In the past, real estate agents were a source of a wide range of information and perspectives for both buyers and sellers. Before the predominance of real estate listing websites, agents were the first port of call when looking for your dream home. Now that we are in the era of social media and virtual “worlds”, a lot has changed. Buyers usual first port of call these days is to search on property websites for listed homes in their preferred locality and of the configuration they need. What then is the role of the agent?
The agent’s role seems to now be more of a concierge, rather than as an advisor/consultant with expertise that enables better decision-making. That concierge role is to formally list the property, host inspections (if required), facilitate documentation (if required), co-ordinate the various parties involved (including building inspectors, surveyors, etc), and essentially close the sales process. The “expert” component of agent’s roles prior to the modern era, has been replaced by the raft of data, opinions, and statistics that are readily available online. That has allowed buyers and sellers to jump several early stage steps in their real estate journey that were previously filled by getting advice from an agent.
If the role of an agent is now as a concierge, what is the impact on their fees and overall earnings? To date, it appears that agents have been able to maintain their fee structures in the face of low-fee competitors entering the market and the emergence of PropTech solutions. It would seem that people are still wedded to the idea of having a full-service agent conduct their transaction processes, with an associated level of added value. However, under COVID-19 there has been a more rapid shift to digital transformation including virtual inspections, online bidding, electronic document processing, and information gathering.
This rise in digital and virtual transactions is already in evidence with “sight unseen” sales now happening in much greater numbers than ever before. Further, there are many homeowners under duress due to loss of jobs, people are looking at areas well outside of CBD localities, and the traditional criteria priorities of where and how to live have changed. Under these conditions, agents now need to be more agile in assisting buyers and sellers connecting, with fee models that are more aligned to quick facilitation of a perhaps already agreed transaction. That by necessity must mean a lowering of fees commensurate with that different type of service.
This new power in the hands of buyers and sellers which allows them to do much more initial legwork before contacting a salesperson is not restricted to real estate; this has been happening for some years across many industries. Those other industries have had to therefore change their sales and marketing, together with their pricing, especially when buyers are well-armed with competitive information. Real estate is now only just coming to terms with these developments, as well as PropTech reducing the scope of their role, and they accordingly will need to change their sales and marketing, and their fee models.