The question is, are real estate agents obsolete and the answer is, not quite yet.
In this post we’re going to learn why real estate agents are not yet obsolete, what the future may hold for them, or us I should say, and the reasons and the realities. The answers may surprise you, especially coming from a real estate agent.
Hi, my name is Joel Weihe. I’ve been a not quite obsolete real estate agent in the state of Kansas since 2009. That’s where I get the experience and know how I use to teach you to sell your house yourself.
Using one of the two million plus real estate agents in the United States is still the most prevalent way to buy and sell a house. It’s still the most popular way and the most used.
But there are a lot of interlopers that are up and coming and trying to change that or disrupt the industry, if you will. We’re going to look at a few of those here and see what’s going on. See if the real estate agent as we know it has a future.
The first we will mention are the Ibuyers. The buyers are companies that will buy your house from you outright. Please don’t mistake these for the many flippers that are working the real estate market. Ibuyers are not flippers. You see those signs on the side of the road that say we buy houses. It’s not those people.
Their goal is not to buy your house for cheap, fix it up and resell it. Ibuyers actually give you pretty close to market value. They are a little more expensive than using a real estate agent after repairs and it’s all said and done but they are super convenient. The convenience is incredibly good. And that is the attraction.
Using an Ibuyer means that you don’t have to go through the whole anxiety of listing your house, repairs, appraisals, fretting over buyers financing and all that. An Ibuyer will make you an offer. If you accept it, you’re pretty much done aside from some minimal paperwork.
Ibuyers are really starting to get traction and are gaining in popularity in the cities where they operate. They’re certainly working hard to make the real agent obsolete.
There are more and more for sale by owners every year. If you look at the numbers that the National Association of Realtors puts out it would seem otherwise. They still have that number at around 8% of all homes sold as For Sale By Owner, and it’s been there forever. But that is not the reality.
The way they do their math to come to that number is a little fuzzy. They only count the people that don’t use a real estate agent at all whatsoever. A lot of people selling their house themselves use a buyer’s agent, some people selling their house use an agent to help them price their house and there are those FSBO’s that use a flat fee service to get onto Multiple Listing Service, or the MLS. NAR doesn’t count those as for sale by owners.
The real number of people not using a listing agent, considered a For Sale By Owner, is really a lot higher.
There are also a lot of misnomers about how a real estate agent can sell your house for an extraordinary amount more than you could on your own making you more money, even including commissions. That is absurd. Those numbers are also fudged a bit, quite a bit.
There have been studies done using side by side comparisons of homes in the same neighborhood with the same type of houses between homes sold FSBO and homes sold by Realtors. They all find that a real estate agent is not going to get any more money for your house than you are. An agent may sell it a little faster but you’ll save paying those expensive commissions when you do it yourself.
Zillow The Disrupter
By far, the biggest threat to the real estate agent is Zillow.
Real estate agents have been in denial about that for years. When Zillow first came online, their big promise to agents was that we’re here to work with you. We’re not going to take your business away from you. For now that’s true.
The thing is Zillow makes most of their money selling real estate buyer and seller leads to Agents. If that continues to be the case agents will be alright. As of right now Zillow’s goal is not to make real estate agents obsolete.
But Zillow is growing fast. In fact, the last quarter of 2020 year over year revenue grew 158% to 943.9 million dollars. For the full year Zillow’s consolidated revenue was 2.7 billion dollars.
That’s right. 2.7 billion dollars.
Zillow is also starting to branch out into other aspects of the real estate industry.
For instance, now you can get a mortgage with Zillow. They have Zillow home loans, and they also bought mortgage lenders of America.
Zillow has Zillow Instant Offers that we talked about earlier. They’re in the Ibuyer business. You can sell your house directly to Zillow and be done with it (snaps fingers) just like that.
Zillow also just recently bought a showing service. A showing service is a company that real estate agents use to schedule showings for our buyers. That’s one of the main reasons why people still use real estate agents or need them is to gain access to houses. That’s important. Everyone is still wondering what Zillow, Zillow the brokerage, needs with a showing service.
That’s not to mention Zillow will also post For Sale By Owners on its site for free. And Zillow attracts a lot of eyes so that’s a big benefit to those listings.
The scariest thing for real estate agents is now Zillow is becoming a licensed brokerage across the United States. In almost every state now Zillow is a licensed brokerage that can run agents and has access to Multiple Listing Service’s across the country.
As long as Zillow is making their money from real estate agents buying leads, real estate agents will remain relevant. But when Zillow finds a more profitable way forward, that could be the demise of the real estate industry.
It could be the end of the traditional real estate agent as we know it.
Is It All Over For The Agent?
With all the competition facing the real estate industry can they hang on? Is it all over for the real estate agent? Not yet. The real estate industry, it’s brokerages and agents are still strong and it’s still the preferred way that everyday people buy and sell their homes. It’s also expensive, cumbersome and outdated.
As long as folks are willing to pay all that money the industry and it’s agents will continue to thrive.
But when the public starts to realize in mass that there is a much less expensive way to handle selling a home, and it’s really not that difficult, it may make real estate agents obsolete.
Sell Your house yourself.