Real Estate

Real Estate Reinvention Part 2: Online and Empowered Consumers are Taking Charge and Paying Less

demanding consumers

“Internet buyers tend to be better informed about market conditions and better prepared to act on the home they want when they start working with a realtor. Fortunately for realtors, these changes don’t necessarily hurt, as long as they can adapt. to the new relationship and realizing that new-style buyers value speed and efficiency over guidance when finding a home.”

– E-marketer, internet homebuyers who change the house rules

Thanks to the Internet and other technological innovations, more real estate information is freely available than ever before. As a result, consumers are demanding new options, improved services, faster transactions and lower prices. According to a recent NAR survey, the number of sellers who stated that they did not want to pay a sales commission increased from 46 percent in 2003 to 61 percent in 2004. In 2004, 23 percent of home sellers from Florida chose to sell independently without an agent, up from 14 percent in 2003 and nearly double the national average of 14 percent, according to Planet Realtor.

And web-enabled consumers demand high digital IQs when working with real estate professionals. In addition to being well-versed in their own industry-specific technology, real estate professionals are now expected to use laptops, mobile phones, digital cameras, personal digital assistants, and global positioning systems to keep up with buyers. and Internet sellers.

Low pressure

“If consumers are going to do their own shopping from home online, they expect to save some money, just as they would if they used the drive-thru lane. That’s why they’re susceptible to online discount brokers and related startups.” that they are promoting lower commissions if only consumers use their agents. These business models promote the idea among consumers that they should pay less money in commissions.”

Realty Times Columnist Blanche Evans

Traditional real estate commissions, typically around six percent of a home’s sales price, are facing downward pressure from consumers and competition. Some consumers claim that traditional real estate commissions do not reflect:

– House prices today. Years ago, when median-priced homes sold for $25,000, real estate commissions were typically five percent, or $1,250. Today, with median home prices in South Florida hovering around $300,000, the cost of a full-service real estate commission of six percent becomes $18,000. Some brokers even charge additional fees to cover administrative costs. When you consider that the average homeowner today sells a home every five to seven years, real estate commissions can dramatically impact your personal savings and net worth.

– Property of the owner. When selling properties, most owners calculate the cost of sale as a portion of the sales price, although commissions are paid out of the owner’s equity. (Equity is the difference between the value of your property and the amount of mortgages owed.) Consider this example: You decide to sell a property for $250,000 in which you own 10 percent of the equity, or $25,000. After paying a six percent commission on $15,000, you have $10,000 left before any applicable closing costs. In this example, the $15,000 commission is six percent of the sale price, but 60 percent of the $25,000 principal.

– Services performed. Under the current commission structure, selling a $100,000 home at six percent typically costs $6,000, while selling a $500,000 home costs $30,000. Does selling the most expensive house really require five times the effort? Your cost is the same whether the agent spends one hour or 100 hours marketing your home. This is one of the reasons many real estate consumers find fee-for-service real estate so attractive.
Development of alternatives

“Consumers want what they want, when they want it, and they will gravitate to the most cost-effective source to get it. Why? Because our ‘one size fits all’ approach to working with sellers and buyers is archaic and won’t let consumers access various segments of the help they need in a timely manner. That’s why .com web startups are finding a receptive audience in real estate consumers and why homeowner sales are booming.”

Julie Garton-Good, author of “A la Carte Real Estate: Selecting the Services You Need, Paying What They’re Worth”

Until recently, you had few practical alternatives to the traditional full-service, full-commission real estate transaction with a broker. Most sellers paid a one-time commission for a full range of real estate services, whether they needed them or not. Now, traditional real estate agencies are challenged to identify new services that have value for today’s sophisticated and empowered online consumers.

One result is a “unbundling” of traditional one-size-fits-all real estate services for consumers who want more control over real estate transactions and their associated costs. If you’re willing to take on some of the tasks traditionally done by agents and brokers, you could receive lower transaction costs. You can benefit from the following emerging alternatives:

payment for services

“Consumers want the help of real estate professionals, but they don’t want to pay for it in the form of traditional commissions,” says Julie Garton-Good, a pioneer of on-demand real estate. Garton-Good has been preaching the fee-for-service gospel for over 20 years. As her name implies, she can choose what tasks she feels comfortable performing and hire qualified real estate professionals to do the rest. Many traditional real estate brokers are beginning to offer a more menu-driven service plan. For example, you may not mind listing your house and holding open houses, but you may want help with contracts and closings.

one stop buying

In response to declining margins and rising costs of technology and lead generation, some real estate companies are attempting to blend traditional and web-based services to provide consumers with a single source for all your real estate needs. One-stop sites typically provide or partner with lenders, insurers, title companies, real estate attorneys, and others to facilitate all aspects of buying and selling. Additionally, some sites are adding home improvement and related services to stay in touch with consumers between buying and selling transactions.

web-based discounts

Although many Web-based real estate companies faded away in the dot-com era, dozens of new companies have emerged to take their place. Offering specific services such as flat-rate MLS listings, buyer rebates, and AVM tools, these sites appeal to independent buyers and sellers who prefer to take a more active role in transactions. In addition to listings, some sites also offer how-to articles and tips for those who choose to go it alone.
Tradition + technology + turbulence = opportunities

So, given the trends, changes, and ongoing evolution of the industry, what can buyers, sellers, and independent investors expect in this new era of real estate?

o The Web and other technologies will continue to evolve and transform the $1.3 trillion real estate industry. Technology will continue to reduce the time, expense, and complexity of manual processes, and increasingly sophisticated search and rating tools will play a more strategic role.

o Free and low-cost real estate resources will continue to be available and even multiply on the Web. In real estate, knowledge truly is power. Consumers will try to use their power to gain more control of the real estate process, and will subsequently expect to be compensated in the form of reduced commissions and fee-for-service.

o The role of traditional real estate brokers will evolve as web-enabled consumers become more informed. This is likely to trigger some restructuring and consolidation of traditional brokerages, but will also drive the development of innovative new practices targeting online and empowered consumers. Real estate professionals will focus more on promoting their local knowledge and industry experience, while consumers will do some buying and selling on their own.

o Traditional real estate commissions and profitability levels will continue to face downward pressure from various sources. The future will be profitable for brokerage houses that are able to extend their core expertise from neighborhood and industry knowledge into flexible new consumer-focused offerings.

o The traditional high-touch, full-service real estate agency is evolving, not disappearing. Real estate professionals who provide exceptional service and value to their clients will always be in demand.

Now you can find more real estate knowledge, tools, and resources on the Web than ever before, allowing you to buy and sell with greater confidence. For real estate professionals, reinventing the industry means making tough decisions, changing processes, and managing new opportunities. But for consumers, reinvention in real estate is a winner, hands down.

More information at http://www.homekeys.net

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