READY OR NOT

Is the internet the new electricity?  It was recently claimed to be the “biggest change to humanity in over 200,000 years”.

Well that’s maybe taking it too far, but all I know is that it transforms everything it touches.

Some examples:  Cab charge was replaced by Uber; newspapers by heaps of on-line things, none of which have anything to do with journalism.  TV is now Netflix or Foxtel.  Hotels are now Airbnb.  The list goes on and on.

And this brings me to real estate agents.

They are the last of the past.  Ask yourself in today’s digital world, where else and in what industry, do we see the kinds of commissions that are paid in this field?  Banking and finance, maybe, but they are about to face the same pressure.

Granted, the real estate industry rewards the hardworking – at times, extraordinarily well.  But this is all about to change.  Real estate agents, including investment sellers and project marketers are about to face the same forces that other businesses are dealing with – automation, digitalisation and the internet of things.

And this means costs will fall and maybe we will see fewer touched-up selfies on For Sale signs in the neighbourhood and fewer luxury cars on the road.  Good riddance.

It is already started.  We are seeing the emergence of DIY sites.  And they just keep coming, with offers of bare bones marketing help from as little as $500 up to five-star concierge packages for under $3,000.

A step up and you can get full-service sales and agent assistance, property appraisals, photos, sales boards, flyers, online advertising, open inspections, and keys handover, all for a flat fee that can save sellers tens of thousands of dollars.

It’s not so much that people want to handle the sales process themselves, but they are starting to question the value of what they get when employing an agent.

Of course, agents do bring valuable services to the table but the bottom line most of these services are now available at the click of a button.

And sellers are questioning paying, say, a $25,000-plus commission, when they can achieve similar results for less than $5,000 and sometimes for much lower.

No doubt, real estate agents are starting to feel the impact of these growing market forces and some are beginning to meet the market.  I keep getting emails from agents announcing their new low fee structure.

Many will say it’s about time.  But the internet transforms and this revolution is far from just about price.

Before we go here are three things to think about:

Cars – unchanged for yonks, now face riding sharing, robotics and electric vehicles.  Do we need all the road space we have, let alone keeping on building more of it?

Banking – will crowdfunding mortgages and other loans become commonplace?  Where will you go for your next loan – the bank, your loan broker or a social media platform/app?

Real estate – existing advertising portals are just starting to connect sellers with buyers direct.  As noted above, DIY sites are starting to get traction.  But what’s to stop some smartie/s developing an app that allows users to point their phone or tablet at a building/street to see what’s for sale, at what price and put them in direct contact with the owner.

Too far-fetched?

Well last week the founder of Airtasker started the property equivalent of LinkedIn – a property portal that allows property owners to establish direct connections with other owners. And REA’s Marketplace is just the tip of the iceberg.

It’s coming, ready or not and it isn’t going to be pretty.

Keen to hear your thoughts.

Until next time,

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Michael Matusik

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