Emerging technologies, data-driven startups and discount brokerages are threatening the traditional Realtor model.
But despite these challenges, Realtors remain very much in need in the home-selling process, according to a new survey by Clever Real Estate, a platform that connects home buyers and sellers with agents.
The Saint Louis, Mo.-based company surveyed 1,000 Americans who were planning to sell their homes within the next year to get a clearer picture of the evolving role of the real estate agent – and the mindset of home sellers in 2019.
It’s no secret that the real estate industry is undergoing a period of significant and rapid transformation, Thomas O’Shaughnessy, research analyst at Clever Real Estate, wrote in a recent blog titled, “The Role of the Real Estate Agent in 2019 – and Beyond.”
“Some claim that we’re on the precipice of a largely automated era in which home buyers and sellers will rely primarily on data- and AI-driven real estate services, enabling them to bypass agents entirely,” O’Shaughnessy wrote. “But is this really the case?”
The research analyst acknowledged that agents will need to adapt to the new, tech-centric real estate landscape to remain competitive.
“That said, despite widespread industry disruption, Realtors still have a crucial role to play in the home-selling process – and it’s unlikely that demand for their services is going to go away anytime soon,” O’Shaughnessy added.
According to the report, most home sellers – even those trying to sell for sale by owner (FSBO) – still need a real estate agent. About 50 percent of respondents said they wouldn’t feel comfortable negotiating with buyers, and about 62 percent of home sellers (and 46 percent of FSBO sellers) wouldn’t feel comfortable finding and completing the necessary paperwork for closing without a real estate agent.
According to the National Association of Realtors (NAR), only 7 percent of home sales were classified as FSBO in 2017, and the average FSBO home sold for $200,000, compared with $265,500 for agent-assisted sales. Research also suggests that about half of sellers who try to sell their homes by themselves end up using an agent.
In addition, 63 percent of homeowners surveyed said agents continue to play an “important” or “very important” role in the home-selling process.
Although millennial respondents were 93 percent less likely to use a real estate agent than older generations, 54 percent of millennials stated they would not feel comfortable during buyer negotiations without the help of an agent, and 61 percent of millennials would feel uncomfortable doing paperwork on their own.
“All of this suggests that many sellers – FSBO sellers in particular – are largely unaware of how complicated and involved the home-selling process actually is,” O’Shaughnessy said in the blog.
However, the research analyst admitted Realtors face serious competition from AI-driven technologies that rely on data and automation to identify qualified buyers and execute real estate transactions.
For instance, REX Real Estate Exchange uses machine learning to target home buyers with highly tailored, digital ads and deploys robots at open houses to field buyer questions.
However, O’Shaughnessy noted that REX still has a team of human agents to help with sales, and it’s anybody’s guess as to its staying power.
“What is clear, however, is that interest among consumers is growing, meaning that these technologies will continue to emerge and improve – and real estate professionals will need to adapt,” he wrote.
Thirty-seven percent of survey respondents said they believe current AI and machine-learning technologies are capable of outperforming a traditional listing agent throughout an entire real estate transaction.
Other survey takeaways included:
- Forty-five percent of home sellers don’t know they are expected to pay the buyer’s agent commission, and only 35 percent know the standard, total commission fee is about 6 percent of the home’s final sale price.
- Sellers are preparing for a housing market slowdown, with 65 percent of respondents stating they’d be willing to wait longer for a better price.
- Thirty-seven percent of home sellers would consider a dual agency, and 46 percent were unsure. Buyers and sellers who work with these types of brokerages put themselves at risk, as dual agents have no clear fiduciary responsibility to either party involved in the sale.