Real-estate agents are going extinct just like travel agents did

[dalton99a]

https://fortune.com/2024/03/23/what-will-happen-to-real-etate-agents-housing-market-nar-settlement/

https://archive.ph/lpjZ1

Real-estate agents are going extinct just like travel agents did, award-winning professor says. ‘You just don’t need’ them anymore because of the internet
BY Sydney Lake
March 23, 2024, 9:00 AM UTC

Last week, the National Association of Realtors, one of the country’s largest industry associations, reached a groundbreaking $418 million settlement over an alleged conspiracy to inflate realtors’ commissions. Some have said the settlement signals an end to real-estate agents as we know them. But an award-winning finance professor, specialized in housing economics, says the demise of this particular profession has been coming for a while.

Indeed, Andrew C. Spieler, a distinguished professor in business and finance at Hofstra University, likens real estate agents to travel agents. Like travel agents, realtors were once the “gatekeepers” of information. They had access to MLS listings that consumers couldn’t find on their own, so buyers had to be much more “dependent” on their agents to even start house hunting, Spieler tells Fortune.

“You just don’t need them,” he says in regard to both travel agents and real estate agents. “I mean, there’s still a few out there, but it’s going to compress the industry.” Spieler is an award-winning academic who has won several industry awards for his real-estate research.

It’s not rocket science, he says. It’s the internet. Online, homebuyers have access to nearly all the information they’d need to purchase a home. On websites like Zillow and Realtor.com, consumers get almost all of the details they’d want to know, plus photos of the property.

...

[leftieNanner]

1. I don't agree

When we sold our house in 2009, we had newbie buyers who made the transaction very difficult. Our agent navigated the rough waters very well. We couldn't have done it as well on our own.

[unblock]

3. Yeah I think they still have a role. Showing the house, for instance

Online pictures can certainly narrow the search, but you need to actually see a house, particularly the parts they don't show online.

And I'd rather have a trusted third party do the tour, whether I'm buying or selling.

But I that agree their role is greatly reduced thanks to the internet.

[leftieNanner]

4. Good points

There are also legal issues, although you could hire an attorney.

Edit to add: No open houses!

[Hassin Bin Sober]

13. We made the mistake of using Redfin on our last sale.

We never had the same agent twice so they weren’t familiar with the property.

It was really frustrating when they wouldn’t show our backyard which was a huge selling point for a condo in the city. We had a beautiful cedar deck cedar and fence and paver patio with a fire pit. Most of the condos in the neighborhood had very little outside space besides the back porch.

Half the agents wouldn’t even open the back door. We had cameras on the property so we could see the showings (that turned out to be way more stressful than it was worth).

[snowybirdie]

28. What seller

in their right mind would allow strangers off the internet into their home? And what about when owners aren't home? A third party must be there to protect sellers.

[unblock]

30. Exactly. But gone are the days when you needed a realtor to see 30 houses

Now it's really easy to narrow it down so a very small number that you might want to actually see

[snowybirdie]

31. Agreed

Sold my last home without setting eyes on my realtor. A long distance sale.

[TomSlick]

36. I've had that lawsuit.

I represented the real estate agent for folks that were looking to buy a house. The agent accompanied the clients on a showing of a house listed by another agent.

The property owner claimed a prospective buyer damaged the home during a showing. The property owner sued the prospective buyer's real estate agent for not supervising their clients. My motion to dismiss the prospective buyer's agent because they owed no duty to the owner was granted.

[MiniMe]

7. They also know what houses are selling for

Those things help when you are trying to set the asking price when you are selling.

[leftieNanner]

8. Yes

And they know what kind of market you are in at any given moment.

[Johonny]

25. Where I live having a local agent mattered

I spent a year bidding on places using redfin but never won. After so many open house visits I knew the local agents. I hired one. Won the first bid. In demand heavy areas the agents all know each other and it helps win you bids.

[ornotna]

2. Don't put them on the endangered species list just yet.

They're quite abundant in Florida.

[2naSalit]

15. They're all over the place here too.

[True Dough]

5. At least the rates they charge

will become more competitive. It's been 100 years of outrageous price fixing. "The system" allowed them to thrive like that for far, far too long because they were a powerful lobby group.

[Dorian Gray]

6. This is funny

bc I just finished booking a trip using a travel agent. (I find that you get perks when they book a hotel that you don't usually get unless you're in a top network.) I highly recommend it, though it depends on who you use.

[CTyankee]

9. We use one for our cruises. She arranges everything. We're elderly and have special needs.

She gets me a driver who also escorts me in and out of museums, finds/books hotel rooms. And it costs us nothing.

[Dorian Gray]

22. Yeah

they work on commission usually. Some do charge a planning fee: $250. But with upgrades and other benefits, it may be worth it, especially if you're booking a more complicated trip with many legs and excursions.

[CTyankee]

23. She must make money or she wouldn't do it for free with us. I think it is because we are a valued customer, i.e. we

don't want to plan everything, 1) because we can't and 2) because we plan what we are best at planning, i.e. the art I want to see -- I usually know where it is but just need to get there and help in getting there and back to my hotel.

[no_hypocrisy]

10. Disagree.

My agent found the perfect buyers. They loved the house. Cash deal. Two months to close. And he recommended stuff like touch-up painting, window-cleaning, and showed the house constantly.

He earned every friggin' penny!!!

[Renew Deal]

11. I also doubt they are going away

They provide a service that many people need. It may encourage the old guard to retire, but I bet the industry will be revitalized through this change.

[WarGamer]

12. +100

In my early 20's I was a realtor.

We had the MAGIC MLS book that came out weekly...

Top Secret stuff lol...

The system was skewed for business to be steered thru a realtor...

And we're were overpaid like crazy.

I remember my first commission was like $4000 and I'm like WTF... maybe 6 total hours of work including babysitting the process thru escrow, title, finance and handing over the keys

[3Hotdogs]

21. The book and the sheets were magic. In many shops, the pages were left unopened and unsorted on a desk or table.

My first (and last) job was at a brokers that was about 1 1/2 years in business. Sheets were in unopened envelopes. While I was waiting for my license to come in from the state, I took time to file the sheets.

One sheet had a property that had been for sale for several months. I put a bid on it that was accepted. I then proceeded to advertise the property and sold it at the closing table to another buyer for a $23k profit in about 30 minutes.

[Stinky The Clown]

14. We've bought and sold quite a few properties, some as recently as 2023.

Our realtor did a lot of work for us, saving us time and effort to say nothing of steering us away from mistakes.

To be sure, given today's resources, there is little they did we could not have done on our own. But would I want to order credit and criminal background checks? From who? How do I interpret what I learn? In more than twenty years of having two or three rentals we have never had a tenant issue.

Our properties have all been in the best neighborhoods appropriate to the nature of the specific properties. For us that means college educated young singles and DINKs of both races. In the process of renting, we were able to pass on applicants that didn't meet our realtor's and our criteria.

Our realtor did open houses, paid for advertising, and chatted with (interviewed) interested people prior to their applications. Could we have done this? Of course we could. But let's be honest, we'd be amateurs just fumbling along.

When buying, we had him choose the title and settlement companies. We had no issues. When selling, the buyer chose them and believe me there are flakes out there. Or realtor kept us safe.

For all these and other reasons, we find value in realtors.

What we're reasonably good at is maintaining properties and bringing them up to market ready conditions. That's what we did, but even, in consultation with our realtor.

We've had four realtors over the years.

[MLAA]

16. Bought a place last month I found on Realtor.com.

I did use an excellent agent who previewed 2 other properties on FaceTime with me since I was out of state. Then FaceTimed to show me the one I found on line. I made offer and it was accepted before I saw it live. I flew in for the inspection and the agent picked me up at hotel and spent about an hour at the property. She steered me away from not great neighborhoods early in the process. All in all she spent about 10 hours working on my behalf before the sale and a few hours after helping me finding repair people etc. So while she probably made $500 an hour, she provided a service I needed. Prior to all the info on line with Realtor.com et al, she would have spent much more time and it would have taken a lot longer for me to find the right place. I really liked looking and learning about what was available by myself, but appreciated the agent’s expertise.

[flvegan]

17. Doubtful. n/t

[chouchou]

18. Good. Never like the system where people saved up for a down payment on a house, while

...greedy agents take thousands and thousands of dollars for showing a God damn house 3-4 times. I wish them the worst.

[Happy Hoosier]

19. I think there were be fewer realtors, but they won't disappear.

They serve a useful function. Just not a 6% of sales price function.

[3Hotdogs]

20. If the 6% dwindles to, say, 4% --- agents and sales reps are sharing a limited "piece of the pie."

In my area, you had to average 6 houses per year in order to make a decent living. With the monopoly being broken, it may take 8 to 12 to achieve the same. But the number of houses on the market will remain the same.

I guess that 20% of the present sales force will leave in the next 5 years.

[Elessar Zappa]

24. I doubt they'll disappear but

I’m glad they capped their fee at 6%.

[AllaN01Bear]

26. yes, travel agents are still around and used . so are travellers checks .

[Sky Jewels]

27. I would not want to handle all that paperwork without an agent looking over my shoulder.

No thank you!

I'm not good with adulting stuff such as buying or selling a home. I need my hand held.

[LisaM]

29. I have never understood the glee people feel in displacing people from their jobs.

Take stores, for instance. In their heyday, department stores had wonderful, experienced buyers who went to trade shows and chose what the store would offer. I remember going through floor after floor of beautiful merchandise. Now people order stuff online, no one's vetted the quality, we're wasting tons of fuel shipping half of it back (the number of people I know who send half of what they buy back is mind boggling).

I work in a law office and we are constantly correcting mistakes made by outfits like Legal Zoom. You get what you pay for, I guess, but I want to see what I am buying first and I don't have any will or inclination to fill out the paperwork when there is a professional who is ready, willing, and able to do it.

[lame54]

34. Ordering clothes in different sizes...

Then sending back what doesn't fit is too common a thing leading to landfills worth of perfectly good clothes

The company won't resell them because it's cheaper for them to dispose of the product

[MineralMan]

32. I have bought and sold two houses without any real estate people

being involved. But, and this is a big but, those houses were owned outright and had no mortgages on them.

On the other hand, my wife and I bought a new house to us in 2021, and sold the house we were living in. We engaged a realtor we know personally to handle both things. She showed us only places that met our requirements and counseled us on how much to offer in that insane market to ensure getting the one we liked the best. We moved to that place before putting our old house on the market.

At zero extra cost to us, that realtor handled dealing with everyone who worked on fixing up our old house, which was now a 30 minute drive from our new one. Instead of dealing with all that nonsense, we just moved in and started enjoying our new place. Then, she found a buyer for the old place for the price we wanted to get for it.

That was worth the 6% commission, and then some. Of course we had to pay those contractors, etc., but I didn't have to deal with them. Everything got done and the house got sold with no muss or fuss.

On the other hand the two houses involved in those non realtor sales also went just fine. It all depends on the situation. If you have time and knowledge enough to handle a sale or purchase with just the title company involved, then you can save a bunch of money. If you don't want the hassle, or don't have the knowledge, a good real estate person will make your life much easier.

[lame54]

33. I'm not buying a house I can't walk into

[JCMach1]

35. Having just bought a house, I completely disagree

The whole process is still Byzantine.