Is the Internet Disrupting the Real Estate Industry?
Yes. Yes it is.
Thank you very much, ladies and gentlemen. Goodnight.
But seriously, folks.
The Internet can, will and is disrupting just about everything on this planet. Good or bad, it’s going down for real.
Retail, radio, TV, travel agents, bookstores, gathering places…so many methods of commerce and staples of society have had their successful business models shaken, stirred, even toppled, by the Internet.
Real estate brokers, like eveyone, are feeling the affects.
The Internet Has Not Replaced the Main Function of a Real Estate Agent
In my opinion, the reason real estate agents are licensed and in business is to help complete real estate transactions. These transactions, by their nature, are larger in size than almost any investment people make. Housing, whether we are renting or buying, accounts for more of a person’s spending than almost anything else. Whether it’s transportation (cars, motorcycles, plane tickets, bus passes, bikes, even some aircraft), food, water, insurance, entertainment, hobbies, they all mostly pale in comparison to what we pay for our housing. For most of us who have monthly housing payments, it’s one of the biggest expenses that continues through most of our lifetime.
It’s a big deal. What real estate agents are supposed to do, and what the Internet will have trouble replacing, is how we deal with micro-local details in deals that involve single, specific properties. This involves histories of properties and how people lived in and treated them. Two properties that stand right next door to each other, but have been lived in, cared for, updated (or not updated) completely differently create two very different transactions.
$5,000, $10,000, $25,000, up from and up to every amount can be gained or lost by either side because of the unexpected issues that often come up. And these problems come from both sides, the buyer and seller.
We Do Our Best to Keep the Deal Together
So many issues come up during a transaction that could derail the deal. Good real estate agents help people solve problems in ways that both parties agree on that also respect the rules and laws of our governing bodies and states.
The state real estate rules, regulations, laws and systems are put in place to make buying and selling homes fair. Real estate brokers and agents are employed to work within the state systems to accomplish that goal.
Real estate regulation and licensing is there to protect consumers. It says so right on the main page of the website of our licensing body in Colorado, the Division of Regulatory Agencies:
Consumer Protection is Our Mission.
The Division of Real Estate provides consumer protection through their enforcement of Colorado License Law and regulation of licensees. However, there are many other areas of real estate law, over which the Division of Real Estate has no jurisdiction, that can factor into the standard real estate transaction.
It is my opinion that the state regulates and requires licenses for real estate for the same reason that it does so for things like selling liquor…because if things go sideways in selling liquor, it can have a big and potentially negative impact on society. So, to sell liquor, you need a license, and you need to follow certain rules and laws to keep that license.
It is my opinion that the state requires licensing for real estate for the same reason that it licenses drivers and maintains laws of the road…because more accidents would probably occur if anyone who wanted to just jumped behind the wheel. More accidents would have a big and potentially negative impact on society.
Colorado, and most other states in our nation, seem to regulate and require licenses for things that, if they went sideways frequently, would negatively impact our society.
And I believe that if a lot of people started to engage in failed transactions, or ones that cost a lot and caused long term financial loss or burden, it would negatively impact society.
The Removal of the Gatekeepers
I went from an industry that actually was disrupted by the Internet (radio) to an industry that is being disrupted by the Internet (real estate). Such is the nature of our times.
However, radio was ripe to be disrupted. Hubris, bad programming, annoying and endless commercial stopsets, corporate control, focus on a lower common denominator—the whole system was a political, bureaucratic, unartistic mess.
I watched it all happen and wasn’t shocked at all when my job was squeezed out the door. I was replaced by no one. One person who was doing four jobs was all of sudden doing five. I, again, was not surprised. Or even upset. I mean, it’s pointless to get angry at changes in the world. I need to change with it.
The shrinkage of radio didn’t surprise me because what radio offered was disposable entertainment. What does radio purvey? Songs, mostly. How much do songs cost? $1.29, for my last purchase.
How much do homes cost? Hundreds of thousands (See Fort Collins Real Estate Median Price Blog Post Here). Real estate agents help people deal with what is often their biggest investment. You’re only out $1.29 if the song stinks. With real estate, a mistake can be a huge blow to your financial life.
I don’t think you should replace your real estate agent with a machine.
I say that for your protection, not for the protection of my profession.
Here’s why. That machine is only doing a partial fraction of the real estate agent’s job.
It used to be that the real estate agents and brokers were the gatekeepers of the multiple Listing service (MLS). The multiple listing service is where licensed real estate agents list homes for sale. Before the Internet, if you wanted to see the MLS, you had to have a real estate agent. With the Internet, that has changed.
You now have Zillow. And Trulia. And Realtor.com
So, why use a Realtor®?
According to the state of Colorado, it is for your protection. It is to counter caveat emptor…or buyer beware.
The reason real estate agents are a state licensed profession, according to the Abridged Colorado Real Estate Manual is:
The Colorado Real Estate Broker License Law was passed to protect the people of the
State of Colorado. Through licensing, the law seeks competency and integrity on the part of
those engaged in the real estate business. The law has had the effect of raising the general
standing of the real estate business and has helped to safeguard the interests of both the
public and those engaged in the business.
Source – Abridged Colorado Real Estate Manual
Yes, you have access to the MLS through Zillow, Realtor.com, etc. But the duty of a licensed real estate agent in the state of Colorado goes so far beyond utilizing the multiple listing service. Membership in our local MLS is a great benefit to our positions. But what we do involves so much more.
When radio was usurped by mp3’s and then Pandora, Spotify and other streaming services, I had to take my hat off to those technologies, because they do it better than radio did. I was in radio for 20 years and the programmers’ methodology evolved through corporate influence and a ‘keep my job’ mentality. Of all the thousands of songs produced, I worked for stations that would play the same 300 songs the entire year, with about 50 of them changing from time to time. And that was on a station whose positioning statement had the word ‘variety’ in it.
They programmed to the 15 minute listener and played the same song every hour and a half. I loved my job as an on air personality, but I always thought the programming was weak.
Radio was primed to be punted. Real estate agents are not.
Realtors® and real estate agents do a lot more than provide a list of what homes are for sale.
Just because everyone can now see most of the listings on the MLS, the profession of real estate agent, in my humble opinion, should not go away. And I don’t advise handling your own real estate transaction because you now have access to Zillow.
Our job, the one we are licensed for, is to help you with the contracts that that state approves for real estate transactions for the protection of the people of Colorado when buying and selling real estate.
We are fiduciary agents, meaning we are bound to put our clients’ interests ahead of our own. We have a duty, and for those of us that are Realtors®, we follow an ethical code.
The Internet is the great equalizer, and I say equalize away. I love to work with people who know that working with a Realtor® helps them make more money, keep more money and have better lives through and beyond their real estate transactions.
Yes the Internet is a game changer. But the real estate game, in many ways, is still the same. Enjoy your access to the MLS. Learn more about real estate. And when it’s time to make a move, it is my advice that you employ a state licensed agent, who is also a Realtor® (like me!) to handle the transaction. Any questions? Give me a call! 🙂
A More and Less Educated Consumer
The Internet has brought the consumer into the MLS, an area they previously had little or no access to. It’s a big part of the regulated real estate system and process. But it’s only a part of the process. Much of the rest of the process deals with the contracts, which are approved of by the state licensing bodies to protect the consumer. To standardize as much as possible, what is for most people a very significant transaction and risk.
For Sale By Owner’s still net less money than if they worked with a Realtor® and still have a much lower rate of closing than if they worked with a real estate agent.
Because of the importance of consumer protection and because of the ability to help the deal get done, I believe real estate agents will remain relevant in some way for some time to come.
At least I hope so, because I love this job. 🙂
Realtor® Paul Wozniak
Realtor® | Associate Broker | RE/MAX Alliance Fort Collins
Realtor® Paul Wozniak serves in Colorado, helping people buy and sell residential real estate, land and commercial property.
Paul specializes in communication and helping his clients make sound decisions with regards to real estate.