Is The Educated Consumer Your Best Customer?
by Steve Kropper
New Jersey REALTOR® September 2001

It is a strange cycle. Every few years some entrepreneurs or investors roll out a new technology, complete with boastful press releases, and promise to "revolutionize" the industry. In two years or less, the new venture is gone, and the number of REALTORS® keeps on growing. Remember RIN, the "Realtor Information Network?" REALTORS® were deeply suspicious of RIN (the predecessor to Realtor.com) even though it was blessed by NAR. RIN's motto sounded good: "Keep the REALTOR® at the center of the transaction." However, agents are suspicious of new entrants in the real estate market since most have their hands out looking for a piece of the commission.

That raises the question: in the five years it's been around, has Realtor.com harmed the agent? The answer is a resounding NO. It is clear that Realtor.com, and its peers, HomeSeekers and Microsoft HomeAdvisor (the legendary lion coming over the hill), have not put the agent out of business. Their only tangible effect seems to be a pretty good one: a 50 percent reduction in the number of showings required to close a sale. The Internet homebuyer sees 12 homes before he or she buys, whereas the others see 26 properties. Providing consumers with access to the MLS has not been a disaster. Public MLS access saves agents time, money and aggravation. It produces better educated, more focused customers with a better sense of where they want to buy and how much they can afford. And the real estate business is unchanged.

So, if public listings are helping agents close more business, let's stop cataloging possible threats to agents, and think about how else they can harness the Internet to make their lives easier and more profitable. What's next? Comps, full-blown CMA, school descriptions?

Let's start with the natural partner of listings, comps. When a seller says "high" and a buyer says "low," the REALTOR® gets down to work. Wringing out the price difference is what takes time once a buyer and seller are engaged. And the Internet can help agents bridge this gap faster and shorten the sales cycle.

My company's Web site, www.domania.com, provides free access to online home price information, which solves two consumer problems. First, the data is unfiltered. People trust us because we are not a party to the transaction. No matter how forthcoming agents are, they cannot quite satisfy the consumer's need for control, for third party verification and assurance that they are paying a reasonable price. Second, consumers need more information, the same information over and over, sliced this way, diced that way, shared with spouse or partner, and at any time of day. And they often won't compromise their bargaining strategy by asking their REALTOR® for ALL the information they want. Why should consumers exhaust an agent's good will, energy and time asking them about static data? Let the computer do it and let the consumer do all the work. When both buyer and seller have perfect market information, the transaction will happen faster and the broker can move on to the next transaction.

Just as direct access to MLS reduces the number of showings it takes to close a sale, Web-based real estate information reduces the tire-kicker phone calls agents must take. How many calls do agents receive from "serious buyers" that are actually tire-kicker calls for property tax assessment, insurance valuation coverage and home equity/home valuation? Does the agent really want to talk with everyone? This is what computers were invented for. Suppose the Web could filter out the tire-kickers or keep them at bay until they have a clue what they can afford, where and what they want to buy, and what they want to pay? Not such a bad thing.

The proliferation of electronic real estate information was at one time heretic in the real estate industry. In 1994, we introduced public access to public home price/deed information nationwide. The cries from a chorus of critics began almost immediately. We were told that: Domania would replace REALTORS®, that consumers couldn't digest this information and that it was dangerous information. Looking back, just like Realtor.com we make the REALTOR'S® work easier. To understand why the Web is no threat to the REALTOR®, consider that a REALTOR'S® true skills are human ones. Buyers and sellers don't begrudge REALTOR® fees for the experience and skill that is essential to starting and keeping a transaction on track. They do resent REALTORS® for charging them for low-value tasks. And these are also the burdens that top producers don't like. I always say that REALTORS® are librarians, therapists and taxi drivers rolled into one. Last time I checked, librarians and taxi drivers are poorly paid, and therapists are well paid.

Therapists - I mean REALTORS®- are experts at navigating the shoals of consumer anxiety, inexperience and uncertainty. Let's spare them the tasks that buyers can do themselves that do not add real value to the REALTOR®/client relationship. If a buyer or seller wants comps, they can start the process and establish pricing ideas themselves in private. And then, armed with the facts they need, the Internet buyer will ask to see 10 houses, not 25. So, the Internet lets the home buyer be the taxi driver and the librarian, and lets the REALTOR® remain the therapist adding real value in the process. The REALTOR® interprets the homebuyer's finding and translates this information into a context in which the buyer or seller can reach an informed decision.

Finally, it is important to remember that a real estate transaction is not like a TV. It can't be made in Japan and purchased on Amazon.com. The real estate transaction has to be handmade here in America by Fred and Mary REALTOR®. The Internet will reduce the low- value roles, but the therapist or sales role will endure. I don't know whether an educated consumer is a better consumer, but an educated home buying public is inevitable. And when more people use online real estate information services the sales cycle will get shorter and REALTORS® will be able to focus on the high-value tasks that will help close the sale.

Article taken from the New Jersey REALTOR(r), September 2001. Reprinted with permission from the New JerseyAssociation of REALTORS®.

Steve Kropper is the Chief Executive Officer of Domania, a Web site providing the public with access to in-depth real estate information while creating a channel of leads to connect REALTORS® with buyers and sellers. http://www.domania.com or (617) 779-2116.