Whoever Owns the Information Will Seal the Deal
- May 07, 2008
Over the past year, the real estate industry has become more and more concerned about Web sites that offer buyers and sellers new ways of connecting without an agent.
And that concern should be growing because–according to some sources–those sites are about to step up their game.
A recent CNN.com article said that soon, value estimates for almost any home in the U.S. will be available online–for free–on sites like Zillow.com, HomeGain.com and RealEstateABC.com.
The danger, CNN says, is that such sites are free of the financial incentives agents have to push prices up in deals. An agent is working for a commission; a Web site isn’t. The site will give you an unbiased home value–in theory.
In markets like the current one–where money is tight and home values are lower–buyers are becoming more nervous about making a profit off the sale of their home.
In some markets, where values have fallen tremendously, that may not be possible–or the profit may be minor, which gives them even more reason for eliminating the typical 6 percent agent fee.
Yes, real estate Web sites don’t offer a personal touch; they don’t advise you in tricky transactions that involve contingent offers and other stipulations. But they’re cheap–and based on today’s home selling prices, so are buyers.
Which is why such sites are a concern.
"You go to
an agent for information," John
Vogel, who teaches economics and real estate at Dartmouth,told CNN. "Free access to it should be a
major threat to the brokerage business."
Wired Magazine editor in chief Chris Anderson, agrees.
"Increasingly, services are moving from
professional people you pay for to places you go to for free, be it
travel agents or stockbrokers or lawyers or accountants–these are all
turning into software applications, and once anything becomes digital,
it inevitably becomes free," Anderson told the Ottawa Business Journal. "That’s simply what digital economics does."
Yes, but, as the Journal pointed out, once that information is free, brokers–stockbrokers or real estate agents–can’t charge the same amount for their prized information.
Even if the information isn’t as precise as an agent can offer, the perception might be that it is–and that could strike a major blow to the real estate agent industry.
How can the industry fight back? What do you think it should do?