots of careful reading, weighing, and brutal decision making. But the work is done, and here are my favorite posts from……
4 Altos Research Real Estate Insights // Nov 13, 2006 at 11:22 am
Real Estate Carnival at True Gotham…
This week’s Real Estate Blog Carnival is up at True Gotham, one of a handful of really great blogs about that city. (My absolute favorite, though not really a blog, is Overheard In New York.)Our post on the Web 2.0 conference is highlighted along wi…
5 m nochlin // Nov 13, 2006 at 11:41 am
your argument for disintermediation not happening sounds simialr to the ones all those stock jockys had years ago when they were being attacked by discount and then online traders. While not completely eliminating their business it has dramatically effeced it.
Travel agents also made the same argument. Many believed that people would come to them for advice and service.
For a small few that proved to be true. There are still people (usually very high end) willing to pay for advice and access to special places.
what hapens in all of these businesses us that the margins get tighter and an new business model evolves that is suitable to a small percentage of the original ndustry.
The rest leave as did many of the stock brokers and travel agents and soon to be Real estate agents.
Just my opionion
6 This week’s carnival is live at Three Oceans Real Estate // Nov 13, 2006 at 1:00 pm
[...] Head on over to True Gotham to check out this week’s Carnival of Real Estate. I’m honored that my contribution on the Internet and Realtor Disintermediation was listed. Thanks! [...]
7 Christine // Nov 13, 2006 at 3:03 pm
Kevin that was a great post and I could not agree with you more. I hire alot of people that are in PROFESSIONS that I can very well do myself - but because of my time issue and other matters, I chose to pay someone to do for me. I also trust these people, if I did not trust them then I could not keep them working with/for me. I do and I will admit that if I can’t find a phone number for a business that is not somehow on the internet - then I skip over to someone that is. I don’t think that I have picked up a yellow pages in 10 years. So, I think that the internet can and will enhance the Realtors online. I am not afraid, I welcome it.
8 New York Carnival At True Gotham at sellsius° real estate blog // Nov 13, 2006 at 4:48 pm
[...] Meet the Top 10 blogger gang, including 3Oceans Kevin, Blue Roof Greg, Altos Mike, Matrix Miller, The Silk Willow, IntheNumbers Dean, Searchlight Crusader Dan, Zebra Dan, Andrew & the WebHomesUSA crew. Dem guys (and gal) dun good, especially 3Oceans Kevin who won top honors for finding the truth in the Hall of Mirrors. Even the beach crowd took notice. Listen to this podcast [...]
9 Maury Properties » Blog Archive » Carnival of Real Estate at True Gotham // Nov 14, 2006 at 8:11 am
[...] All of the articles featured are good reads, but there a few that I particularly liked. “The Power of Reputation” from BlueRoof and “Why the internet will never disintermediate Realtors” from 3 Oceans Real Estate.dealt with the role of Realtors. IntheNumbers has a post about buying foreclosures that argues that most residential foreclosures aren’t worth pursuing. [...]
10 Diane Cipa, General Manager, The Closing Specialists® // Nov 14, 2006 at 8:28 am
Unless and until there is a replacement for people on the ground showing the properties, Realtors, have job protection. Most sellers don’t want to deal directly with buyers and many can’t be available for showings. That’s the bottom - bottom line, but it doesn’t take into account the value of salesmanship. For some reason, folks who are not in sales always discount the value of a real salesman.
Marketing and salesmanship make the world go round. Buyers and sellers are not pros. They get stuck on ideas that just don’t work. A salesman recognizes what it takes to move the property and makes the transaction happen.
Real estate is not just numbers, like stocks. Real estate is not just about destinations, like travel. Selling real estate is immersion in the psychology of the human beings - buyers and sellers – their wishes, their fears. It’s one on one human-to-human communication in a way that can’t be replaced by the internet. The internet is a valuable tool, but it’s not a replacement for a human being.
11 Lenny G, Tampa Realtor // Nov 14, 2006 at 2:07 pm
The service that travel agents provided (if I remember right) was finding the best fares, room rates, recommending lodging choices, etc. These things are all easily done by the end user utilizing the web. The internet is a great tool for sellers to get their homes in front of buyers eyes. And for buyers, it is a great place to start. But the web cannot replace all of the other services a good agent can provide. Consumers may or may not see value in any or all of these services. But we know many do and my bet is that many will continue to value those services as we move forward.
12 BrokersFirstRealty.com | Shining Some Light on the Local Atlanta Real Estate Scene » Blog Archive » Will the Internet Replace Realtors? // Nov 15, 2006 at 11:32 am
[...] Kevin Boer over at Three Oceans Real Estate topped the Carnival of Real Estate at True Gotham with his post “Why the Internet will never disintermediate Realtors”. [...]
13 TRANSPARENT REAL ESTATE (www.TransparentRE.com) // Nov 17, 2006 at 2:47 pm
Kudos to Carnival picks from the Bay Area…
/images/33632-31387/silicon_valley.jpg”>Congrats to four Bay Area Carnival of Real Estate mentions (I’ve never seen the Bay Area so well represented): Kevin at 3Oceans has the “most intelligent” post on why Realtors won’t ever be com…
14 jf.sellsius // Nov 18, 2006 at 11:42 am
Diane has it right.
Besides, real estate is not like buying an airline ticket or stock. First of all, the items are not uniform and the price you’re risking is high. Even if you traded stocks yourself, I’d seriously doubt you’d drop hundreds of thousands of dollars on a stock you researched online.
15 Why the Internet will never disintermediate Realtors — Part 2: It builds, not erodes, the relationship at Three Oceans Real Estate // Nov 18, 2006 at 9:32 pm
[...] In my previous post on Internet disintermediation, I argued that real estate is primarily a relationship business, and that the only real estate professionals who should fear the Internet are those who really, really suck at the whole client relationship thing. For the rest of us, the Internet represents a big challenge, yes, but also a huge opportunity. [...]
16 Edgar Espinoza // Nov 19, 2006 at 2:49 am
What many forget is that real estate is an emotional and not necessarily logical investment for most people.
If you don’t have an agent that can carefully help you though the whole process then anxiety, jitters, sleep less nights will ensue. A good agent, realtor or not, is one who helps with the buying and selling process by doing all the usual things such as negotiate and find a good mortgage compay and such but also to provide the buyer or seller a pepto bismol free night.
Many many angry anonymous posters on housing bubble blogs are always shouting how much better the universe would be if real estate agents would return back to their luciferic orgins and let them rein in their place. Its amazing how many times these guys flash their mba credentials and speak of their superiority of most of mankind because they predicted that housing prices would collapse and that the universe would impklode in on itself when allen greenspans cholesterol level reaches a certain level.
An agents job is to help already determined buyers and sellers with the transaction. Yes there are agents who advertise that now and tommorrow and the day after that is the right time to buy and sell and depending on what sort of real estate you are selling that may be true but we as agents are not forcasters and economists, we do have a professional say on things but we are here to service clients who are determined to buy and sell, not convince them to do so.
Its like some guy walking into a dealership and looking for a car that has poor MPG, the guy knows gas prices are going to be a pain in the wallet but the dealer is not going to say “Sir, but did you know gas is expensive? Would you mind comming back when you are fit to take a financial burden as buying a car when petro prices are so high?”
The dealer is there to assist the buyer in what SHE wants not what the dealer wants.
Let me tell you that when you and your pops are in the car and arguing about whether to get a car or not because gas this or gas that issues, I bet you that the second you roll into that car lot your logical mind is thrown out the window with a restraining order attached to it and your emotional ego comes into play because now you see yourself in a nice car that would look awesome with you in it plus the bragging rights you’ll have with friends.
Its emotional and salespeople who understand this have nothing to worry about.
If the housing bubble people ever have their perfect world where real estate agents would bow before them every morning and evrything was how they wanted they would never be satisfied.
They’d try to tackle ticket scalpers, game console scalpers, banking atm fees, high taxes, immigration issues and a myriad of issues that existed before we were born, that exist while we are alive and that will exist when we pass on.
There’s just no pleasing this people.
17 Andy Piper // Nov 19, 2006 at 12:48 pm
I think you are on the money. The way I understand it, the Internet was supposed to put Realtors out of business about 5 years ago and FSBO’s would rule - but - the number of fsbo sales has remained relatively steady at @ 20%.
Some people are do it your selfers, others want full or even premium service and they value the expertise that a local real estate expert can provide.
Not only is real estate a relationship business it is a LOCAL business as well. Someone who works with home buyers and sellers everyday and knows thier local housing stock, neighborhoods, employers etc, can clearly add value.
Andy
18 Kevin Boer, Three Oceans Real Estate // Nov 19, 2006 at 2:10 pm
Edgar, thanks for dropping by and for the long, insightful comment. The Bubblistas are indeed a frustrating lot, but at least they’re unlikely to become clients!
I’m not sure if I agree with your car dealer analogy, however — at least as I understand the analogy. Part of my job, I believe, is to advise clients on what they really can afford; this is particularly important here in the Bay Area where modest starter homes are $750K and above. Quite frequently I find myself advising clients against buying, say, a $900K property when we’ve run the numbers and found out that $800K is really their upper limit. I think clients appreciate that kind of candor. But, as you say, there are occasions where, regardless of the price, emotion will kick in and they just gotta have that house!
19 Jonathan Tedd // Nov 29, 2006 at 9:46 am
Hi Kevin
Good arguments put forward here in defence of realtors (or estate agents as we call then here in Gt Britain).
Realtors are not liked here in the UK! It’s due to probably the huge rise in prices (threefold in 10 years) and the dubious practise of agents valuing high in order to get the instruction. First-time buyers here are extinct!
There most certainly is a real estate bubble in the developed world. The US figures look dire (I’m a fan of the Daily Reckoning website - not happy reading, but pretty good forecasting thus far). The UK is not far behind. All due to the Fed’s “easy money” policy. Dollar is under massive pressure right now.
The BBC broadcast a show about how several couples managed to buy and sell without an agent. A mixed success. I agree totally about this business being professional and relational and local.
So where does this leave our local realtor? He must work harder! Agent fees are driven ever downward (1% plus 17.5% value added tax) and as we enter recession folks are going to want to sell without paying huge fees. I predict a surge in web portal FSBOs or a big brand doing it (ebay property for instance). A lot of firms will go as the competition becomes too much and the industry becomes regulated (no need for any licence or qualifications to operate here in the UK).
The Greenspan boom in housing and related business is now entering a new and scary phase.
20 Everyone Can Benefit from Real Estate Technology– Part 1 | The Real Estate Zebra // Dec 5, 2006 at 12:35 pm
[...] With the Web 2.0 movement changing real estate, there is much talk about disintermediation and transparency. Kevin Boer thinks that agents will never be disintermediated, and I happen to agree. Then there is an entire blog dedicated to transparency in real estate. Transparency is a good thing. [...]
21 TRANSPARENT REAL ESTATE (www.TransparentRE.com) // Feb 10, 2007 at 12:26 am
Disintermediation Effects of the Internet and the Outsourcing Movement…
Kevin at 3Oceans makes solid points on why the internet won’t put Realtors out of business like the travel agents. On a larger scale, industries that are prone to disentermediation by the internet must also contend with the disintermediation effec…
22 Doug Trudeau // May 19, 2007 at 1:03 pm
Kevin - Well written. Love your response to fubar kahn. Man this is an old blog looking at the dates of some of the responses. Where were you when 60 Minutes was asking their Redfin questions to the Realtor on TV? She needed to have read this first. Approx. 1/3 of my business, and maybe even higher today, comes from the Internet.
Everything comliments the other side. Not everybody drives a Rolls Royce or a Yugo. Its a matter of personal choice. I say let there be options. I only want to work with someone who wants a Realtor. For the rest, there’s some good deals and some nighmares out there. Is it worth the risk? You have that right to make that decision.
23 Disintermediate Realtors (Not Happening) at Condo Blog // Feb 15, 2008 at 9:26 am
[...] my previous post on Internet disintermediation, I argued that real estate is primarily a relationship business, and that the only real estate [...]
24 Jonathan Bunn - Ashburn VA Real Estate // Apr 4, 2008 at 7:56 am
great post. there is no question that real estate is a not the same as a being a doctor. we go to doctors because they know a lot more than us and we cannot fix ourselves. we hire agents because they have a lot more experience than we do at doing what we could do but don’t have the time to do. we are more like tax professionals as you said. for most of us, the internet has not slowed our lves down but sped them up so that we have less time to do the tedious work of selling our homes. thanks for the article.
25 Why the Internet will never disintermediate Realtors — Part 2: It builds, not erodes, the relationship : Domus Test Test Test // Jul 19, 2008 at 9:04 am
[...] my previous post on Internet disintermediation, I argued that real estate is primarily a relationship business, and that the only real estate [...]
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