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Why real estate agents survived the Internet

The vast majority of consumers begin their new home search looking at listings online, but the spread of the internet has done little to quell buyer's desire for personal touch afforded by a real estate agent. On the contrary, consumers are willing to pay more than ever to secure the services of a good real estate agent, says Steve Murray, president of the consulting firm Real Trends, which tracks how real estate agents conduct their jobs.

While the internet has disrupted countless industries from travel to finance and more, real estate agents have never felt their jobs being threatened, Murray told the Washington Post.

“There’s not a shred of evidence that the internet is having an impact,” Murray said.

Where the impact of the internet has been felt is in the way agents do their work. For example, the Internet is now the number one advertising portal for agents, who use various services and software to automate tasks like marketing etc. However, the Internet hasn't taken any real estate agent's jobs away - instead, the number of agents actively working in the U.S. has risen by 60 percent in the last 20 years, Murray said.

That's quite the opposite of many predictions. “The industry was fearful of the internet,” said Leonard Zumpano, a retired finance professor at the University of Alabama’s Real Estate Research Center. “They didn’t think they’d have jobs.”

But on the contrary, real estate agents today generally earn more in commissions than their pre-Internet era counterparts. That's thanks to stable commission rates and surging home values, the Washington Post says. Back in 1997, agents made an average commission of $16,000 on a median-priced home, adjusted for inflation. Today, the average commission is $20,131.

One reason why experts say real estate agents have prospered in the internet age, where other professions have failed, is because home sales remain an extremely complicated financial transaction that few consumers know how to handle themselves. The process is intimidating, and so consumers want a helping hand to guide them through it.

In addition, real estate firms and associations have been working hard to promote the value of having a real estate professional guide you through your transaction. The National Association of Realtors recently struck a deal with ABC's sitcom "Modern Family" to have an episode where the character Phil Dunphy highlights his role as a licensed Realtor. Meanwhile, Century 21 Real Estate is running advertisements with the slogan “Good luck, robots” … “there’s no robot for insight or hustle or a handshake.”

In 2016, some 89 percent of home sellers used the services of a real estate agent. Meanwhile, for sale by owner transactions have fallen to their lowest level since 1981, at just 8 percent of all home deals.

“Who is going to write a contract? Fill out a disclosure statement? Anticipate what’s coming on the market?” asked NAR President Bill Brown. “There’s a human element to buying and selling a home that can’t be replaced.”

Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

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