When Redfin, Zillow, and Trulia became major players in the real estate market, traditional realtors had reason to feel nervous. Would these online sites take significant market share away from the old model?
Most real estate searches start online, but the great majority (89 percent) of the 42 percent who find their homes on the web still use real estate agents to close their deals, according to Bloomberg Businessweek. In 2012, less than 10 percent of homes in the nation were for-sale-by-owner properties (FSBO), down from 13 percent in 2008, based on figures from the National Association of Realtors. The downward trend of FSBO’s seems counterintuitive. If online search and sales sites are so prevalent in today’s home buying process, why aren’t more buyers and sellers taking advantage of the services?
Phil Faranda of J. Philip Real Estate, a 14-agent brokerage in Westchester County, N.Y., says that real estate is more complex than “a point-and-click industry.” When clients buy or sell properties, most of them are dealing with the biggest investments they will handle in their lifetimes, so they turn to “a trusted adviser to ensure…the best terms possible.”
The complexity of the customers’ need for co-navigators in transactions involving money and emotion was felt by Redfin. CEO Glenn Kelman said that the company came to a point of realizing the imperative to provide services beyond information. “We thought we could make the business more virtual than it was.” It turns out while Redfin and its competitors provide more data about homes than customers have ever had in the past, the public still seeks personal advice, which doesn’t come in virtual form.