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Is Traditional Real Estate Dying Out? Not Quite.

Written by Posted On Wednesday, 17 April 2019 12:03
Is Traditional Real Estate Dying Out? Not Quite.

When new technologies hit any industry, the hand-wringing begins.

Kindle will surely snuff out the desire for paper-and-ink books.

Netflix will destroy traditional broadcasting and cable TV.

Yet studies show that Millennials would rather curl up with a paperback than an e-reader, and many folks still haven’t cut their cable cords. Why? Those offerings were disrupted and changed — but they weren’t eliminated. The same will hold true for traditional real estate. Innovative methods of transferring properties have certainly gained in popularity, but their presence only helps to differentiate classic real estate models.

These offerings provide the variety that appeals to niche buyer segments, and that’s wonderful. In the meantime, though, no passionate, knowledgeable agent should worry about being displaced.

App-Based Buying and Selling Tools

The most prominent modern competitors to traditional real estate fall under a category dubbed “iBuyers.” This includes companies such as Opendoor, Offerpad, Knock, and Zillow, which offer money to sellers who want to move without the wait. As long as the sellers meet all the iBuyer requirements, they receive upfront cash or help to sell or buy property.

What’s the catch? Their selling prices are lower than property sold on the open market, as iBuyers aim to maximize their investment when they flip properties.

If you’re unfamiliar with how these iBuyers work, consider Zillow. Its promise of lightning-fast transactions is best-suited to people who want to move immediately and are willing to pay more instead of waiting 30-plus days to close. For the right individual or family, this is a sensible option.

But for people who want top dollar for their properties, Zillow holds little attraction. And Zillow knows that — which is why its business model grabs prospects’ data upfront to resell it later to real estate agents in need of referrals. At the end of the day, the platform always wins.

Knock is a little different than Zillow, as it helps clients facilitate the sale of their current homes by fronting them the money to buy a new one. This strategy offers particular convenience and efficiency in fast-moving markets. Plus, it allows buyers to make cash offers to attract sellers’ attention from bids linked to financing or home-sale contingencies.

Like Zillow, the downside to Knock is that it can be pricey. Frugal homeowners might find it difficult to accept less than their house is worth just to pay for a new one. Plus, a system that runs on algorithms and numbers lacks personal touch.

It’s worth talking about auctions, too. Although they’re not platforms or applications, they have similar components. They can drum up interest in a seller’s home, especially when the property specifications are listed online. The goal of an auction is to boost bids beyond expected market value and pass the commission costs along to the buyer. Of course, the seller could lose big-time if not enough potential buyers — including internet-based ones — show up on the day of the auction.

Traditional Real Estate’s Stronghold

Regardless of the alternatives to classic real estate practices, the traditional model remains highly convenient and attractive. Plus, it lasts long enough to avoid snap decisions from buyers and sellers. In 25 years, I’ve seen no more than a handful of transactions dissolve in the few days before closing. That’s a testament to the fact that despite both parties taking a risk that the other will perform on the contract, everybody leaves happy at least 95% of the time.

Another advantage to traditional real estate selling and buying lies in partnering with professional licensed agents who can offer a cool head and expert insight every step of the way. Many homebuyers — including ones who have moved before — appreciate working with agents. Great agents strive to collaborate with each other, ward off problems so everybody earns their keep, and provide value at every turn.

In the best scenarios, real estate agents become both trusted advisors and friends. I’ve seen agents help clients through tragedies, check on vacant homes, pick up pets at the airport, offer a little “sweat equity” to spruce up a property, and go out of their way to exceed expectations. The same will never be said for any app. How motivated is a multimillion-dollar corporation to move mountains or show compassion when an individual seller has a personal emergency or needs a couple more days to move out?

Society might expect instant gratification and heightened convenience, but people still value a human touch. They appreciate walking through properties with an agent who can research comparable sales and provide opinions based on years of expertise. It’s the reassuring element real estate agents have — along with their readiness to help you make long-term commitments — that no trend can match.

 

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Jeff Thompson

Jeff Thompson is managing partner at Windermere Group One. WGO is a member of Windermere Real Estate, a real estate network comprised of 300 offices and over 6,000 agents throughout the western United States. Jeff is truly passionate about helping build companies by building their people. He leverages his 25-plus years of experience in real estate to coach other managers and brokers. Jeff credits much of his success to hard work and a willingness to partner with good people. 

www.windermere.com/

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