1. What’s happening in real estate?
Just fifteen years ago, the real estate broker was at the center of most home sales. Sellers as well as buyers and agents depended on the broker and the broker’s “multiple listing services” book (MLS) to bring a property to the attention of the marketplace.
Online technology brought about a revolution in this marketplace as in so many others. The main change is the elimination of the middle man, a process known as disintermediation. For example, travel agents have been largely replaced by direct purchases from web sites and antiques are now often auctioned off online by the owner rather than in an auction house by an auctioneer.
In the 1990s, the first wave of Internet-driven change overtook the real estate business. For example, it quickly became possible to comparison shop for home loans among many, many lenders. As real estate services moved online, the online MLS became available to agents as well.
More recently, such listing services have become accessible to the consumer. Individual buyers can now search real estate listings almost as easily and thoroughly as a veteran broker or agent, and indeed most home buyers today begin on their own, browsing listings. Finding a compelling listing, these buyers might visit and even bid on a property before they have ever consulted a real estate agent or broker.
To be sure, real estate brokers and agents are still consulted -- particularly by those accustomed to the traditional business model. But the process of disintermediation continues and there is simply too much money involved in the purchase or sale of your home for a seller not to ask: what is my agent doing to earn a percentage of my home? Why can’t I do that job to avoid handing over a piece of my home’s value? Much of this book will address such “value proposition” questions and the corollary, is there an agent or consultant who really is indispensable and worth the expense?
Stopping by Carl’s office
“Carl, how did you sell your home? I heard you sold it online in an auction?
“That’s right. We considered auctions because I had a new job to start and renting for months looked really expensive. But the auction not only sold the house in a couple of weeks. It also fetched us a competitive price and cut our broker fees dramatically.
“I’ve auctioned off skis and a computer online. But a house?
Well, you’re right. A house isn’t the same as a household commodity like skis -- you need a specialized online auction service where serious buyers are following the listings. I used Oresy.com.
“I don’t get it. Who’s going to bid hundreds of thousands of dollars based just on a few pictures online?
“No, that wouldn’t work. Actually, you market the house like crazy and photos of the properties do go up on the site. The point isn’t to sell them on the house via photos but to convince them to see the property in person. Then you ‘Open House’ previews, provide inspection reports, and so on. The bidding happens online in a fixed timeframe.
We’ll look at Oresy.com and the process of selling your property there in the last section of this book.
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