Internet Sites Help Buyers, Brokers
When we began to hear about the World Wide Web five years ago, there was little real estate information online. Today nearly 150,000 Internet sites can be found under the term “real estate,” and doing business on the Web has become a reality.
An Illinois broker put up a Web page and within a week had her first buyer-brokerage client. A Texas lender earns $4,000 to $5,000 a month in fee income from an informative Web site. A Tennessee broker sells several homes within a month to buyers found online.
However, although a growing number of brokers and lenders are enjoying good results on the Web, this new medium has also stimulated a certain amount of fear.
New technologies often mean an end to old products and old ways of doing business. If airline tickets can be bought without traditional travel agents and stocks can be purchased through discount brokers on the Web, why not online services that change the way real estate is bought, sold or financed?
It turns out that the Web has changed the real estate business, but not the way many brokers and lenders expected. Rather than losing business because of the vast amount of information on the Web, broker market penetration has actually risen along with online usage.
Between 1989 and 1995, figures from the National Assn. of Realtors show some surprising trends:
* Broker-assisted sales rose from 78% in 1989 to 81% in 1995.
* Properties sold to home-buying companies dropped to 2% from 4%.
* Self-selling fell from 18% of the market to 15%.
In 1995, only 2% of all buyers said they relied on the Web for information. Given the vast increase in the number of users who have come online since then, there can be little doubt that buyer use of the Internet is larger today and will be far larger tomorrow.
This is good news for brokers because selling real estate is often a numbers game. The best way to sell property is to distribute sale information to the largest possible pool of buyers.
Combine online marketing with newspaper ads, signs, open houses and other selling tools, and the pool of potential buyers simply gets larger.
Consumers can now find online information and photos for more than 1 million properties. If you want to know what is for sale in your neighborhood or in another city hundreds of miles away, such information can be obtained with the click of a few buttons from home or office, day or night, without ever meeting a broker.
More information and less contact with brokers sounds like the death-knell for brokers--at least on the surface. But a close look at the way real estate works explains why increased Web usage elates a growing number of brokers.
Suppose you are a buyer and want a three-bedroom, two-bath home in Phoenix for $150,000. You search the Web and within minutes identify properties, see pictures and read descriptions.
You may well find a home page offering a property for sale by an individual, and you may also find sites where groups of self-sellers advertise. But realistically, you want the widest possible selection. And who has the biggest number of listings? Brokers.
Placing huge numbers of listings online--sometimes several hundred thousand on a single location--means that consumers can quickly search through large numbers of properties by such characteristics as location, price and the number of bedrooms and baths.
Once one or more prospective homes are identified, what do buyers do next? Homes invariably have links to individual broker Web pages and e-mail addresses. With a few keystrokes, it is possible to see what other properties the broker has available and to get in touch with the listing broker or a buyer broker if more information is desired.
Looking toward the future, it is clear that the Web looms as an increasingly important source of real estate information. It is also clear that some cautions are appropriate:
It is constantly said that real estate should not be bought sight unseen, and nothing about the Internet changes this reality.
Real estate is a localized business, and each property is unique. To get the best deals, consumers still need to visit properties, be familiar with local communities, read local papers and engage local brokers, lawyers, inspectors, surveyors and other specialists.
The Web has a lot of information, but not all the information. For example, homes for sale can be found on many free sites, yet recent past sales are often unavailable. Past sales--comparables--are important when considering pricing and offers.
The Web--like the real world--also has its share of scam artists. So “browser beware” is a good motto for any site that promises to make you richer, thinner or sexier.
In addition, mortgage money has a certain cost to lenders, and there is only so much room to bargain at any given time. Rates and programs that seem too good should raise a red flag.
Being on the Internet is not enough. If a broker wants to list your property and post it online, that’s fine. But before you list, send e-mail to the broker and see how long it takes to get a response. Also take a look at the broker’s Web page. Is it easy to find? Easy to navigate? Useful to consumers, or just another place to sell, sell, sell?
Lew Sichelman is on vacation. Peter Miller is the creator and original host of America Online’s “Real Estate Desk” and author of several books on real estate.
