First off, let me start by saying this is going to be a long blog because, it’s a topic I am sure is going to cause many feathers to ruffle but, I think this question should be asked because, I strongly believe we are in the beginning of a technological revolution that will dramatically and catastrophically change the face of the real estate industry and more importantly, the human face of the industry….specifically Realtors.
Let’s start with what we all know about licensed agents and for that matter, Realtors. Getting into Realestate and becoming a licensed agent isn’t that hard. In fact, the requirements to be a licensed agent are different from State to State but, for the most part, our industry and lobbying group NAR (National Association of Realtors) has done a good job at ensuring licensing requirements aren’t as stringent as other professions. The reason behind this is because, like any “unionisque” type of organization…which NAR is, they only make money on dues paid by their members so, what is their number one goal….to grow membership of course. You can’t grow membership if you limit the number of potential members by strict or hard to obtain licensing requirements. That is why becoming a Realtor is much less difficult that say, becoming a barber or stylist.
Secondly, turnover is high, very high. I believe I saw a statistic back in 2008….maybe 2007 that said during the height of the real estate bubble, before the collapse, over 90% of licensed agents dropped out of the industry after 6 months because, they weren’t able to make a living. I also seem to remember a NAR statistic a couple years ago that said the average salary for a Realtor was $28,000.00 a year…..that just a little better than minimum wage which in my state makes you between $22,000 - $24,000.00 a year. Let’s not forget that NAR isn’t the only expense agents have. For most of us, we pay for our own website, we pay for our business cards, signs, riders, office fees, splits, car note, gas, and marketing…etc…. so, even though you may be making $28,000.00 a year, I seriously doubt that’s all net profit to the bottom line. When I look back at my real estate career, my first year…I was not profitable and I didn’t net anything near $22,000.00. So, just on the economics alone, being a licensed agent is expensive and the pay sucks!
Finally, competition is fierce and new agents suffer the worse in most market places. We all know buying or selling a home is the largest financial investment most people make and as such, no one in their “right” mind wants to use a agent that just got their license 6 months ago and has never listed a home and only worked with two buyers. If you are an honest agent and have this kind of conversation with a potential seller, I am sure you will be shown the door. Ok…sure, most seller’s don’t interview more than 1 agent anyways….we have all see the statistics from NAR that tells us something like 80% of homeowners simply pick an agent they already know or are recommended to them but, that doesn’t make competition any less fierce. You see, that means you as an agent have got to be spending a crap load of money on marketing yourself and networking….which most new agent don’t have that kind of money and aren’t seeing that kind of money come in the door. So, to survive the fierce competition you better be able to afford it.
I say all that to give you a bit of a back story because the meat of this article is coming up. You see, I read a very interesting article on Bill Gates where he was explaining that world governments and business are not prepared for what advancements in technology will do to the job market in the next 10 years. He warned that many jobs will become automated through employer cost reductions using technological advancements in software automation……or robots. Now…for some of you, this may sound all, techy mumbo jumbo but, just think how your home has changed just in the past 5 years. We are seeing home automation take off like nothing any of us have ever experienced before. For goodness sake, we have Google announcing that they expect their driverless cars to be on the roads in 5-7 years from now. We have homes that communicate with your phones and allow you to turn off lights, lock doors set security systems, turn of faucets….etc…. Take this same automation technology….and more importantly mentality and start applying this to real estate.
Yes, I said it, I said take software automation and start applying it to real estate, what do you see is the future of the Realtor? As a Realtor, it really sends a cold shiver up my spine. For many of us, we are already seeing automation in our markets and think of it as a easier way to do business. For example, many of us use appointment centers to schedule our appointments for us. Some appointment centers like the one I use allows my sellers and my buyers to be completely on self help. That’s right, my sellers can log on to their account, set the parameters of their availability and buyer’s agents can log on and schedule showings without ever having to pick up the phone, speak to me, or speak to anyone for that matter. In other words, the buyer’s agent and sellers completely handle their own showing schedule without any involvement from me…….other than simply setting up the account.
We also have wonderful automated lock boxes with phone widgets. Once a buyer’s agent has a showing scheduled, they don’t need me to open the box. They just show up, open their phone widget, type in their code and boom, the box opens and reveals the key. My point is, you don’t need me to schedule the showing or to give entry anymore and we all seem to be ok with this technology because, it makes our life easier.
Now, let’s all jump on board the imagination train and see a future where sellers can go online, find a cloud based real estate brokerage where all paperwork is signed digitally on-line, they upload their own photos, provide their own measurements and can place their own lock box on their door, set up their own schedule center and get all the marketing and advertising such as, MLS, MLS Syndication, National Syndication, Local Marketing, Craigs List Marketing, etc….. for the low 6 month price of only $499.99. No commissions to pay, no silly Realtor to deal with and all of the purchase and sale forms are online and explained so you negotiate your own home sale, directly with the buyer, through a web portal where an online licensed agent can answer any questions you may have via live chat.
Just curious, did you feel that shiver up your spine yet? If not….maybe you should go get checked, you might already be dead.