I have been reading about Zillow Instant Offers, and it never occurred to me to see it as an immediate threat to my business. Homebuyers and sellers have always had the option to buy or sell without the involvement of a real estate agent, but most call the agent anyway.
Not only do most homebuyers and sellers work with real estate agents, many of them work with the ones who charge the most or who are total jerks but drive nice cars. Some buyers and sellers even agree to dual agency, which probably isn’t in their best interest.
In addition to paying commissions, some consumers fork over an extra $400 to $700 to cover fees charged by some real estate companies.
Even in a strong seller’s market, I see For sale by owner (FSBO) homes on Zillow that have been on the market for 60 to 90 days or more. Similar homes listed on the MLS sell in less than a month. Some of my best clients have been people who listed their home on Zillow as FSBO.
Some Realtor associations and real estate companies dislike Zillow, and the new Instant Offers service isn’t helping. Much of Zillow’s income is derived from people who belong to Realtor associations and work for real estate companies.
How can a company or an association be against something its members and associates are using and paying for?
The cost of technology
Some have suggested that technology should be lowering the cost of real estate services or should replace real estate agents, which would somehow reduce the costs of buying or selling a house. Technology has changed many industries, but it doesn’t always lower costs.
Technology has had a big impact on health care, yet prices have gone up for patients. The meter reader doesn’t stop by the house to look at my electric meter, but the price of electricity has gone up, not down.
There are now self-checkout stations at an upscale grocery store downtown. Prices in the store are higher than they are at the store I usually go to that doesn’t have any automated cashiers. Fewer cashiers means fewer jobs. People without jobs cannot buy houses.
I hope they bring the cashiers back because I don’t see self-service as a win; it is a redistribution of money so that one group of people is unemployed while another group profits from the savings.
Most jobs are in danger of eventually being replaced by automation. Even the people who work at companies like Zillow should be worried about being replaced by something better, faster and cheaper.
Maybe real estate portal-type sites have already reached their zenith and will slowly fade away as they are replaced by something better and less expensive that doesn’t require agent dollars and legions of telemarketers.
What’s next?
When real estate agent jobs are gone, who is going to pay for Zillow? What will happen to all those jobs within the Realtor associations? Will the brokers go broke? Who will subscribe to this site?
Will I be replaced by artificial intelligence that can crank out articles more quickly and with fewer grammatical errors? What will happen to the real estate conference industry?
Loan officers could be replaced with software. How much longer will we need people for the loan application and approval process. Wouldn’t the whole system be more paperless, transparent and faster with machines in charge?
I don’t really have a plan for being eliminated, and I don’t spend any time worrying about it. There are just too many more important things to do, and worrying isn’t a revenue generating activity.
Technology isn’t really a threat to the industry; people will still buy and sell real estate.
Technology will redistribute the money that would have been made by many real estate agents and brokers to a smaller group of people who work in or own technology companies.
My mother-in-law worked in a steno pool, and one of my grandmothers was a switchboard operator before she married. I have a grandfather who manually set type for the local newspaper. One of my first jobs involved using a keypunch machine.
New technology that eliminates jobs isn’t new, and neither is change. Even companies like Zillow will evolve and change — or die.
Teresa Boardman is a Realtor and broker/owner of Boardman Realty in St. Paul. She is also the founder of StPaulRealEstateBlog.com.
