Why Pay an Agent When You Can Go Online?

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The Housing Market's Great! (Or So Say Ads From Realtors)

"Can a computer do it all?" asks a recent Century 21 TV ad. A smiling agent dressed in the brand's signature gold jacket in a roundabout way, admits yes, but with this caveat: "Except a computer can't do what I do: understand your needs."

Yet, fact is, for a handful of web-based real-estate start-ups, such as Redfin.com and Zillow.com, a computer does understand the needs of a growing segment of dissatisfied buyers, at least when it comes to their desire not to cough up 6% in commission fees to real-estate agents.

A challenge
The once unassailable stronghold Realtors had over the prized "data" of the marketplace -- from the days a house was on the market to previous sale prices -- is being undermined by these online startups, which efficiently comb public data, link with local multiple-listing sites and, in general, challenge the status quo of the real-estate business.

Technology also has changed how real-estate agents are marketing themselves -- with newspapers the big losers. Charlie Young, senior VP-marketing at Coldwell Banker, said he's increased his online-marketing budget by double digits in the last three years -- shifting it from TV spending. The online budget is going to everything from paid search to content-integration deals with sites such as HGTV.com.

"The newspapers aren't providing online sites that can compete with other avenues," he said. "On the local level, people in the real-estate industry are pretty dissatisfied with newspapers. Just putting a picture of a house on sale in the papers isn't going to cut it."

Why bother?
In fact, 80% of buyers now begin their search online, according to the National Association of Realtors. So while it may have been commonplace a decade ago for buyers to scour newspaper ads for home listings, why bother now if you can hop on Zillow.com and search local listings or major real-estate brand sites investing heavily in searchable property listings?

The online shift has forced traditional real-estate companies to give up more and more information once used as a tool to cement relationships with clients and has crunched the amount of time buyers spend with agents -- the average timeframe has shrunk to just four weeks, according to some estimates.

Glenn Kelman, CEO and founder of Redfin, envisions his company as spurring a kind of Youtube revolution among home buyers. Young, tech-savvy users today post their own video, audio and photos to market a house they want to sell on the site. "The most motivated advertiser is the seller and millions of homeowners are proactive now. If people can see a home without an agent, where does that leave the industry? It's kind of marketing itself off a cliff."
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