Despite expert predictions of their demise, real estate agents still provide a much-needed human experience.
Human capital in many industries has taken a beating from the internet. Retail stores are closing from pressure from online mega-stores. Travel agents have seen business drop because consumers can do pretty much what they do.
But the same hasn’t happened in real estate, which remains a human-driven sales experience.
In a March 17 story for The Washington Post, reporter Todd C. Frankel wrote there are big signs that real estate agents aren’t yet being pushed aside by technology, despite expert predictions of the demise of human real estate agents. That’s despite consumers’ having access to much of the same information and doing more groundwork in finding their homes, thanks to technology.
Despite home buyers and sellers having access to some of the same data as real estate agents, real estate remains a human-driven sales experience.
For example, the average real estate agent commission has gone up since 2005 to 5.12% in 2016, according to Real Trends. The typical commission on a median-priced American home is $20,131, versus $16,600 in 1997—a figure adjusted for inflation, according to the Post. Commissions appear to be surviving the launch of real estate tech companies, such as Zillow, Redfin, and Trulia, according to The Washington Post.
The human touch prevails
Perhaps more compelling than the money being made is the percent of sellers using real estate agents. The National Association of REALTORS® reported that 89% of residential sellers used agents in 2016, which is similar to the numbers in the previous five years. Sale-by-owner transactions plummeted to 8%, which is the lowest rate since NAR started tracking sale-by-owner transactions in 1981, according to Frankel.
So, why are people still turning to people for their real estate transactions?
One reason could be that it’s intimidating for consumers to take on the sale of their homes, and many would rather leave it to the professionals.
Regulations might come into play, as many states have taken steps to protect real estate agent commission structures.
Human agents can reason, taking the big data — which is meaningless to the average buyer or seller — and make it make sense to each client.
Lobbying and advertising probably play roles in swaying consumers to work with human agents. NAR is embarking on creative ways to get the message across, including contracting with a television sitcom to make one of its characters a licensed REALTOR®. Century 21 is running ads that address the issue head-on with the tagline, “Good luck, robots,” along with: “there’s no robot for insight or hustle or a handshake,” The Washington Post reports.
Technology’s effect
Still, technology has changed the profession.
The internet has altered how real estate agents get their pieces of the estimated $60 billion paid annually in real estate commissions, according to Frankel. But rather than running away, agents are embracing the technology that was thought to threaten their professional existence.
The same smartphone and other applications that allow consumers immediate access to data that used to be found at the county recorder’s office help real estate agents do their jobs better and faster. Today’s apps scan documents, write contracts, keep agents up-to-date on sales leads and networking, and help tremendously with advertising.
Real estate agents are embracing the technology that was thought to threaten their professional existence.
Robots won’t replace the job of human real estate agents, according to Laura Ellis, who wrote on the topic for Inman.com. Humans, not robots, have intuition. Their guts and experience help agents know if homes will be good fits for clients, for example.
Human agents can reason, taking the big data — which is meaningless to the average buyer or seller — and make it make sense to each client.
That’s not to mention the empathy and emotion that come into almost every real estate transaction, according to Ellis. Home buying and selling are momentous events. Robots haven’t been through the process or owned a house, she wrote. And robots can’t hold clients’ hands when things don’t go their way or hug them when they do.
Finally, according to Ellis, real estate agents can network and offer “the scoop” on a new listing. It’s that local, community insight that comes with living in and being active in communities that sets humans apart from technology.
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