Today’s home buyer can search for their dream home online; narrow their search based on specific neighborhood details, property specs, and price points; tour the home virtually with high-resolution photos and 3D tours; and access the open house with secure lock box technology.
All of these tasks were previously initiated and executed by a licensed real estate agent. Traditional MLS listings made real estate agents the first point of entry for most home buyers, and gave agents an upper hand when it came to owning the home purchase experience.
Despite predictions by others that real estate agents will become obsolete with new consumer-minded technology, Ben Rubenstein, founder and CEO of Opcity (now a part of realtor.com), believes the real estate agent is here to stay.
His prediction? The pool of real estate agents will shrink as the demands of the agent grow, and the best-of-the-best will pull ahead to deliver specialized expertise to home buyers. This new age of real estate agents will deliver consultative services to home buyers as they navigate one of the biggest investments of their lives.
At the Future of Real Estate Summit held last week, Qualia Co-founder, Joel Gottsegen, sat down with Rubenstein to discuss predictions around the future of real estate agents.They focused on what’s to come for the consumer experience in the real estate transaction.
The shifting role of the real estate agent
Rubenstein said that traditionally, the real estate agent’s role came down to 3 core functions:
- “Find me a home” whereby the real estate agent helped a home buyer find a home through the MLS
- “Show me a home” whereby the real estate agent helped a client access and tour a home
- “Negotiate on my behalf” whereby the real estate agent helped a client nail the offer process and navigate the complex ecosystem of stakeholders in the closing process
With the proliferation of online search, the first core function has almost completely dwindled. “When we ask consumers who submit leads on our portal if they are committed to a real estate agent, over 90% of people say they are not affiliated or have not worked with a real estate agent when they start the search,” Rubenstein said.
“The second core function— ‘show me a home’—is also starting to shrink,” Rubenstein said. “I think that’s where we’ll see the most disruption coming up.” With self-driving cars and finger-print activated lock boxes, people can access homes independently without a real estate agent driving them around.
Rubenstein believes the second function will further shrink as people narrow their home search with 3D virtual tours and simulation services that help home buyers envision what their furniture will look like in a space or how different colored walls could transform a room to match their preferences.
Rubenstein says the third core function “negotiate on my behalf” will be the biggest opportunity for real estate agents of the future. “Real estate agents will have more transactions and more ability to focus on what they are best at which is negotiation and the coordination of the final close.”
Rubenstein also noted that the negotiator role will likely play out more significantly in markets where homes are older or have more unique features. “The cookie cutter homes that are identical don’t need negotiating,” he noted, “so the real estate agent’s value will be for those looking at homes without as many comps.”
Gottsegen questioned whether iBuying could change this in the future, pointing out that algorithms used to create offers could become more sophisticated and eliminate the need for negotiation. Rubenstein agreed that this could be the case in the long run; however, he believes most sellers in competitive markets will only go to iBuyers as a starting point and will want to test their ability to negotiate on the open market.
Brokerages in an “Uberized” world
Gottsegen and Rubenstein also discussed the changing demands for brokerages. As more consumers start their search on portals like Zillow, they have greater expectations for instantaneous service. “We’ve found that 70% of consumers will go to the first agent they speak to, and often that’s the agent that responds first,” Rubenstein said. Brokerages will need to invest in systems to respond to consumers instantly.
Rubenstein compared this shift to the taxi industry. “Before, I would cross my fingers that the taxi I called would even show up,” he said. “Now, in an uberized world, I’m upset if my driver is even a minute late…Expectations in just a few years have massively changed and this is now happening in real estate.”
Rubenstein forecasted that in this new environment, low-fee brokerages will provide “do it with me” services that will help consumers do most of the process themselves; full-service, niche brokerages will provide unparalleled and individualized customer service; and those in the middle will likely not survive.
How real estate brokerages and real estate agents will interact with title & escrow businesses in the future
“There’s quite a bit of vertical integration right now as search and discovery tools aim to deliver an end-to-end experience,” Gottsegen noted. “How do you prepare yourself as a title company in a world with online aggregators?”
“Title will need to partner with online aggregators to get in with the consumer sooner and be a part of a managed, controlled ecosystem,” Rubenstein said. “I think the successful title companies will be those who are not afraid of the aggregators and will be confident in their service to inject themselves into this system.”