Realtor Insider explores inside the mind of a Realtor to learn the hidden secrets of buying and selling real estate.
Have you bought or sold a house in your lifetime?
If you are older than 40, you probably can still remember the days when you would have to contact a Realtor if you wanted to buy a house. The Realtor would look through their big book of listings, preview properties for you and then set up showings. The other way to find houses was to drive around neighborhoods on the hunt for any “for sale” signs.
If you were going to list your house for sale, you would have to rely much more on physical showings of your home, versus buyers having the luxury of looking at your home online. Open houses were more efficient as buyers had to go to them if they wanted to walk the house without an agent. Realtors relied on each other more for possible leads on buyers.
As much that has changed, there are certain aspects of real estate that has not changed much. Today, the basics of selling and buying a home are really the same. We are just using different tools and techniques to get it done. If you are looking to sell a home, you have to make your house presentable so buyers will be interested in purchasing it. If you are buyer, you have to look through several homes (usually online) before you find a few that might fit your “wish list”
To fund a purchase, you still have to work with a mortgage company who will require you give information about your Grandmother’s third cousin removed before they will approve a loan for you. You still have to come up with the cash for the large down payment and you will still have sticker shock when the first mortgage payment slip arrives in the mail.
Once you move into a home, you still have to do all the repairs yourself to keep the property maintained. This means you have to know who to call when something breaks, or know how to fix it yourself. Angie’s list and Home Depot become you new best friends and it always seems something has to be done to the property. Yes, owning a home is still a lot of hard work.
Despite all this, there are three ways Real Estate has changed for good over the last decade These three ways radically changed the way we look at buying and selling a home today. Each change has its good parts and its bad parts. No matter how you look at it, you can’t argue with the fact that these changes were revolutionary to the real estate world.
Searching for homes has never been easier – What is the first thing someone does when they want to buy a home? They go online to see what houses are available. You can use a wide variety search engines today for searching your local housing inventory. This great post outlines the most popular search engines on the Internet today. Zillow is by far the leader with an estimated 36 million visitors in January 2019. Trulia has 23 million. Yahoo Homes had 20 million and Realtor.com had 18 million. The rest of the list is so far behind, it doesn’t even make sense to list them here.
Of course, Zillow has branched off into other areas away from searching. It has become a player in mortgage industry and the Ibuyer industry. (I get into the Ibuyer industry later, but just know these are the companies that buy homes directly from sellers versus selling the homes for them.) Zillow has used its leverage as the search engine for Real Estate to transform itself into something more than a website. Agents can participate in helping Zillow customers through the Zillow Flex program where Zillow gets a 35% referral fee from the agent. It doesn’t need to be its own brokerage. It can survive on the referral fees alone.
Despite the future path these companies will take in the industry, one cannot doubt the impact being able to search for homes on the web has had on the general public. It is so easy now to see what homes are available on the market. Realtors will tell you that these portals are out of date and give value estimates that are more wrong than right. It can also be dangerous for consumers as scammers have yet another tool to cheat people out of their money. Despite these shortcomings, online search for homes gives the data to the consumer so they are a much more powerful position than ever before when it comes to buying and selling a home.
Non Traditional Ways to Sell and Buy a Home -We used to have really only two ways to sell our homes. We could hire a Realtor to list our home in the MLS so buyers could know it is for sale. You could also sell it yourself on the open market to buyer. These two methods have not gone anywhere. You can still do them both. However, there are many different flavors on the traditional ways of buying and selling real estate.
Ibuyer companies have really invaded the industry in the last three years. I am sure you have heard their commercials on the radio. Companies like OpenDoor, OfferPad, Perch and Knock have opened for business recently. These companies make selling a house very easy. You go to their website, fill out the online form and you get a initial offer within 24 hours. These companies will inspect your property closely and then modify their offer based on the condition of the home. They also charge a hefty service fee, usually 8% or higher. It is easy to use these companies, but you end up sacrificing much of your equity in taking this shortcut.
You also have companies like BlueMatch and EasyKnock, who make selling your home much easier. BlueMatch uses its tech know-how to make selling a house much easier as they have made the process more streamlined. Because of this easy process, Bluematch charges much less than the traditional 6% for selling your home. EasyKnock has figured out that a lot of people want to take advantage of their equity but don’t really want to move. Their “sell and stay” program allows homeowners to do this exact thing. EasyKnock buys your house, you get a part of your equity and you can stay in the house. Of course, both of these companies have a ton of fine print for you to read so so be careful. You don’t want to do something you will regret later.
Bottom line: We still have our traditional ways of buying and selling real estate. The new players, however, have given customers options that has changed the real estate world for good. Customers know that they are not held prisoner by the current system and can go a different route.
Big Money Has Invaded Real Estate – I’ll keep this one short, because it hasn’t really been revolutionary as the other two mentioned here. Big money has always been a part of real estate. After all, it is a trillion dollar industry. However, some brokerages have emerged, such as Compass and Realogy, with huge companies investing in them to the tune of millions of dollars. Wall Street has taken notice of the real estate industry and they are throwing some big bucks at it. How does this change real estate? One way this author has observed is the movement away from these huge companies being customer centrist to agent centrist.
How many times have you heard a story about a Realtor really dropping the ball on a client? I know I hear about two to three stories a week about the horrible agent someone hired. I truly believe these large brokerage are so enamored by helping the agents succeed that they forget that they are actually serving the needs of a customer. They provide all these wonderful tools and processes for agents but do very little training on basic customer service. Why do they even have to bother? Their investors back the companies to the point where the loss of any one customers doesn’t really hurt enough for them to care. We have lost the basic tenet of being in a service industry: the customer always comes first.
This lack of customer service, or not even caring about their client, is what is going to end driving a lot of customers to those more easy way to sell their homes. Why bother with the headache of a realtor when you can sell your house fast and easily? Whether we like or not, this attitude is changing real estate.