Technology has impacted the way people find homes, research neighborhoods, and compare prices; in essence, buyers are able to get much of the initial legwork done by sitting at their computer or scrolling on their smart phone. Nevertheless, when it comes to actually buying a home, about 90% of buyers still use a hired real estate agent to help them with the actual offer and contract negotiations according to a report released by the National Association of Realtors.
In an article published by Forbes, its noted that “… buyers and sellers can get to the “one yard line” without much help. But deals rarely get done unless an agent is acting as middleman.” Real estate agents, without a doubt, add value with their professional expertise and negotiating experience. However, the sticking point for many is the large piece of the sale that the agents get for their commission. In many cases, the seller pays a total of 6%, with the buying and selling agent getting 3% each.
The concept of direct sales, hasn’t yet taken over the real estate market and certainly hasn’t made real estate agents obsolete; in fact, realtors may skip showing homes whose sellers aren’t willing to pay the 3% commission. Yet, technologically based real estate companies are still searching for ways to compete with the current real estate agent.
Case in point, companies such as Opendoor, you simply “type your address into Opendoor’s website, submit a few photos, and it will make you an offer within a couple of days. No open houses, negotiation, or waiting months for the buyer to come up with the money. In fact, the average closing time from the first offer is less than 20 days,” according to the article written by Stephen McBride. Some experts believe this type of business could change the way people buy and sell houses and the agent’s role in the transaction.
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Zillow has been expanding the services it offers to both home buyer and sellers. In select markets, the company began a program called Zillow Offers. In the Phoenix, Las Vegas, Atlanta, Charlotte and Denver areas, homeowners are able to “request a no-obligation cash offer from Zillow to buy their home. If they accept it, Zillow directly buys a seller’s house, prepares it for showings and quickly lists it for sale”, according to an article published on HousingWire.com.
The program was only launched nine months ago and according to the president of Zillow, Jeremy Wacksman, there has been a demand from homeowners to launch Zillow Offers in additional geographic markets. Wacksman states, “It’s clear people want a convenient, stress-free way to sell their home, and real estate professionals are eager to work with us to leverage Zillow Offers as a way to build their local businesses.” As a result, Zillow Offers will be expanding in 2019 to Miami, Minneapois, Nashville, Orlando and Portland. Additionally, the service is going to be launching in even more cities by the fall of 2019.
With this expansion, Zillow expects to not only work with local real estate agents and brokers, paying commission to local agents, but also promote Premier Agent, which helps connect sellers and listing agents when a seller has decided not to move forward with a Zillow Offer transaction.
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Technology seems to be the heart of the real estate market. It begs the question, do house hunters and owners selling their house still feel that they need to use a real estate agent? Based on a recent housing consumer study completed by Harris Insights, the answer is a resounding yes.
In fact, the percentage of home buyers or sellers who used a real estate agent in a recent transaction has increased 5 percentage points from the last study three years ago and up 9 percentage points since 2001.
Many might assume that the older population of buyers and sellers are the most likely to use a real estate agent for their transaction. After all, Gen Xers and Millennials are tech savvy and more accustomed to navigating the virtual world. However, according to an article published by Housing Wire, “91% of those ages 18 to 34 used real estate agents in their transaction. That number is slightly higher among Gen Xers, or those ages 35 to 44 years old, at 94%…Actually, it’s the older generations that are cutting real estate agents out of the picture as just 81% of those ages 55 and older reported using a real estate agent in their transaction.”
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Buying and selling a home might be one or the biggest personal financial transactions of your life. It can be emotional, confusing and time consuming. Many home owners and those looking to purchase a home will eventually look to a real estate professional to guide them through the process.
In an article published by US News and World Report, the author, Devon Thorsby, provides some helpful tips and suggestions for finding a real estate agent for your next real estate transaction. Thorsby begins by suggesting that potential home buyers or those considering listing their home begin the process of searching or a real estate agent earlier rather than later. A real estate agent can help make important decisions and suggestions early on that may help the process go more smoothly.
Its important, of course, to find the right agent. Narrowing down what kind go real estate professional you need is important: an agent, Realtor or broker; each provides a different level of service and expertise. Having a prepared list of questions for a potential agent can help ensure that there aren’t any surprises or concerns late in the process. You want to be sure you feel comfortable with the type and level service the agent will provide and what the ultimate price of using the agent will be.
Read the entire article for more specific information and details about tools to use when selecting a real estate professional.
Photo Credit: Scott Maxwell