The housing slump hasn’t been easy on real estate agents, but they’re now facing a new threat–online listing sites, which are booming despite the continued decline of home sales in the U.S.
According to an article in yesterday’s New York Times, companies like Redfin, an online brokerage, Zillow, Terabitz and Trulia have seen sales rise this year as the housing market sank.
Trulia, Zillow and Terabitz execs compared online real estate sources to the Web-based travel agencies that offered an inexpensive alternative to traditional agencies after Sept. 11, when travel wasn’t selling.
For Trulia, Zillow and Terabitz, success seems understandable; we’ve been hearing reports for months that the more-costly print real estate classified ads are down at many of the nation’s largest newspapers.
A Classified Intelligence and RealtyTimes.com study late last year showed that almost half the real estate agents surveyed said they had increased their advertising and marketing budgets from 2006–but only 15 percent said they advertise in print.
Which might be why in November Zillow and 11 newspaper publishing companies–representing 282 U.S. newspapers–announced plans to partner and offer for-sale listings and open house information via Zillow.
Agents are looking for cheaper alternatives that can reach more people–and the Internet is a likely candidate.
However, unlike the other sites, Redfin, based in Seattle, doesn’t deal with brokers and agents; the site acts as both, arranging deals, home visits and other services for a lower fee than a traditional agent.
Since late September, the share of real estate sales in which Redfin represented the buyer increased by 23 percent in Seattle and swelled by 176 percent in the San Francisco area, according to the Times.
San Francisco, I get: California is one of the states most affected by the housing slump. After seeing astronomical highs during the housing market’s peak, its real estate industry is struggling–especially high-priced properties, which are hard to purchase or refinance as more banks become hesitant to make the jumbo loans a pricey property transaction requires. That’s an issue in San Francisco, where the median home price was $770,000 in the third quarter of 2007, according to a recently released Center for Housing Policy study comparing home prices to average income.
The national decline of home prices and sales means it’s budgeting time for many home sellers–they don’t want their homes to sit on the market and they don’t want to take too much of a loss (or any) because home values have declined since they purchased the place. And that can mean cutting out agents to save paying a fee.
But Seattle? Redfin’s success in the Emerald City is more perplexing. Standard and Poor’s Case-Shiller index, released today, said Seattle is one of the only urban areas in the country that had rising home prices in 2007. Which would indicate a healthy market–and no immediate need for cost-cutting sale techniques or new promotional methods to sell homes.
So it’s a little bit scary that Redfin’s success rate in that city is so high. Redfin bills itself as a "smarter way to buy and sell your home"–could it be the homeowner market is starting to agree? And what can agents do to combat the growth of real estate sites that aim to replace them?
There is one big difference between a sales site and a sales agent–one is in the real world, and the other in a virtual one.
Stress that the benefits an agent can give–assistance, neighborhood expertise, years of market experience–far outweigh any slight savings a real estate Web site might offer. Put that statement in your marketing materials, on your Web site, on your business card.
The same goes for brokers–make sure your clients and potential clients know that a personal touch goes a long way.
Seattle may be one of Redfin’s best markets (and, as home to Microsoft, a generally technology-loving town), but it still has a need for agents. When my sister and her husband bought a house about a year after moving to Seattle, they used a real estate agent–who explained to my Midwestern sister why buying a house in their climate made of wood wasn’t a bad thing (hailing from Chicago, she thought only bricks or aluminum siding made decent home exterior material–in the same way she thought all pizza was four inches high).
The agent showed them a neighborhood they hadn’t really considered and a house they didn’t know existed: both of which they now love. When they moved in, she continued to be a source of where to shop, where to dine, where to park: exactly what you’d expect an agent to know; exactly what makes the transition of moving from one place to another so much easier.
And, because my sister and her husband were young and new to the area, the agent and her husband invited them over for dinner–and became their first friends in their brand new neighborhood.
What Web site can do that?