CEO/Founder of Ask DOSS, developing the best technology to make homeownership in AMERICA more affordable. #proptech #placetech #voicefirst
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Can you imagine the real estate industry before the internet? Before emails, digital signatures, electronic lockboxes, GPS, scanning documents and Zillow? Admittedly, I can’t imagine a world without these now basic necessities. But before the World Wide Web, properties had to be advertised in magazines or local newspapers. There were no home search websites, and real estate agents of times past had oversized printed property listing booklets at their offices to display the information about and prices of homes for sale in the area. Each office had its own booklet of properties and no ability to show listings from other offices or brokerages. And because there was no GPS back then, each real estate agent had a road map book in their car to locate landmarks and streets. It was a time that required personal delivery of documents — until the fax machine was invented.
Back then, the real estate industry was just like every other — bulky, expensive, limited and time-consuming. Simple tasks had the potential of taking several hours or days to complete. Given these factors and the cost of time before the internet, I can sincerely understand the justification for a relatively high commission rate being charged to sell a home before the internet (however, I don’t agree with or support price-fixing, which the real estate industry was routinely found guilty of in federal courts).
Fast forward to 2020, and the internet and internet of things (IoT) have radically evolved the real estate industry. There are game-changing technological tools that are constantly being created and/or improved upon. Property can now be listed online and instantly seen around the world with 2D/3D animation and virtual reality. Virtual home tours, keyless locks, digital cameras, digital signatures, Google Maps and street view, virtual closings, and digital marketplaces that empower anybody to sell anything from anywhere in the world, delivery of almost anything that can happen overnight, social media platforms that have changed the way we communicate and market ourselves, FaceTime, videoconferencing — the list goes on. Today, all of this can take place in the palm of our hands with a smartphone, saving real estate agents time and helping them to make more money. But what about the consumer?
Since the commercialization of the internet, the entire world has changed. The entire world is now connected and more competitive, convenient, economical, efficient and transparent. The promise of technology was to empower all of us to save time and money. Practically every industry on the planet has adapted and adjusted to the advancements of technology to benefit everybody. Every industry, that is, except for the real estate industry.
A fair question: Given all the technological advancements that have benefited the real estate industry, should it still cost 6% to sell a house?
According to a 2019 report from the Consumer Federation of America, of hundreds of real estate agents in 20 U.S. cities who were surveyed, 73% said that they would not lower their standard 6% rate. These same agents, who are licensed to serve the best interest of the consumer, are also consumers of products and services. Why would agents deny and/or deprive consumers of the same opportunity to save money?
Everybody wants the best service at a fair price. However, the real estate industry has done a masterful job of indispensably positioning real estate agents at the center of the real estate transaction with every intention of preserving itself and price-fixing the rate of 6% at any cost. How much longer can the real estate industry sustain that position in a tech-driven, consumer-centric era?
What’s the solution?
Three things must happen to reduce the historically high cost that comes with selling a home:
1. Tech-based consumer-centric real estate brands must become a practical and viable alternative to the status quo.
2. We need what I would call listings as a service (LaaS), which would give sellers the option to customize the costs and types of services they need and want to sell their property.
3. Consumers must collectively demand better service at a fair price. However, and most importantly, consumers must patronize and support this next-era alternative service in order to change the real estate industry.
The old cliché “You get what you pay for” is attributed to Gabriel Bell almost 500 years ago, long before the internet was commercialized in 1995. Now, everybody wants the best service at a fair price, including real estate agents. That’s the beauty of free enterprise: Innovative people and startups develop and leverage the best technology to find new ways to execute the basics. However, this old cliché will be used against homeowners the moment they tell the old guard of traditional real estate agents that they are shopping for the best service at a fair price. Or, the instant they are asked to reduce their commission.
The traditional real estate industry’s value proposition is rapidly deteriorating as innovative ideas and technology continue to introduce themselves to an evolving consumer with new problems that need new solutions. As the founder of a technological consumer-centric real estate startup, I see firsthand how an innovative marketplace can provide full service at a price that allows a home seller to preserve some of their hard-earned equity. This is an opportunity for our industry to revolutionize for its own sake as well as for the consumer’s.
If you are a homeowner thinking about selling your property, shop for the type of service you believe you need and want in order to sell your asset at the highest and best price. Two-thirds of what you need you already have: the asset and the internet to do your own research. More than ever, be a smart consumer who shops for the best service at a fair price — and know that that can and should include your real estate agent and their services.
Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?