Future Of Real Estate Agents
A growing disconnect between homeowners and real estate agents is among the biggest changes happening in real estate investing. Many find themselves asking: Is it better to list a property by yourself, or enlist the help of a professional agent?
To this day, real estate agents have yet to become obsolete, and it is hard to imagine that their services will ever not be needed. They simply offer too much value to the average homeowner.
For starters, their negotiating skills and local market expertise will always help sellers receive the most money for their property. Homeowners that take on the task of selling a home could lose money with one single mishap. At the very least, the buyer’s agent may talk down the price. Any number of things could go wrong without a professional agent to represent your side of a transaction.
Outside of selling a home for its maximum value, agents have the potential to sell faster. In addition to marketing campaigns, there is a good chance they already have a competent buyers list. The right agent could have a buyer in place before the home is officially up for sale.
There is no questioning that a good real estate agent is worth their weight in gold, especially for those in the investing industry, but there are a few trends that warrant your attention. Specifically, the advent of For Sale by Owner (FSBO) sites are beginning to carve out a niche among a select population of sellers.
According to a survey conducted for Redfin, approximately 17 percent of homebuyers in the last two years didn’t feel the need to enlist the services of a real estate agent. The same survey, made possible by SurveyMonkey Audience, identified an increasing trend in discounted commissions. Of the homeowners that did use an agent to purchase a home, one-third said their agent offered incentives in the form of a refund or savings in excess of $500.
It is not uncommon for Realtors to charge six percent of the sales price for their services. On a $230,000 home (the median value of a single-family house), commissions can reach upwards of $14,000. At that rate, the prospect of foregoing a Realtor altogether becomes very enticing.
According to data provided by ForSaleByOwner.com, about half of all homeowners in America would consider selling their home without the help of a Realtor. At the same time, 55 percent of Millennials acknowledged that they would like to use the “for sale be owner” sales model to list their home.
“We’re seeing a dramatic transformation of the real estate industry with today’s consumers, especially millennials exerting more control over the buying and selling process than we have ever seen before,” said Lisa Edwards, director of business strategy at ForSaleByOwner.com.
Listings on ForSaleByOwner.com increased an impressive 57 percent in spring, the pinnacle of the 2015 selling season, and there is nothing to suggest that the trend won’t continue. It is important to note, however, that most of the sellers reside in the Northeast. Major metros like New York, Boston and Philadelphia appear to be more interested in foregoing the agent experience. Even the National Association of Realtors (NAR) has concurred that FSBO sales are more likely to occur in major metropolitan areas.
“Today [sellers] can quickly understand market conditions by using free online pricing tools, reviewing recently sold homes and homes currently for sale online without the help of an agent,” said Edwards.
Sellers have found sites like Redfin to be extremely helpful. In fact, Redfin charges sellers 1.5 percent of the sales price, whereas traditional agents can get away with charging twice as much. On a $250,000 home, the difference can save sellers as much as $3,750.
There is no denying that online listing services have changed the way people look at selling. Agents, in particular have had to react to the advent of technology.
”Real estate agents are reacting to more competition in the market,” said a Redfin spokesperson, adding that traditional brokers have had to change the way they do business to stay competitive.
Of course, there is no reason to believe that any trends will result in the extinction of real estate agents. The creation of FSBO and other websites have made listing a home easier for the average seller, real estate agents still have their place.