If a homebuyer and seller were siblings, the favored child for the past 20 years has been the buyer.
Twenty-five plus years into the real estate digital revolution and most of the money and innovation has been focused on helping homebuyers. Look at the record: listings on the Internet, virtual walkthroughs, 3D tours and digital docs that makes it easier to buy a house.
A few clicks away and buyers can see all of the inventory and begin the process of buying a house.
Sellers have been stuck in pre-internet purgatory
Homesellers face maddening uncertainty about how much their property will sell for and how long it will take to unload. They must suffer through a protracted waiting game for that right qualified buyer. Then, they must put up with a string of open houses, after they clear out their stuff and live in a West Elm faux movie set for weeks if not months.
Listings were always the holy grail for real estate agents, but once they got the listing, agents only offered one path to sell the house — “full fee” brokerage. The alternative was FSBO, which rarely worked very well.
And who has paid for this one-sided buyer innovation parade? The homeseller. The commission is the Mother Lode that funds billions of dollars in lead generation, uncertain digital marketing and software to aid buyers, like search and home valuations. Arguably, sellers pay for buyers to come to their property, but do they really? That is the work of the MLS, paid for by agents.
This lopsided situation is like you picking up the entire dinner check with your friends when you drink ice tea and nibble on a house salad while everyone else enjoys artisanal cocktails, expensive French wines and $80 dollar tomahawk steaks.
In 2019, homesellers got more choices
The neglected second child — homesellers — are finally getting some attention. Innovation is accelerating with new and exciting ways of selling. Expect shorter sales cycles, more certainty around price and timing and technology options that make the process easier.
The Silicon Valley, including Zillow, is salivating for a bite at the commission pie that homesellers pay — a $75 billion-plus splendor. It is offering solutions where it can capture those dollars through instant offers, mortgage alternatives and success fees on online referrals.
The good news is that homesellers have more options when it comes to selling with more certainty about the outcome. The downside is that a new party is trading in commission dollars and it is very unclear how much they will command and how far they will go in undercutting the role of the agent. And the jury is still out whether homesellers will be whipsawed capturing the full value of their home.
Lawsuits lurk and NAR stood up for homesellers
The mega class action lawsuits also stew in the background. Among other claims, the litigants argue that homesellers are unfairly paying for buyers’ agents. At the very least, the lawsuits will put sunshine on the process, forcing reforms.
The National Association of Realtors’ new pocket listings policy is another homeseller victory. If a seller is not getting maximum exposure for their listings then they are being jilted by their agent, argued the Realtor association policymakers.
And finally new models like Redfin Direct bring buyers directly to homesellers through an online trade of sorts, reducing their commission on the sale and arguably speeding up the offer process.
Homeowners are no longer forced into a single solution to sell their homes. Across the board, a new bargain is being struck with homesellers with a raft of innovations coming next year. They will have more choices, including fast and furious closings and all-cash deals with nothing clumsy, complicated or uncertain about the sale.
None of these changes have been perfected.
But they are here to stay and will be improved on and become mainstream.
Those agents and brokers attached to only one way of selling a home will be like retailers when Amazon came on the scene. Those stores that didn’t offer e-commerce alternatives early on are struggling or closed. Even the big boys got thrashed. To witness the carnage, you can visit the iconic Barneys department store on Madison Avenue in New York City for their close-out sale. Eighty percent off, 10 days before Christmas.
It is a stark reminder that old ways die hard and fall even harder.
Now more than ever, broker-owners and agents must define their niche and refine their value proposition.
Are you ready for what the industry holds in 2020? Inman Connect New York is your key to unlocking opportunity in a changing market. At Connect you will gain insight into the future, discover new strategies and network with real estate’s best and brightest to accelerate your business. Create your 2020 success story at Inman Connect New York, January 28-31, 2019.
Thinking of bringing your team? There are special onsite perks and discounts when you buy tickets together. Contact us to find out more.