Technology eventually changes everything. Just imagine what it would be like for both Motorola and Kodak today if their focus remained on selling consumers beepers and instamatic cameras with flashcubes and film rolls. They’d be laughed out of the marketplace.
However, not everyone is willing to accept that change with open arms. They will either embrace it and lead the charge, or deny that change is imminent while hanging on for dear life and hoping for the best. And as many industries have inevitably changed as a result of advances in technology, it’s time for another to enter the modern age: real estate.
Bloomberg BusinessWeek recently published an article that talked about how the Zillow-Trulia merger “could finally change the business of real estate.” The goal of the merger? To streamline the currently disconnected home-buying/selling process and reduce the amount of money it costs to buy and sell real estate. Yes, it’s a huge deal, and the impact of it would ripple across the entire real estate industry, affecting homebuyers and home sellers in a number of different ways. Finally.
I’ve said for many years now that the business model for the way we buy and sell real estate in this country is stale and in need of a makeover. Most consumers will openly complain that commissions are too high and that there’s a fee for everything, but the majority has no interest in trying to sell their house on their own. For a long time, the industry looked at this situation as their “ace in the hole,” and the fact that there was no other viable alternative created a shield of sorts around the industry.
As you can imagine, my views have not been popular with everyone, especially those who believe that if you don’t talk about it, no one will notice it and the status quo (a.k.a. the broken model) will reign forever. However, they’re finally catching up.
The efficiency of the Internet have provided consumers with instant access to the information they need to make informed decisions and in many cases reduced the cost of goods and services. Currently, about ninety percent of homebuyers begin their search on the Internet. They research neighborhood values, shop for a mortgage and settlement services, and look for all kinds of information related to the home buying or selling process. Everything they need is only a smartphone away—and it’s become too difficult to ignore that.
For months, there’s been news about Zillow putting the framework in place for a national MLS (Multiple Listing Service) to rival the local MLS services owned and operated by the local real estate brokerages. And I’m surprised it’s taken this long for someone to see this opportunity, filling a void to give consumers another alternative to the conventional model.
Several years ago, the banks wanted to get into the residential real estate industry, but NAR (National Association of Realtors)—who happens to be the largest trade organization in the world with very deep pockets—spent millions lobbying congress and squashed it.
Unfortunately for NAR, there’s very little they can do to turn back the time on technology, which will ultimately be the catalyst that brings much needed change to the industry.
However, there will still be challenges ahead. While I don’t believe that the full-price service model in the real estate industry will disappear overnight, it’s abundantly clear that consumers, who don’t want all of the bells and whistles or the hefty fees associated with them, would like to have other options.
Whatever happens, you can be sure we’ll let you know about it as soon as possible. For now, we wait in anticipation.