In conversation with Ed Hand of Rogers Citydesk, he told me he did not feel that the internet was changing the real estate industry. *Cough, Choke, Cough! What?* – I had called him to pitch a story for his show, which follows a round table discussion on a topic of national and regional interest for which I figured my proposal was perfect.
My proposal was to discuss the issue of how the internet was changing the real estate industry and who was set to gain and lose from its influence. As guests, I proposed, the owner of the top brokerage in Ottawa and past president of the Ottawa Real Estate board, Kent Brown; the owners and creators of the hugely successful website Grapevine.ca that has cornered Ottawa’s market for private home sales; and finally myself, a top real estate agent in the area and co developer of the UniqueHomeSites.com web tool.
Ed, a recent homebuyer himself, was disheartened by his experience in the industry and felt that internet was not changing the industry. Furthermore, he thought that the story was not news worthy. I was baffled and dumbfounded and assured him that I would put together a package of outside media that shows some of the many changes affecting the industry and how it is both news worthy and relevant to his viewers who like him, all have strong feelings about the real estate industry and how it operates.
Without putting words into his mouth, I think what Mr. Hand meant was that the internet is not influencing realtors’ hold on the market and their commission rates, which is one of the central issues to be discussed in such a story. It is also such a touchy issue that it has been dissected by both the realtor, the homeowner, and major newsgroups such as CBS.
CBS’ 60 Minutes produced “Chipping Away at Realtors Six Percent” a controversial commentary (investigative report) that had the National Association of Realtor up in arms and resulted in 153 pages of viewer comments within the first 72 hours of the story being posted.The National Association of Realtors took exception to many of the comments that were stated. They even wrote a formal letter of objection resulting in an editor’s note being posted as a foreword to the story on the CBS website. According to the CBS story and many homeowner’s opinion (including Mr. Hand’s?), the realtor is becoming less important to the transaction as the internet is providing more and more information to the homebuyer and seller.
Amy Brown-Bowers of the Toronto Star opens her article with the line “The internet has radically changed the resale home sales process”. Her article is broken into sections that focus on topics such as MLS, “Power to the People”, “Implications of Marketing”, and “Is Agency Necessary?”. The gist of this story is that there are so many new tools available to agents and the general public that many buyers do most of their shopping on their own and rely on these tools, primarily provided by the listing agents, to choose their home. Mike Parker of RIS Media wrote an article that illustrated many of these changes statistically.
In his article, Traditional buyers and Internet Buyers, he summarizes a study performed by the California Association of Realtors (CAR®). According to Mr. Parker and this 2006 study, Internet buyers have already been researching for 3 weeks longer then traditional buyers and they look at homes with an agent for 2.2 weeks vs. the traditional 7.1 weeks. Finally, they visit and look at less then half the number of homes of traditional buyers. The number of these internet buyers has grown from 28% in 2000 to 70% in 2006. (NAR recently updated this statistic in 2007 to be 80%)
The internet buyer can take this to the extreme as illustrated in Noelle Knox’s article in USA today about a family who moved from Scottsdale Arizona to Tulsa with out ever visiting the home, or even the area. The purchase and research was all done completely online. A similar article was also written by Iris Winston for Can West News about her daughters experience in Calgary.
There is truly an enormous amount of articles about the affect the internet is having on the real estate industry. There are new products, new marketing tools, empowered buyers and empowered Sellers. But Ed is right, to date there is very little change in commissions charged by real estate agents, interesting! Perhaps we need to have a bunch of experts sit around a table so that we can all discuss this and see if we can understand why! What do you say Ed, interested?!