Are Real Estate Agents Relevant in the Age of Hybrid Brokerages?
Technology has changed the way Americans shop for property. Thanks to websites such as Trulia and Zillow, buyers are now able to browse listings, compare homes through virtual tours, and narrow down their search parameters without help from an agent. The rise of online mortgage companies also means that buyers can even get pre-qualified for a loan before they’ve settled on a specific property.
But even though technology has allowed the modern home buyer to do much of the legwork themselves, there is still a need to involve real estate agents to finalize the lengthy transaction. So how much do these agents make? In most cases they get the usual 3%, for doing what seems like a tiny fraction of the work.
This is a situation that baffles a lot of new buyers, particularly the millennial, who have grown up buying everything online, from mattresses, to cars and groceries. But do real estate agents really offer value for the hefty commission they receive? It depends on the agent, the company they work with, and the technology they choose to use.
It’s not a secret that buyers are taking advantage of apps and digital platforms to locate homes themselves, and they even have options to set up alerts for new listings that match with their needs. But once they locate the house, they still need to hire an agent to open the door to the house, craft an offer for the seller, and submit the offer.
Before the likes of Zillow and Redfin started offering 3-D tours, real estate agents were responsible for guiding clients through the whole process of buying and selling a house, but today, as much as 90% of these transactions are conducted mainly through the internet, with the agent playing that final, but pivotal role of handling the legal documents.
Real estate agents simply wait for shoppers to find a home on websites such as Realtor.com or Big Block Realty, and once they’ve identified a property and shown interest in buying it, the agent may then come in and play a minor role in the transaction. In the old days agents were the gatekeeper and commanded a 6% commission for the role they played in a sale, but the rise of hybrid real estate brokerages has changed the way things work.
A hybrid brokerage offers alternative that sometimes replaces commissions with flat fees and a comprehensive menus of services to go with it. Some of the practices of traditional brokerages like printing brochures or holding an open house have been reduced to optional services that real estate companies and brokerages may or may not choose to offer clients — unless requested.
Modern brokerages can offer a few services pioneered by traditional real estate companies such as advising clients on price and the art of negotiating a sale. A few similarities can be seen with hybrid real estate companies and traditional ones; for instance, both shops have in the past adjusted commission for favorite clients, and also during a down market. This report by Inman describes how technology has changed real estate in the last few years, and it also looks at the relationship between traditional and hybrid models.
Real estate agents that don’t want to be left out of the technology rush must find ways to fit their business into the new model. What’s interesting is that there is no association of hybrid real estate brokerages so there’s really no way to measure the market right now or know exactly how they operate. What’s more, there is no hard definition of hybrid brokerages and the closest description is a hybrid between the old real estate companies and a “for sale by owner”.
Online property brokerage firms aim to make this transaction easier for the client by offering all sorts of services and technology to show them houses, calculate costs, and analyze any relevant factors (such as safety, health care, education, and other factors). Listing commissions for hybrid firms can go as low as 1%, or sometimes go with a flat fee, which significantly reduces the agent’s fees.
That is not to say real estate agents aren’t making money today; it just means they have to focus on offering value to the client, as opposed to quoting a commission. For the average real estate agent there are benefits to migrating to hybrid firms.
· Low commissions and flat fees which attract more business that allows forming of new relationships with many clients.
· Tech-oriented forms also invest quite a great deal on networking and communicating with potential clients through social media and other platforms.
· Hybrid brokerages also reel in customers and link them with their agents, which means buyers don’t have to cold call to find listings.
Some companies pay agents salary plus benefits, and this is good for risk-averse agents who are not likely to venture out alone.