By Public Radio Discussion: Will real estate agents go the way of travel agents?
Last week, KQED’s Forum (a Bay Area public radio program), ran a segment on the role of REALTORS® in today’s changing real estate environment—are full service REALTORS® a dying breed; with the advent of the internet, will they go the way of travel agents?
The discussion centered around the fact that consumers today can go online and access comprehensive, in-depth information to help them in the buying or selling of their home—data that was once held exclusively by the REALTORS® themselves. Several questions were raised: with all this information available to consumers, are REALTORS® really necessary today , do full service agents do as much work for their clients as they did 10 years ago, and do they deserve the 5-6% commission they get?
Though we in the industry may think that our clients see value in working with a REALTOR®, the media keeps pushing these issues to the forefront again and again, which indicates that these questions are definitely on the minds of consumers.
Guests on the show were:
- Enrico Moretti, associate professor of economics at UC Berkeley and co-author of “Can Free Entry Be Inefficient? Fixed Commission and Social Waste in the Real Estate Industry,” published in the Journal of Political Economy.
- Jorrit Van der Meulen, vice president of partner relations for Zillow.com
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Krista Miller, real estate agent with Windermere Real Estate of the Bay Area
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Rick Turley, president of the San Francisco Peninsula Region for Coldwell Banker Residential Brokerage
The panel agreed that REALTORS® serve a role to the consumer, and that it’s ridiculous to make a comparison between the services a real estate agent provides and those given by a travel agent. The buying or selling of your home is a vastly different transaction from buying a plane ticket—in terms of the size, significance (both financial and emotional) to the consumer and consequence of the transaction. REALTORS® are people you develop long-term relationships with, unlike a travel agent, who an individual typically deals with on single transactions.
There was, however, a question hanging in the air about whether or not REALTORS® should continue to receive the traditional 6 percent commission. With so much information widely available online, is that investment for the buyer/seller a sound one? Perhaps it should be lowered?
Turley (Coldwell Banker), Miller (Windermere) and even Van der Meulen (Zillow.com) did a fairly good job of addressing that question by talking about the supporting role REALTORS® serve to consumers on several levels (marketing and advertising homes, acting as professional consultants, assisting in ancillary areas like financing) but there didn’t seemed to be a clear, concise argument in their discussions that really articulated the value of the comprehensive services we provide.
This is troublesome. We in the real estate industry need to start doing a better job of defining and communicating that argument as a whole. As the internet becomes a bigger and better resource for consumers, our clients are going to continue to question our value. Now is the time to clearly define that value before it’s too late—perhaps even in the form of a written customer service value proposition. And, we need to consistently communicate that message industry–wide, to our clients and the market. The questions are already arising in people’s minds. If we don’t speak clearly about how are role as REALTORS® may be changing, but is still as valuable as it was 10 years ago, we are leaving ourselves vulnerable to others defining it for us.
To listen to the Forum discussion, click here.
