In the ongoing argument over the state of real estate commissions, I say long live 6 percent commissions. Technology hasn’t replaced the agent, but it could help save the agent and justify the value the agent brings to the table if they choose to take on the challenge.
Today’s market sends waves of information at consumers, a confusing bath of foreclosures, fluctuating values, and changing lending rules. With all this information at our fingertips, it becomes clear that access to data alone will not enable the average consumer to find or sell homes. There is so much information, information that is not standardized for easy comparison, that consumers could, if leveraged correctly, appreciate the work of professionals more than ever.
In fact, some like myself are even willing to pay a little more for it. And I don’t think I’m alone.
It has been nearly 10 years since consumers have had access to all sorts of housing data including MLS and real estate agents — long ago believed to be on their way out. Yet both are still around. So who’s gone? Maybe only those agents who believed their value was based solely on the information they provided rather than the services consumers needed.
Data transparency has done its part by enabling consumers to become better educated and has given them confidence that they are not being manipulated by someone who doesn’t know what they are doing.
Unfortunately, this is where the buck stops. The problem is that data transparency is about as far as new technology has taken us in real estate. The Internet offers consumers two experiences: the national portal, offering listings search together with a bit of local content, and map-based search. Beyond these two experiences there is precious little. Purported innovation has not advanced the consumer experience one iota. There is more to finding a home than ZIP code, city and state!
Enter the real estate agent stage right
Many thought that data transparency would end the work of agents. But it hasn’t. In fact, the opposite has occurred. And the reason is simple: People need someone with a professional background and deep understanding of what that data means along with other "facts" on the ground to explain it to them, to simplify it and to guide them through it.
In the airline industry, for example, hordes of consumers are learning through experience the side effects of booking through online Web sites as opposed to paying a service fee for a travel agent to handle the booking for them. Frequently the price paid is the same and the time wasted is a lot less. And with real estate currently taking it on the chin under the stress of a sliding market, it is very much the same. Give me an agent who can work with me, communicate in my language on my desired platform, deliver on marketing promises and nail the price of my home with only my best interests in mind, and I’ll pay 6 percent. I might even pay 7 percent.
When consumers are in a stressful state of mind, which describes just about every single real estate transaction, the industry is gifted with a great opportunity to leverage its real value built through laser focus on service and brand. What agents can provide in service becomes more critical because now consumers really can tell the difference between self-serving and service oriented.
Six percent commission 3.0
Now is the time to embrace this! This is the real meaning behind real estate 2.0 and in truth the fuel for what will drive real estate 3.0. This is where agents and brokers seize the opportunity to make things better for consumers and for themselves. Real estate 3.0 is about combining the data and transparency, technology, and experience to deliver a consumer experience that is personal, data rich and reassuring.
The crown jewel for brokers and agents is that they can truly own their marketplace and the future of real estate if they just begin to realize the true benefit of their services, market around them and build meaning through them. The minute they realize this they will gain share. Six percent commissions aren’t dead by any means. After all, people are still paying it.
Agents have a huge opportunity to step up and show consumers why their service matters. Given the right set of tools that can help you extract that core insight you have about homes, about the marketplace and about people, an agent can navigate the transaction in a way that’s well worth the price of commission.
And more!
Ashfaq Munshi is the co-founder and CEO of Terabitz, a national software provider that helps real estate brokers engage online buyers and sellers.
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