The question is, are real estate agents obsolete and the answer is not quite yet. In this post we’re going to discuss why real estate agents are not yet obsolete, what the future may hold for them, or us I should say, and the reasons why. The reality will surprise you, especially coming from a real estate agent.
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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 in the U.S. It’s still the most popular way and the most used. There’s a lot of interlopers that are trying to change that or disrupt the real estate industry as we know it today.
We’re going to discuss a few of those interlopers here.
Ibuyers Want To Make Agents Obsolete
First are the Ibuyers. Ibuyers are companies that will come in and buy your house from you outright. Don’t mistake these for the many flippers that are out running around. They’re not house flippers. You’ve probably seen those signs on the side of the road that say we buy houses. It’s not those guys.
Ibuyers don’t buy your house for cheap and then fix it up and resell it. A seller will get pretty close to market value when using an Ibuyer. They’re a little more expensive than using a real estate agent but very convenient. It means that you don’t have to go through the whole anxiety of listing your house, repairs, appraisals and all that.
An Ibuyer will make you an offer. If you accept it, you’re pretty much done. Ibuyers are really gaining in popularity across the country where the service is available.
While Ibuyers are gaining traction in the areas they operate real agents are not yet obsolete
Mostly here on my website and Youtube channel I discuss and teach For Sale By Owners. There are more and more For Sale By Owners every year. More home sellers are figuring out it’s not that difficult with all of the free information and technology available.
If you look at the numbers from the National Association of Realtors they still have that numberof FSBO’s at around eight percent and it’s been there forever. The number is really actually a lot higher.
The way they do their math to come up with that 8% is a little fuzzy. For instance 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. Even with FSBO’s Real agents are not yet obsolete. They still have place.
There are also a lot of misnomers about how a real estate agent can sell your house for an extraordinary amount more than than you could on your own. And they claim you would get more money even after paying commissions. Some claim as high as 32% more. That’s just absurd.
Those numbers are also fudged a little bit. Without using side by side comparisons but lumping all FSBO’s together that number would appear higher. Mobile homes and condos are often sold by owners and much less expensive than single family homes that would list with a Realtor.
There have been companies that have done side by side comparisons in the same neighborhood with the same type of houses. They all find that a real estate agent is really not going to get any more for your house than you are.
By far the biggest threat to the real estate agent is Zillow. Real estate agents have been in denial about that for years. Zillow has the power to make real estate agents obsolete.
When Zillow first came online, they’re big thing to agents was that we’re here to work with you. We’re not going to take your business away from you. The thing is, is that Zillow makes most of their money by selling real estate leads to Agents. When a consumer is on Zillow looking at homes and want more information Zillow gives your contact info to a real estate agent that pays for that privilege.
Zillow is growing fast. In fact, in the last quarter of 2020 year over year Zillows revenue grew 158% to 949.3 million dollars. For the full year their consolidated revenue year over year was 2.7billion dollars.
That’s two point seven billion dollars. That’s right.
Zillow’s Growth Could Make Agents Obsolete
Zillow is also branching off 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 out mortgage lenders of America.
Zillow has Zillow instant offers that we talked about earlier. They are now in the IBuyer business. You can sell your house directly to Zillow and be done with it 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 buyers. That’s one of the main reasons why people still need real estate agents, or use them, is to gain access to houses. You have to wonder what a company like Zillow needs with a showing service and how they plan to use it.
That’s not to mention Zillow will also post For Sale By Owners on its site for free. Zillow attracts a lot of eyes to help sell those FSBO’s. Sites like Realtor.com won’t post for sale by owner listings.
The scariest thing for real estate agents is now Zillow is becoming a licensed brokerage across the United States. In almost every state, if not all, Zillow is a licensed brokerage that can actually run agents and gain access to the MLS has across the country.
Agents Are Not Obsolete, For Now
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.
Until such a time real estate agents are not yet obsolete.