Q & A with Real Estate Author/Tech Guru Dani Babb
Q: Why are real estate professionals' commissions at risk because of technology?
A: Technology has allowed online real estate companies to create services in both the broker/agent markets and the lending markets that let consumers take advantage of extremely low costs. In the case of real estate agents, flat fee or low-cost brokers are allowing sellers to list their home in the MLS, take advantage of advertising and sell their own homes for a fraction of what a traditional real estate agent costs. The Internet is also helping consumers find the least costly mortgage, compare brokers and understand the business. Technology has broken down the barrier of secure information that these professionals once held, such as neighborhood information, comparative listings, and analyses.
Q: Why now? Most other markets have already been impacted by technology, why has real estate taken so long?
A: The real estate market is unique in that over 100 “hands” usually touch a single transaction. Therefore, as a technologist, it’s harder to mimic the transaction in an online environment. Also, the real estate industry has not until recently had a set of standards by which to communicate, known as protocols. Now that those are nearly developed, it will be easier for real estate brokers’ systems to work directly with, say, an escrow service without the need for heavy individual involvement.
Q: Are there industries that this has already happened in? What was the outcome?
A: Travel is the first one that comes to mind. Many travel agents and specialists were replaced with the Expedia’s and Travelocity’s of the world. We saw this with products, too; the book market, for instance, with Amazon and BarnesandNoble.com. However, due to the complexity of real estate transactions and the ability of professionals to keep most of their information tightly held, it has taken some time for the same thing to happen in real estate. Remember, some travel professionals did not survive the technological revolution. The same will be true for real estate professionals -– the strong and best will flourish while the others will be finding new careers.
Q: Are new systems coming online that threaten the industry?
A: Most definitely. Watch for big partnerships between major technology companies. Already consumers can view online maps, aerial photographs, MLS data, historical and projected values, neighborhood information, rental comps and a variety of other demographics just by going online. New systems will make the process even easier, with e-notary and e-signing, the ability to monitor and even modify your listing yourself, and even the ability to order yard signs and list in the MLS with the click of a mouse. There are already low cost and flat fee brokers like forsalebyowner.com that are changing the real estate world forever.
Q: Is there anything a real estate professional can do about it?
A: Yes! Real estate agents and other professionals need to think differently about their business. They need to re-strategize, but to do so they need more information; they need to understand and know what they are competing with. Commissions at Risk helps them comprehend who their new competition is, and adjust their business accordingly. A big key in the process is to use technology to web-enable the business, not just webify the business –- and the difference is huge!
Q: Are there niche markets left that would still prefer to be represented by a real estate agent for the sale or purchase of a home?
A: Yes. Some of these to research include: baby boomers, first-time home buyers, people without Internet access or who are afraid of revealing their information online (yes they do exist!), people with bad credit, active adults (most of whom are selling the home they raised families in to move to their retirement city), investors who don’t live in the city they are selling it, and people moving to cities they are unfamiliar with!
Q: What are some things real estate professionals need to do now to be successful in the future against low cost or flat fee online competition?
A: Be better than they offer better service, better responsiveness, and better information. Do this through the use of technology, including community forums, blogs, e-newsletters, listing searches, mortgage calculators, online referrals, having a great service-focused website, providing an Intranet for clients (particularly the investor market), support all kinds of technologies (Instant Messenger, email, cell phone text messaging, SMS messaging, etc.) -– put a technology plan in place that is conducive to achieving your business goals. Real estate professionals need to become technologically savvy, know who is out there and who their competition is, and know what tools their clients are using!
Q: How can a real estate professional quickly become technically literate?
A: There are many ways. Certification courses are one (the only one recommended by the National Assn. of REALTORS is e-PRO). Real estate professionals can start using the technology that their clients use, such as A9, Zillow, Google Earth, and numerous Comparative Analysis Sites. They can browse through sites like forsalebyowner.com and ZipRealty.com to see what some of the major online competitors are doing. They can take a class at a local community college on web-design and web marketing. They can attend seminars and presentations, read books and talk to other successful professionals who are integrating technology successfully.
(Danielle Babb, Ph.D., MBA, is an accomplished technology professional with years of experience in the real estate industry. She has worked as an IT Leader in residential, commercial, and multi-unit real estate. She has worked for seven years at several Fortune 500 real estate companies in the technology field and is currently a consultant working with real estate organizations looking to improve their potential. She is the author of Commissions at Risk- https://amzn.to/2E3GE5c)