There are plenty of industries that have been disrupted by technology, and they’re still running strong without handing out discounts left and right. New business models don’t always mean the end. They are just creating smarter consumers, not displacing agents.
Teresa Boardman is a long-time columnist with 400-plus Inman columnsunder her belt. She writes about her real estate observations and experiences as an officeless indie broker in Minnesota.
When I read the news about the real estate industry, it looks like people like me will become extinct soon. It has looked that way since I got my license in 2002. We tossed the word “disintermediation” around a lot back then.
Now we also have people telling us that the internet has replaced us so we should be charging less. Who does that? As always, commissions are negotiable. And aren’t websites just another intermediary?
Let’s talk about money
With all the disruption and technology in the industry, people call us when they want to buy or sell real estate. They don’t seem to know who else to call, and they might not be comfortable buying or selling real estate online.
The amount I have been charging my clients has remained fairly consistent over the past decade, but it fluctuates by about 1 percent depending on the desirability of the business and the cost of the real estate being sold.
Commissions are now and have always been negotiable even though they say we all charge X amount.
New business models in the real estate industry are all about who will make money when consumers transact and not about how to save the consumer money. Housing costs continue to rise at a faster pace than commissions are going down.
Take a look at the automobile industry
The last time I bought a car, I asked my son, who knows stuff, what kind of a car I should buy. I took his recommendation and did all my research on the internet.
I found the car I bought on a dealership website.
I had to go to the dealership to buy the car. I wasn’t offered a discount for finding it myself, and the salesperson I worked with still got paid. I wasn’t offered any kind of a commission rebate, and the salesperson’s commission was not disclosed.
The factories where cars are made keep using more technology. There are robots on the assembly line taking the place of humans. Robots cost automakers less than humans, and they don’t call in sick as often, but cars have not come down in price.
And then there’s the self-checkout aisle
Last week, the checkout line at the grocery store was too long, so I used one of the self-checkout lanes. I scanned my groceries and paid with my phone. A decade ago, I wouldn’t have been able to do either one of those things, but technology has changed all of that.
After I got my receipt, I looked at it and noticed that even though I had to check myself out and bag my own groceries I did not get a discount for doing all the work.
How can that be?
I even used my own bag, yet I paid the same as I would have if I had used one of the free grocery bags at the checkout.
The self-checkout doesn’t always work the way it’s supposed to. There’s a button that can be used to call for help, which usually results in a much longer wait than the checkout line with the cashier.
Where are we really?
Some of the new services for homebuyers and sellers seem more like the self-checkout at the grocery store. They make the line shorter and, in some cases, they make the experience easier, but they are not necessarily better or less expensive than traditional methods of buying groceries.
Self-checkout stations have not made the cashier obsolete. People still wait in line for a person at a cash register even when there are open self-checkout lanes.
Our whole system for buying and selling real estate is perverse. Small businesses and individuals can make money by doing things in a kind of old-school and traditional way while other industries are dominated by large companies.
New business models will shift some of the profits from home sales away from real estate agents to larger companies without saving consumers any money.
Consumers get to decide between working with a person or using the self-checkout. I don’t think agents will have to lower their fees to compete, but it’s always an option.
Those epic lawsuits and threats of disintermediation keep us on our toes. They remind us that we are all expendable and that we need to always be looking for ways to provide better service to our clients — or someone else will.
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