NEW YORK (MainStreet) —“This last house sets the benchmark for the house I’d really like one day,” I told the real estate agent, as we slid back into her car, “but, I need something in a good school district. It’s a deal breaker. My daughter starts kindergarten in a year.”
“Oh, well, it’s always something, isn’t it,” she honked in adenoidal annoyance.
It was the seventh house I’d seen in two hours with her—all of which were listed at $200,000 more than I could afford. After two in-person meetings and two dozen emails, did she miss the bit about my budget? She obviously missed the bit about school districts.
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Earlier in the day, she even declined to sit down for coffee, mid-way through our open house marathon through Northwest Washington, D.C. I thought, rather sanely, that we should chat (again) about my priorities as a buyer.
“Oh, no,” she growled, “we have more houses to see. There’s no time!”
But, it wasn’t time that we lacked. It was rapport. Why did I trade a year of hunting and gathering on the Internet for two hours of this?
The Big Binder in the Sky
Historically, real estate agents have been the valves that modulate available information about housing stock, comparables, and local market trends for buyers and sellers. They have also been incredibly handy in the negotiation process—helping you trade mortgage points to lower an interest rate, dealing with squirrely third parties like inspectors, and mediating a sale that buyers and sellers ideally find agreeable.
In other words, the value of an agent has always been two fold—made clear up front when they help you hunt for buyers or sellers and made even clearer when they help keep the hunt from becoming a bloodbath.
Happy sellers walked away feeling that they got a good price, and happy buyers walked into their new home feeling that they got a good deal. Now, online databases like Zillow or Trulia threaten to kill one half of the agent’s intrinsic value.
“As keepers of information, a real estate agent’s role has already changed,” says Katie Curnutte, Director of Communications for Zillow Real Estate Research. “You used to go to the office as a buyer and browse the big binder of listings, culled from public record data. That information was their domain in the sense that, while it was out there, it was not easy to come by. So, you depended on an agent from day one.”
Curnutte notes that buyers are going to real estate agents later in the discovery process. Agents may still have binders in their offices (or impressive video displays in their storefronts), but they have become outmoded showpieces like rotary phones or paper Rolodex files.
Consumer-driven legwork is also cutting down on cramped car-time with an agent. “It’s the difference between spending five weekends with agents, looking at 30 houses, and spending one weekend with them, looking at 10 houses,” Curnutte says.
Still, she is quick to point out that agents are invaluable during the negotiation process. “They manage transactions between buyers and sellers at least once a month for a living,” she says, “while most normal people engage the purchase or sale of a home once every seven years.”
Redfin offers another, perhaps more insidious model for the future of real estate, however: that of database and online broker.
Redfin employs hundreds of agents in 21 local markets, according to Rachel Musiker, senior spokesperson for Redfin. The other part, for which it’s best known: Redfin’s digital presence. “We’re a full-service brokerage, but we refer to ourselves as the tech-powered brokerage,” she says.
“Tech-powered” in this case, is another way of saying consumer-powered. Before even meeting with a Redfin agent (or an agent at all), you can geo-locate precisely filtered properties based on, from my count, 31 separate variables, look at photo galleries, peruse “tour insights,” and even calculate your monthly mortgage, property taxes, and condo dues. Redfin even has an “Offer Wizard” to initiate the purchase.
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Redfin homes sell, on average, 15 days faster than conventionally listed homes, and the company claims that 97% of Redfin customers are satisfied with their experience. Impressive numbers to be sure, but are they sustainable?
“If there are 80 topics on the agenda at a real estate conference, 79 will be about how to sell things to customers, not how to make customers happy,” says Glenn Kelman, Redfin’s CEO, who founded the company in 2002. “Investors are looking for sustainability. And, the only source of sustainability is a critical mass of happy customers.”
Kelman reports that 90% of Redfin’s happy customers are under the age of 40, a demographic that’s come to expect reliable and instant access to books, shoes, and plane tickets. By his reckoning, the ultimate consumer purchase should follow suit. “If there’s one way that real estate will change in the next five years, it will become much, much faster. So, if you’re standing in front of a house and you want to get inside, a Redfin agent can be there 15 minutes later. That’s my hope.”
“I think we can avoid some of the madness of 2005 and 2006, where folks were making uninformed decisions,” Kelman says. “And yes, it’s easier to get real-time information with Redfin, but it’s about more than seeing pretty pictures on a website or on a mobile app. It’s about changing the process at every step so our informed customers can always make the best decisions.”
Last October, Better Homes and Gardens Real Estate released a study affirming that 18- to 35-year-old Americans are “knowledgeable, responsible, and savvy” about the prospect—and process—of homebuying. The findings indicated that homebuyers under the age of 40 see the difference between investing in a home and investing in an iPhone 5.
There are no shortcuts, in other words, to making the biggest investment of the average consumer’s life. Even a generation that runs to Google as a matter of course is inclined to treat home buying with reverence—not as a mysterious, black-box experience, but as a data-driven hunt.