Let’s start by acknowledging the benefits of web real estate platforms: like all things Internet, the consumer has immensely benefited from their emergence. In particular, they have significantly increased the real estate market transparency: spreading out accurate data allows the consumer to have a reliable picture of the market. True, not everything is perfect. There are occasionally significant differences between some estimates and the market. But on the whole, these are more exceptions rather than the rule.
So, are realtors now a useless thing of the past? To answer that fair question, the best way is to compare the business models of Internet platforms to that of Realtors.
Let’s start with the Internet platforms business model.
An Internet platform is not your counsel: like all companies, their goal is to further their own business interest. You’re not their client, they owe you nothing except accurate data to back up their reputation. Internet Platforms are not even your counterpart. True, some have launched Buyers system where by they stand ready to purchase houses. Make no mistake: the end goal of this product is not to accumulate real estate, a very capital intensive activity. Plus it would expose them to significant market risk which their capital base is not meant to absorb. One of the main benefit of such a program for those platforms is to generate leads.
That brings us to the core of their business model: aggregating data: when you click on the “buyers” button, the platform just acquired data on a potential listing. And the core of the business model is to sell those data. And whom do you think they sell it to? Actually to some realtor who is not working hard enough to create their own leads but buys them from a data aggregator. Therefore, you’re not the platform client, you’re not the platform counterpart, you are actually the platform product. It is a well-known fact that when something is free on the Internet, that means you are the product. T
What about the realtors business model?
A realtor can only survive if they’re successful at putting the clients interests above all else. And not only is it the key to success, it is also a legal obligation: any realtor who would fail to do so would expose themselves to disciplinary measures from the Real Estate Board. Acquiring a realtor license carries two consequences: the ability to carry out real estate transactions and the legal obligation to put the client’s interest above all others, including the realtor’s ones. When you sign a representation agreement with a realtor, read the fine print: you will see that you are obligated to nothing. All obligations fall on the realtor’s side, the main one being that they should put your interests ahead of all else including their own. So why do realtors sign those agreements? Such an agreement being signed is the necessary condition for the realtor to get paid for his work.The only contract obligation not falling on the realtor is for the property owner to pay the commission remunerating the realtors work. That’s it.
As you can see, comparing Internet Platforms business models and Realtors business models clearly identifies the need for homeowners and homebuyers to rely on a Realtor to walk them through the maze of real estate transactions. Dispensing of the use of a realtor exposes you to the risk of being defenseless during what happens to be the largest financial transactions of your lifetime. Obviously, not all realtors are created equal. So you have to make sure that you rely on an experienced and hard-working individual who will truly bring value to you. It’s not about access to the information (it’s all online), it’s not about holding the keys to houses that you want to visit. It’s about ensuring at every step of the way that your interests prevail over the multiple parties to the transaction.
An Internet platform will never do that.
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