Real estate professionals are currently facing an onslaught of property technology (PropTech) aimed at driving the human real estate agent and his commission into extinction. But it seems most opportunistic creators of these platforms that seek to replace the realtor fail to understand that each percentage point of commission payable to an agent is earned 10 times over during the sale process.
After a few years of new technologies and apps that can technically ‘replace’ the real estate agent, it has become quite clear that human restate agents are a crucial piece of the buying and selling puzzle which cannot be replaced that easily. Here’s why:
1. Estate agents are the guidance counsellors of the property industry
From a sellers perspective, making the decision to sell a home – whether a positive or negative move – is always laced with emotion and agents have all heard statements like, ‘this is the house we brought our children up in’; ‘I was my happiest in this home’; ‘This was the first home we purchased’; ‘we don’t actually want to sell but we have to for financial reasons’, or one of the most common: ‘we’re getting divorced and have to sell’.
An app or online platform is hardly going to display empathy and be a pillar of strength and guidance throughout the process. Estate agents are always at the ready to provide guidance, direction, and reassurance.
2. Sellers armed with apps are not marketers
If you take a look at most private listings on the most popular property advertising platforms such as Property24, Zillow, and the like – the photos are far from ideal, and do not do justice to the homes they are trying to market. The descriptions are long and rambling – sellers love to wax lyrical about their homes, not realising that in this day and age concise and bite-sized pieces of information are where it’s at in order to hold a reader’s attention.
Real estate agents use tried and tested and well-timed marketing strategies, professional property photographers, and expertly crafted descriptions in order to have the maximum impact on potential buyers.
3. Sellers already have jobs
Scheduling viewings, keeping track of feedback, arranging show days, putting up boards, managing ads, fielding phone calls, spending time with prospective buyers, negotiating deals, amending contracts, and all the other tasks associated with selling a property all take up a lot of time – which is why being a real estate agent is a full time job – with most agents working pretty much round the clock during the week, and on weekends. Most sellers have careers of their own taking up their waking hours. This means if they have decided to sell privately through an app or online platform they have probably vastly underestimated the amount of time that goes into selling a property and will eventually seek out an agency to do the job for them anyway.
4. Negotiating is not for sissies
As we know, if a seller is not knowledgeable on the topic of negotiating a property sale, chances are they will not be able to negotiate the best deal for themselves. Negotiating is an art in which estate agents are well versed and most sellers are not. It takes a lot to bring a buyer and a seller onto the same page in terms of offer amounts. Sellers think they will be saving themselves a couple of bucks using an app to privately sell their property but in actual fact, what they save in commission will be lost to a lower sale price due to poor negotiating and errors in pricing.
5. That little but ever important push (aka closing)
9 out of 10 buyers need a little push in the direction of signing and submitting their offer in order for a deal to close. There are always reasons to be afraid and tentative of submitting an offer, it’s a big decision to spend a large amount of hard-earned money, and buyers are often in this frame of mind when making the decision on whether or not to take the leap. Estate agents are experts at applying just the right amount of pressure in these situations in order for the buyer to feel confident and excited about their offer, rather than feeling fearful and walking away. Sellers making use of apps to sell run a real risk of being stood up last minute.
6. The back and forth of it
Few people actually know what the selling or buying process entails. The contracts, where to sign, how to add amendments, price changes, how to finalise offers which will be lodged with the deeds office, what inspections need to be carried out and by whom, and which attorney services to utilise, among other specifics. There is a lot of back and forth of offers, changes, talks, and then once an offer has been finalised and accepted, attorney communication, certificates to be finalised etc. A PropTech platform is unable to personally guide a buyer and seller through this terrain. In this respect real estate agents are worth their weight in commission.
We have looked at why human estate agents trump technology platforms for sellers, but why should buyers use estate agents instead of PropTech when looking for the perfect buy?
1. Estate agents are the guidance counsellors of the property industry.
Estate agents provide their pillar of strength, hand-holding service to buyers just as much as they do to sellers. As with selling a house, buying a house can be fraught with emotion – excitement at upsizing or buying in a new area, disappointment at downsizing, distrust towards sellers, hesitance, fear at making the wrong decisions, and the list goes on. Again, a property-selling app is not going to do much to mitigate fears, and a buyer is going to be less likely to see a purchase through.
2. The larger the pool, the larger the indecision
Choices, choices, choices… These days when searching for the perfect property, buyers are inundated with options. Thousands of options shown to them right there on their smartphones. This is great as they really get to see what’s out there, but it’s not so great when it comes time to make decisions. Working with an estate agent solves this problem for buyers as the agent gets to know the buyer and their needs/wants, and then presents to them a number of options which in their expert opinion could potentially be the right property. We all know it is much easier and less confusing to make a decision when the noise is turned down and we only have quality options to consider. It’s like choosing from a menu which offers too many options – it takes a long time (sorry can we have another 5 minutes) and you usually aren’t happy with what you chose in the end because you knew there were tons of other options you could have gone for.
3. Estate agent/protector
Let’s be honest. An app is not going to alert a buyer to potential damp or mould issues at a property. It won’t alert a buyer to unethical or dishonest seller behaviour, or prevent a buyer from having the wool pulled over their eyes. An estate agent is a buyer’s only source of protection against these potential issues. Estate agents are well-versed in spotting abnormalities in properties, as well as best practice in property sales. Buyers can find themselves in all sorts of trouble without an experienced guide walking them through the process of purchasing a property.
4. Don’t talk to me, talk to my agent
Negotiations of any kind are awkward at best when the negotiating parties represent themselves. PropTech apps are not able to give each party individual representation in negotiations in order for deals to be finalised. Most buyers need estate agents to negotiate for them. Buyer’s agents are experienced in this type of negotiation and will ensure the best outcome for the buyer. You wouldn’t do your own dental work if you weren’t a dentist, so why should a buyer try to negotiate a property sale if they are not a negotiator?
All in all, it’s pretty clear to see that real-life human real estate agents are not going anywhere any time soon. No app or technological platform can fulfil the many roles a realtor plays for both buyers and sellers.