In industries ranging from banking and investments to retail and real estate, technology is overturning tradition. In real estate, there is a long-standing tradition where clients pay a 6% fee to their real estate agent for helping them through the transaction. 6% is a lot, so some newer companies and tech startups are looking to undercut the traditional 6% fee.
Self-Service Makes Buyers and Sellers Less Reliant on Agents
Some people have debated whether or not real estate agents will become obsolete. With powerful, free apps to buy houses and apps that help you sell your house, many astute buyers and sellers don’t bring in an agent until the later steps in the process.
While agents are knowledgeable and work hard to earn their paychecks, they don’t need to do quite as much today as they did today, maybe their fee should go down a little bit as well.
Technology Lowers Costs
A great source of information for people searching for homes, RedFin has a website and app that connect into the MLS database to show prospective buyers homes they may be interested. The company also has its own agents who work on a 1.5% flat fee, with a minimum of $5,500.
With increased efficiency and less reliance on agents thanks to online tools, RedFin is trying to undercut traditional agents with lower fees.
Surefield, a newer real estate startup from Seattle, recently entered the real estate markets with the same 1.5% rate as RedFin. With a heavy technology focus, Surefield creates 3D home tours for listed homes that potential buyers can view online.
The Future of Real Estate
We are in an era where home buyers and sellers are more independent, knowledgeable, and self-reliant than ever before. Savvy buyers can quickly search through MLS listings on their own and can be mostly self-sufficient when starting with their search.
Any seller can log onto sites like Zillow or Trulia to get a reasonable estimate on the sale price. Something that used to be completely contingent on agent knowledge is now a matter of public record.
So what do agents offer that customers can’t do themselves? Sellers can’t access MLS on their own and both buyers and sellers look to the expertise of agents to verify the price and lead them through the complexities of the paperwork and details of the transaction.
For agents to stay relevant, it is important to adapt to our current real estate climate rather than fight it. Be ready to help well informed clients who have already done their research online. Be responsive, knowledgeable of the local market, and quick to fill in the gaps when your clients need help.
With a lower work load for each transaction, many agents have lowered their fee to be more competitive. While no one like a pay cut, with a lower time commitment for each client you may be able to take on more clients each year, so what you may give up in rate per transaction, you can make it back up in volume.