The internet will not doom Real estate agents to extinction like travel agents* because there are fundamental differences between the two businesses.
|
Travel agents |
Real estate agents |
| Sell a product that is produced by a few different suppliers (airlines) who are in competition. | Sell a product that is “produced” by many different suppliers, who are not in direct competition. Every homeowner is a supplier. |
| The airlines can create, change, set prices, or eliminate the product (an airline flight) at will. | Real estate cannot be created, changed, have its price set by the supplier, or eliminated at will. |
| Airline flights are, for the most part, fungible – that is uniform enough to be freely substituted. | Real estate is unique. |
| The customer pays for the product with his or her own money. | The real estate buyer rarely pays with his or her own money, the vast majority of buyers need a loan. Lenders are additional stakeholders in transactions. |
| Travel transactions are discretionary. | Not all real estate transactions are voluntary. |
| Airline flights are purchased without prior inspection. | Real estate is almost never purchased without prior inspection. |
| The price, terms, timing, and conditions of sale of airline flights is not negotiable. | The price, terms, timing, and conditions of sale of real estate is fully negotiable. |
| Travel agents utilize a database of products (flights) created by the suppliers (airlines) as the foundation of their services. | Real estate agents utilize a database of products (houses) created by themselves (through broker member multiple listing services). |
Both the travel agent’s and real estate agent’s databases are now available to the public. Consumers in both markets can search for the product they want. The primary, and essential, difference is that travel customers searching the online databases can actually click to purchase the airline flights online.
There are too many areas where a buyer needs skilled assistance, such as viewing and inspecting homes, negotiating the price and terms of sale, and most importantly coordinating the transaction with lenders, appraisers, inspectors, and others for online real estate buyers to simply click to buy a house. But, if it were ever possible for an online real estate buyer to simply click to purchase a house, then real estate agent might become extinct too.
*Actually, travel agents are not extinct, but their business has been greatly diminished. The ability of travelers to directly purchase flights online, and airlines stopping paying commissions on flights eliminated the vast majority of travel agents. There are still travel agents, but they provide niche services, such as putting together tour packages and otherwise add value beyond just connecting a traveler to an airline flight, hotel or rental car.
Comments(5)