More than 4 in 10 consumers believe real estate commissions are too high, according to a study from real estate technology startup ShelterZoom.
ShelterZoom hired market research firm Propeller Insights to survey more than 1,000 U.S. adult consumers about what they think of the homebuying and selling process. The results indicated a lack of trust in a process that many consumers consider opaque at best, though admittedly the survey is being presented by a company that promotes streamlining that experience.
“Perhaps the survey’s least surprising finding was the widespread unhappiness with the home buying process,” ShelterZoom co-founder Allen Alishahi wrote in a blog post the company will publish next week.
“[T]he survey makes it clear that consumers are frustrated with the obstacles that, until recently, have been an unavoidable part of the buying and selling processes,” he added.
While nearly 30 percent of respondents said there was nothing wrong with the process, the rest hit on familiar pain points: 39 percent said there’s too much paperwork, 36.6 percent said the process takes too long, 28.2 percent said it’s too confusing, 21.2 percent said there are too many people involved, 17.3 percent thought they were giving away too much personal information.
There was no “Other” option for this question.
When asked about specific concerns, “Commissions are too high” was the biggest concern, cited by 42.7 percent of respondents. This finding comes as commissions are under scrutiny from multiple fronts, including lawsuits and an investigation by the U.S. Department of Justice (DOJ).
Perhaps related, 33 percent of respondents said they were concerned about lack of transparency in the homebuying process and the same share said they were concerned about conflicts of interest. Just under 29 percent said they were worried about lack of communication in the process while 21.9 percent said “The agent can’t be trusted.”
When asked what was meant by “conflicts of interest,” ShelterZoom said respondents were not given an explanation, but that the company had these scenarios in mind when considering this answer choice:
- Not disclosing if/how a sale will benefit an agent financially
- Not disclosing if a service provider is operated by or affiliated with a relative, friend, business or other associate of the agent
- Agents not disclosing who they represent in the transaction
- Agents representing others who may be interested in the same property
- Highballing the listing price
Just under 17 percent of respondents said they didn’t have concerns with the homebuying process.
“I’m not that surprised by these findings, as they have been concerns for as long as I’ve been in the business,” Alishahi wrote. “But I will add that so much depends on the real estate professional you’re dealing with.”
“As with any profession, many are fantastic and truly take the customer’s concerns seriously and do whatever they can to alleviate them. Others don’t.”
When the survey dug into what takes too long about the process, more than a third cited getting a mortgage approved (43.8 percent), signing and completing contracts (35.7 precent) and too many people involved in the process (33.8 percent). Only 1 in 10 respondents didn’t think the process takes too long.
“When you consider how fast everything moves these days — thanks in large part to technology — and how short attention spans and expectation spans have gotten as a result, the home buying and selling processes are even more of an anachronism than they were just a few years ago,” Alishahi wrote.
ShelterZoom’s study asked about four different ideas for making the homebuying process easier, all of which line up with what ShelterZoom’s blockchain-based offer and transaction management platform does. The survey did not ask about anything that could make the process easier but that the ShelterZoom platform doesn’t do.
More than 4 in 10 respondents considered three of those ideas improvements:
- The ability to ensure that my offer is presented to the seller and track every step of my offer
- The ability to see how many offers are being made on the home
- The ability to be notified every time a change is made by the seller, broker or agent
Regarding the homeselling process, the survey found that the vast majority of respondents (76.2 percent) would be willing to lower the price of their home if it meant not having to deal with the costs associated with homebuying such as agent commissions, lawyers, home repairs, and closing costs.
“[The home selling process is] so unpleasant that most respondents would leave money on the table to avoid as much of it as possible,” Alishahi wrote.
If a home were not selling, a minority (12.3 percent) would not be willing to lower the price of their home. But a third (33.2 percent) would be willing to do it after three months, 19.7 percent after one month, 17 percent after five months, 9.4 percent after a year and 5 percent after more than a year. A tiny share (3.5 percent) would be willing to cut their price if the home doesn’t sell in a week.
ShelterZoom noted that iBuyers — technology platforms that make automated cash offers on homes — are on the rise, but said that the survey results point to consumers valuing ShelterZoom’s platform rather than “the more bare bones and limited iBuyer model.”
Asked to elaborate, the company pointed to 92 percent of younger millennials using buyer’s agents, per a National Association of Realtors survey.
“Buyer’s agency isn’t going away as homebuyers still rely on the industry knowledge, market knowledge, negotiating skills, and other value that agents can offer,” a ShelterZoom spokesperson told Inman via email.
“ShelterZoom provides the same types of tools as iBuyer platforms, using better technology, and delivers them to those providing that value. The buyers and sellers are ultimately the beneficiary of the platforms and it empowers agents to better meet their needs.”
The company’s upcoming blog post about the survey promotes ShelterZoom’s platform. Asked about the survey’s value beyond that, the spokesperson said, “Understanding market trends in a space that is now constantly evolving is paramount to the very innovation that drives change. There are brokerages out there country-wide that are still utilizing fax machines and that has become a hinderance to home buyers and sellers that need guidance but still demand a better process.
“By sharing our findings, so many different verticals can benefit by tailoring their products and services to better meet the needs of consumers in 2019 and beyond. This is especially true for an industry that remains mostly fragmented and slow to adapt to change.”
ShelterZoom survey methodology: A national online survey of 1,026 US consumers, ages 18+ was conducted by Propeller Insights on behalf of ShelterZoom, between May 10th and May 12th, 2019. Survey responses were nationally representative to the U.S. population for age, gender, region and ethnicity. The maximum margin of sampling error was +/- 3 percentage points with a 95 percent level of confidence.
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