Last year Beth and I bought our first house. We used a Realtor. Our experience was great, and I would recommend my Realtor, Rhonda Brewer, to anybody looking to buy a home in the Blacksburg area (and I have recommended her to a few co-workers). Rhonda led us through the home buying process from start to finish. She helped us locate properties, tour them, helped us make the winning offer in a competitive bid situation, and guided us through all of the legal crap. Thanks Rhonda!
However… if there had of been an electronic alternative available for at least part of the buying process, I would have used it. This is nothing against Rhonda, or my uncle Den who is a Realtor in Rhoad Island, or any Realtor for that matter. I just think your market needs a disruptive company to come in and shake things up a bit. I was surprised at how lo-tech the home shopping tools available are, and how closed of a system the MLS is. Home listings are posted on the MLS for licensed Realtor eyes only several days before they are available on the public sites. Sometimes homes are sold before they ever reach the public listings. Come on this is 2006! Put this information directly in the hands of your customers and find a new way to make money from it.
Also, it sucks that you have to go to a completely separate web site to find information on historical home sales in the neighborhoods you are shopping in. Whoever opens up the MSL and integrates this data will make a killing – somehow.
Today I read about what Redfin is doing in Seattle and San Francisco. They have opened up the MLS and integrated historical sale data, and mapping software. And if you want they’ll even help you make an offer and help you through the legal crap. Awesome. Realtors are up in arms over there and sending Redfin employees threats and other nastiness. But they shouldn’t be. This was bound to happen. The information should be publicly accessible, just like it is in every other efficient market.
Realtors: If you look at this change as something that is going to steal your job away, it will. If you embrace this change and change with it, then you will survive and even gain customers.
I do not see Redfin’s make-an-offer / legal-representation service as an alternative to using a Realtor. Realtors know their local markets well, know the neighborhoods and may always do better than an online service at this. Redfin’s service instead is an alternative to buying a home without a Realtor, which a lot of people do. Redfin is trying to capture a 1% commission from the home sales that are not currently giving Realtors any commission.
(1) Redfin or a similar company will take this business model nation-wide within the next couple of years.
(2) Traditional Realtors will be bitter about this and will quickly become obsolete. The older generation of home buyers will continue to use Realtors, but the demand for traditional Realtors will shrink and there will be less of these folks around.
(3) Progressive Realtors will accept and embrace this change and look for ways to capitalize on it. They will point their customers to the online tools, help them use the tools, and be there for them when it is time to make an offer. Realtors will do less per sale, but they will be able to work more efficiently with their clients by letting their clients do the searching for what they want, rather than they Realtor doing the search as a middle-man.
(4) The buying agent commission will decrease and/or buying agents will start giving cash back to the buyer as Redfin is doing. Currently it is 3% of the sale price.
(5) More people will use a Realtor when buying a house because of the commission decrease.
(6) Similar change will occur on the seller-side, but less rapidly because it is not nearly as needed.