CEO/Founder of Ask DOSS, a voice-activated digital real estate assistant that’s like having a REALTOR in your pocket. #proptech
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Today, everything that could technologically cause real estate agents to become obsolete already exists. As the old phrase says, “What goes up, must eventually come down!” The real estate industry was more formally founded in 1908 as the National Association of Real Estate Exchanges in Chicago, Illinois. It went through two separate name changes in 1916 and 1972, it became the National Association of Realtors (NAR) known to today’s consumers. Created more than eight decades before the internet was commercialized in 1995, the real estate industry, along with everybody else, was unsure if not outright skeptical about the World Wide Web and its potential of becoming the next paradigm shift.
Fast forward to 2021, 26 years after the internet was commercialized, and the core structure of the real estate industry still hasn’t changed much. Given all the technological advancements and law changes over the decades, the cost — commissions — to transact real estate is still relatively the same with real estate agents still indispensably at the center of the real estate transaction. Buyers almost always need to be accompanied by an agent during home tours and sellers don’t always have a voice as agents vie for and fight over what data belongs to whom.
I believe the real estate industry has done a masterful job of advertising, controlling the narrative, politicizing and selling the general public on why they need them. In spite of how technology has drastically improved the real estate industry for the practitioner, its efficiencies — particularly the ability to easily and digitally market a property in comparison to the past — the benefits appear to be kept away from the consumer. Not to mention the real estate industry through the actions of the many players have yet to reduce many of the costs for the consumer with these efficiencies.
What will the real estate industry look like?
How does a group, individual or organization continue to reign as a gatekeeper, a dictator if you will, when they are no longer in control? In real estate, what will it look like when consumers realize they are actually in control, especially when it comes to price?
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Although it can last for decades, historically, acting as a gatekeeper has proven to not be evolution-proof. As people connect, evolve, get smarter and learn a better way they eventually begin to question and demand a different — perhaps more fair and just — system. I’m predicting, with the help of this pandemic, it’s starting to happen to the real estate industry. And its origin is in the hands of the largest, most diverse and most educated generation in history: the millennial generation.
They have changed the fabric of many multi-billion dollar industries: lodging, retail, travel and work in general. Very soon, the real estate industry will also succumb, thanks to a distaste for strong authority like dictators paired with unprecedented access to excess information to make educated decisions about everything — including real estate. They don’t need or want anybody making decisions for them. They want someone or something to successfully facilitate their experience and the transaction by giving them great service at a fair price.
A Move Toward Facilitators
A facilitator can be a person or a thing that makes actions or processes easier.
The promise of technology was to primarily do two things: save people time and save people money. At 113 years old, the real estate industry stands out as one of the largest industries to avoid high levels of disruption since the birth of the internet. Almost the entire real estate industry, including leading real estate search engines, continue to be agent-centric. The industry and its platforms were built to make consumers need them as industry players fight to control data they don’t actually own. One estimate of average commission levels shows a slight decline of one percentage point from a little over 6% to a little over 5% from the early 1990s to the early 2000s, with sustainment since then. This occurred in spite of the technological advancements benefiting the real estate industry.
How long can anybody, an organization or industry, believe this type of bureaucratic behavior can take place before people collectively begin to create and demand change? The real estate industry was created by a generation that now owns a third of the real estate in the U.S. and continues to retire in droves. Yet, today the largest purchasers of real estate — millennials — are often stuck following a system created decades before their existence.
What are the consumer-centric options?
As a founder of a voice-activated digital real estate marketplace, I’m not totally convinced that technology will remove the need for a real estate agent anytime soon. However, I do believe that the role of a real estate agent is about to drastically change. As solutions and technology continue to evolve, it becomes more and more difficult for today’s real estate agent to continue justifying dated value propositions that were first formed via a business model that was created almost 90 years before the internet was commercialized. This means they themselves will eventually be forced to evolve or risk the same disruption that impacted the travel industry.
Today’s consumers, unlike the generations before them, have access to companies that offer a variety of services when it comes to buying and selling a home. With the power to choose the type of service you need and want based on your level of experience, consumers who know both how and where to access information find themselves not necessarily in need of a real estate agent like before. From free listing services to full-service-at-a flat-fee, sellers have options that can help them preserve some of their hard-earned equity. For consumers who are thinking about buying a home, there are real estate companies in your market that will give you a homebuyer rebate to lower your closing cost to reduce the amount of money you need to purchase a home. Consumers are changing and have changed many industries. Real estate is no exception and will eventually bend toward the evolved needs and wants of the consumer.
Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?