As technology advances, it changes every aspect of our lives. From money to food, and even love and dating, nothing is free from change. In this article, we will look at how modern technology is changing the real estate industry and what that means for buyers and sellers.
Technology makes its way into everything: whether it’s picking up your groceries, getting a taxi, or finding love, it seems inevitable that modern tech will continue to change every aspect of our lives. Faced with this impending shift, many people are concerned about the future of their jobs and their ability to make a living.
Out of all the occupations in our global economy, real estate appears to be one vocation closest to the precipice of change: it is a career rooted in customs established many years ago, before digital technology and the internt. Although certain aspects of the profession have evolved, such as the MLS, the basic identity of a real estate agent has remained unscathed by the relentless advance of technology.
Until now, that is. With competition in the form of iBuyers and other automated services that perform some real estate agent’s core tasks, realtors are being forced to adapt and reevaluate their role in the market. While it is unlikely that real estate agents will disappear, modern-day agents will need to view their career from a new angle if they want to keep up with the times and continue to bring value to buyers’ and sellers’ lives.
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While the digitization of real estate is still in its early stages, there are several technologies that are both being developed and in use that promise to change the face of the industry as we know it.
Online Home Valuation
In the past, real estate agents were the gatekeepers to market information — if you wanted to know about home values and real estate trends in South Carolina, for example, you’d seek an agent. Nowadays, curious buyers and sellers can go on Zillow and learn all they want about the local real estate market. Zillow provides information about home values, trends, median listing and sale prices, and even the differences between neighborhoods in the same city.
However, while sites like this can provide information to the masses, It’s difficult to interpret it and apply it to real estate transactions. Real estate agents are still needed to offer buyers and sellers guidance on how this data affects their sales and purchases.
Algorithmic Home Pricing
Pricing a home has traditionally been a job left to professionals, but with the increasing availability of free and up-to-date market data, some homeowners have taken to performing their own comparative market analyses (CMAs). Besides this, some companies have begun offering algorithmic valuation services, which essentially perform automated CMAs.
These technologies are still in their nascent stages and can’t compare to the pricing expertise and experience that a real estate agent can bring to the table. Although the technology threatens the industry to some extent, it will be quite a long time before human-performed CMAs are replaced by algorithmic ones. The most likely future scenario is that real estate agents will use pricing algorithms to get a solid estimate and then tweak it from there — they will be just another tool in the agent’s toolbox.
Out of all the changes the real estate industry is experiencing, the emergence of iBuyers is one of the most substantial. Unlike traditional real estate transactions, in which a seller sells directly to a buyer, iBuyers buy homes from sellers and then sell them to buyers later on. These companies act as middlemen and are trying to streamline the buying and selling process.
While iBuyers can help sellers close their homes in as little as seven days, this convenience comes at a cost: selling to an iBuyer can cost up to 10% of the property’s fair market value. For comparison’s sake, the average commission fees for an agent-mediated sale are just 6%. With their current fee structure, it doesn’t look like iBuyers will replace real estate agents soon.
Just how much cryptocurrency will change our lives is up for debate, but crypto appears to be here to stay. Although uncommon, there have been some real estate transactions carried out in cryptocurrencies like Bitcoin. However, the currencies are still too volatile to achieve mainstream acceptance in real estate transactions at the moment.
A Shift to a Service Role
So, what does all this mean for buyers and sellers? As of now, working with an experienced real estate agent is still the best way to get a great deal on your home. However, the way real estate agents work is changing.
Since buyers and sellers have such easy access to information, agents are taking on more of a service role: instead of deriving their value from providing information, realtors are creating value by interpreting and explaining it. Buying or selling a home is complicated and having the guidance of a professional throughout the ordeal is necessary for most buyers and sellers.
Even though the face of the industry is changing, real estate agents aren’t going anywhere. They are still an essential part of buying and selling a home. What is changing, however, is how buyers and sellers get connected with an experienced professional.
Clever is disrupting the industry by providing an easy way for buyers and sellers to find a low-cost, top-notch, local real estate agent. Get matched with a Clever Partner Agent and you may be eligible for Clever Cash Back, 0.5% of the purchase price back after closing on homes over $150,000.
If you’re interested in learning more about how Clever can help you achieve your real estate goals, fill out our buyer’s or seller’s form and set up a no-obligation consultation with a qualified Clever Partner Agent.