The Evolution of Real Estate

The internet has arguably not had a more significant impact on any industry more so then real estate. It has effectively changed the way prospective home buyers find the property they ultimately purchase.

Here is the most compelling statistic to support my argument – according to the National Association of Realtors (NAR) 70% of home purchasers found the home/property that they ultimately purchased on the internet “BEFORE” they hired a Realtor. Prior to the internet individuals looking to purchase a new home had to go to a Realtor and outline their requirements (price, bedrooms, bathrooms, region, etc) and then have the Realtor go through the MLS to find suitable properties that matched your requirements. The realtor would then present his/her findings and set up appointments to view. Today prospective buyers have access to that same information and can use web based products like Google Earth to zoom in and view aerial photos of homes and neighborhoods. They can also go online and get free appraisals or access real estate comparables and see exactly how much the house down the street sold for. They can also shop for mortgages and compare rates. City data sites provide demographics, rate school systems and provide community features for virtually all cities and towns across America. And the best part, it is all free and readily accessible at their fingertips!

While there are many websites that offer access to real estate listings according to Hitwise (an internet monitor which collects data directly from ISP networks) here are the top 10 real estate websites:

1. realtor.com (most active site in world with 350 million page views/month)

2. realtytrac.com

3. homegain.com

4. rent.com

5. remax.com

6. realestate.yahoo.com

7. zillow.com

8. apartments.com

9. ziprealty.com

10. move.com

Realtor.com, the official site of the National Association of Realtors, is far and away the No. 1 ranked real estate website with a 8.8% market share. According to the USA Today traffic on real estate websites jumped 8% in 2005 – double the growth rate of Internet traffic overall.

The internet has effectively leveled the playing field – homebuyers simply do not need a Realtor as much as they used to, this fact ultimately puts pressure on Realtors to justify their commission rates. Supporting this outlook is the fact that real estate commissions have dropped to an average of 5.1%, down from the long-standing 6%, according to Real Trends.

As in any industry the less you do, the less you are paid, why should Realtors be any different? The curious thing is that as home prices go up so do commissions – unless of course you engage a “Discount” real estate broker. These brokers recognize their reduced role and workload and simply offer their services at a reduced rate. But don’t underestimate the powerful NAR lobby (remember they have 91 BILLION reasons to protect their industry). Realtors have helped “persuade” about a dozen states to pass laws limiting the ability of real estate agents to give rebates to home buyers or to offer a la carte services at low prices to home sellers. The Justice Department, in an effort to protect competition laws, has pressured some states to reverse plans to pass such laws.

In 1995, just 2% of home buyers used the Internet to look for a home. Last year, 77% of home shoppers went house-hunting online. Shockingly, again, according to the NAR, the average Realtor spent under $500 annually on the internet (advertising and development).

The rising dominance of the Internet comes at a pivotal point in the real estate market. The average home price dropped 6% this year. Home buyers and sellers, meantime, are seeking new ways to save money, and they’re finding them on the Internet. Armed with more information many home sellers are cutting out the real estate agent altogether and moving towards “For Sale by Owner” (FSBO). The biggest challenge for FSBO’s is the effective marketing of their property. While there are many (thousands) of websites that cater to FSBO’s the industry is extremely fragmented and there is no repository of properties that competes with Realtor.com or any of the other “Top 10” real estate sites listed above. One option is Flat Fee MLS (http://ezinearticles.com/?Flat-Fee-MLS&id=548210). With Flat Fee MLS a Realtor essentially agrees to list a FSBO property on the MLS for a “Flat Fee” as opposed to a commission. The service is barebones and the Realtor that lists the property does not provide any services beyond putting the property on the MLS. It does however expose the typically marketing challenged FSBO to a Realtors most effective marketing/sales tool for a minimal fee (usually $399 – $699). Another option is to simply list your property on Realtor.com (my preference – I will explain why in another article).

While the way individuals “look” for property has changed, the way they purchase hasn’t – 81% of home buyers that utilized the Internet to look for a home still engaged a real estate agent to buy.

The fact is the internet has drastically eroded the value of traditional real estate agents. Ask yourself this question – Is putting a sign on your property, listing the property on MLS and then spending the next 3 months convincing you to lower your asking price worth 3%? Is “showing” a house worth 3% of the asking price? Am I being too harsh – maybe. I understand that Realtors provide a level of expertise and more often then not “deliver” the purchaser to your doorstep, but if you look at the process of getting there the purchaser is clearly doing most of the climbing, a Realtor simply opens the door after their journey.

Mark Camphaug is currently President of FreeFSBO.com (http://www.FreeFSBO.com) and it’s parent Martcam LLC. FreeFSBO.com is a For Sale by Owner (FSBO) website that offers a free online listing and free real estate lawn sign to prospective FSBO home sellers. Previously Camphaug spent 6 years as Vice President of one of the world’s largest and most successful Interactive Marketing Agencies where he specialized in all aspects of internet marketing, including SEO, PPC, Email and Affiliate marketing. Prior to that Camphaug spent 12 years in the competitive new home industry, duties included sales, marketing and client relationship management.

Article Source: http://EzineArticles.com/?expert=Mark_Camphaug

The Evolution of Real Estate



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