The real estate industry has been going through significant changes over the past few years. Doomsday predictions about Realtor demise have been heard from coast to coast, brought on by a variety of Internet based companies who think they have the answer.

This invasion of real estate has not gone unnoticed or undefended.  Agents who for years have been the gate keeper to the MLS fought the battle to keep the keys out of the consumers hands.  That battle was lost and now we know that's OK. We have learned real estate is local and will always be local.

Some have also learned the Internet is a medium, it is not the market.  Yes, we have all had the occasion to sell a property sight-unseen by the buyer thanks to digitial photo technology and the Internet.  But the reality is this is the exception to the rule.  Most homes are not sold sight  unseen and we are not likely to see a change happening there. 

What the medium of the Internet has done is bring the world to our door.  The far-reaching effects of marketing listings on the web have provided a much larger audience.  Listing agents who utilitize the Internet in marketing have learned the importance of properly presenting the property because most likely the buyer will find the property on the web.

Countless new business models have emerged from this easy access to listings.  Some born out of the public's desire to Save the Commission.  One of these models offers buyers a 75% REBATE if they sign up and buy a house from them.   The buyer gets to search for a home online.  When the get the list of homes they want to see, they call this company who then sets the appointment with the listing agent. 

Clueless

There are many problems with this business model.  First the consumer is being set up to believe they will be saving money. Apart from the obvious (to us REALTORS) issue regarding agency, the buyers are completely ignorant of the local protocol between showing and listing agents.  We have responsibilities that go with each side of the job.  Typically those responsibilities do not cross over to the other side of the transaction.

Animosity

When a buyer has a listing agent show them a home on behalf of a company that is not present, they are asking for trouble.   Yes, the listing agent has a commitment with the seller to find a buyer for that property, but the listing agent does not have to do this for free. When a buyer expects a REBATE they are asking the listing agent to work twice as hard for half as much.  This expectation is not acceptable nor is it sustainable for a listing agent.  Expecting this service for free can and will backfire.

 Getting paid for doing nothing?

The trouble with this model is evident on many levels.  First, who's there for the buyer?  Who is going to explain the home buying process?  Real estate protocols and laws change from area to area and state to state.  How can unseen Internet broker be up to date and savvy in every market?  The truth is, they can't.  Having an unseen, absent broker represent a buyer is an accident waiting to happen.  A local broker with deep smarts and negotiation skills will out negotiate the Internet broker. It doesn't take much to lose all a buyer might hope to gain by taking this route.

Consumers Take Heed...Information is NOT understanding

Buyers who believe finding a home and buying it via a sight unseen REBATE company is a good thing need to consider other factors.  Finding a home is not difficult when you are using the Internet and know the territory. The problem arises in not what you know, but what you don't know.  Buying a home is not like buying stock.  100 shares of Google is well, 100 shares of Google.   With real estate that is seldom the case, we generally have to compare apples to oranges for values.  Determining the value is a task that is best done with agents who are familiar with the market, who have most likely been in and out of the neighborhood.  Just because there is a price on a home, it doesn't mean the price is your price. 

A Solution...Listing Brokers Must Set Standards

As listing agents it will become very important for Brokerages to set some basic standards for selling agents to "earn their" fees.  For example as we are advertising our "co-broke fee" in the MLS, there will be an asternic there with the standards of what the "selling side" must do to earn the co-brokerage fee.  If they can live up to the Standards, they will get paid, if they don't, they won't get paid.

 Price does not equal value

Consumers not knowing values is of great concern.  Working as a buyer's agent many times I discover situations that enable us to negotiate prices that are far better than one would ever imagine.  Other times we discover the most important thing is to get the home, at whatever cost it takes. Negotiation isn't always about price.

Fiduciary Duties Also Mean Allegiance to the outcome

Unseen, unpresent representation is detached.  From a consumer perspective this is detrimental, who will be your cheerleader?  Who will come to your rescue when things go sour?  Real estate transactions are not as easy as they seem.  The consumer seldom sees how hard we are working behind the scenes, particulary when something goes wrong.  Agents take on business and do become devoted to the outcome, they become advocates for the buyers they represent.  Dealing with a REBATER with whom you are just a number in the great scheme of things, brings with it a detachment that is detrimental to the consumer.

So Who is Circling the Drain?

We all are.  The consumer will go down the tubes if they continue to think that having the real estate information is the same as understanding it.  The real estate industry will go down the drain if they fail to recognize the industry is changing and we need to change with it. 

Survival depends on how we deal with these changes.  We cannot ignore them and continue on with business as usual.  We need to address the issues and implement the changes soon.

Suggestions for Consideration

Setting standards.  Helping the consumer understand the process, so it's not a mystery to them, will aid in their understanding of what we do.  Our value in not in finding homes, our value is in being a proactive trusted advisor through the process.

Give the consumer a choice.  If they want to go for the Rebate real estate, let them, but also help them understand the pitfalls they may encounter.

Stop paying a Co-op fee.  Discount brokers, lead aggragators and unpresent interlopers prey on the co-op fee.  By removing, it will become necessary for agents to list the buyers just like listing a seller.  The agent will need to hone their buyer agency skills just like those of the listing agents.

The Cycle of the Consumer has begun.  For agents who can accept the changes and make the shift, there will be plenty of opportunity.  For agents who can't, you will be flushed.  Remember the definition of insanity?

           When you keep on doing the same old thing, but expect to get different results.  

 We can't keep doing the same old thing and expect things to change.  We must be proactive and change them. When we do, we will get better results!