How Much Does The Average 14 Year Old Get Paid Reinventing Real Estate, Part 2: Online and Empowered Consumers Are Taking Charge and Paying Less

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Reinventing Real Estate, Part 2: Online and Empowered Consumers Are Taking Charge and Paying Less

Demanding consumers

“Internet buyers are often better informed about market conditions and more prepared to take action on the home they want when they start working with a real estate agent. Fortunately for real estate agents, these changes don’t necessarily hurt, always that they are able to adapt to the new relationship and realize that new-style buyers value speed and efficiency over guidance when it comes to finding a home.”

– E-seller, Internet home buyers changing the rules of the house

Thanks to the Internet and other technological innovations, more real estate information is available for free than ever before. As a result, consumers are demanding new options, improved services, faster transactions and lower prices. According to a recent NAR survey, the number of sellers who said they did not want to pay a sales commission increased from 46% in 2003 to 61% in 2004. In 2004, 23% of Florida home sellers opted to sell independently without an agent, up from 14% in 2003 and nearly double the national average of 14%, according to Planet Realtor.

And web-savvy consumers demand a high digital IQ when working with real estate professionals. In addition to being well-versed in their own industry-specific technology, real estate professionals are now expected to use laptops, cell phones, digital cameras, personal digital assistants, and global positioning systems to keep up with buyers and sellers. of the internet

Downward pressure

“If consumers are going to do their own shopping at home online, they expect to save some money, just as they would to use the self-service lane. So they are susceptible to online discount brokers and related new businesses that they are promoting. reduce commissions if only consumers use their agents. These business models promote the idea to consumers that they should pay less money in commissions.”

Blanche Evans, Realty Times columnist

Traditional real estate commissions, typically around six percent of a home’s sales price, are facing downward pressure from consumers and competition. Some consumers claim that traditional real estate commissions do not reflect:

– Today’s housing prices. Years ago, when median-priced homes sold for $25,000, real estate commissions were typically five percent, or $1,250. Today, with median home prices in South Florida around $300,000, the cost of a full service real estate commission of six percent becomes $18,000. Some brokers even charge additional fees to cover administrative costs. When you consider that today’s average homeowner sells a home every five to seven years, real estate fees can dramatically affect your personal savings and net worth.

– Own heritage. When selling property, most landlords calculate the cost of the sale as part of the sale price, although commissions are paid out of the owner’s equity. (Equity is the difference between the value of your property and the amount of mortgages owed.) Consider this example: You decide to sell a property for $250,000 in which you have 10% equity, or $25,000. After paying a six percent commission of $15,000, you are left with $10,000 before any applicable closing costs. In this example, the $15,000 commission is six percent of the sales price, but 60 percent of the $25,000 equity.

– Services performed. Under the current commission structure, selling a $100,000 home at six percent typically costs $6,000, while selling a $500,000 home costs $30,000. Does selling the most expensive house really require five times as much effort? Your cost is the same whether the agent spends one hour or 100 hours marketing your home. This is one of the reasons why many real estate consumers find fee-for-service real estate so attractive.

Development of alternatives

“Consumers want what they want, when they want it and will gravitate to the most cost-effective source to get it. Why? Because our ‘one-size-fits-all’ approach to working with sellers and buyers is archaic and won’t be possible. They don’t allow consumers access various segments of help they need in a timely manner. That’s why .com web start-ups are finding a receptive audience among real estate consumers and why sales by owners are growing.”

Julie Garton-Good, author of “Real Estate a la Carte: Choosing the Services You Need, Paying What They’re Worth”

Until recently, you had few practical alternatives to the traditional full-service, full-commission real estate transaction with a broker. Most sellers paid a single commission for a full range of real estate services, whether they needed them or not. Traditional real estate agencies now face the challenge of identifying new services that have value for today’s sophisticated and empowered consumers.

One result is a one-size-fits-all “unbundling” of traditional real estate services for consumers who want more control over real estate transactions and their associated costs. If you are willing to take on some tasks traditionally performed by agents and brokers, you could receive lower transaction costs. You can benefit from the following emerging alternatives:

Fees for services

“Consumers want assistance from real estate professionals, but they don’t want to pay for it in the form of traditional commissions,” says Julie Garton-Good, real estate pioneer a la Carte. Garton-Good has been preaching the fee-for-service gospel for over 20 years. As the name suggests, you can choose which tasks you feel comfortable performing and hire qualified real estate professionals to do the rest. Many traditional real estate brokerages are beginning to offer a more menu-based service plan. For example, you may not mind listing your home and holding open houses, but you may want assistance with contracts and closings.

One time purchase

In response to shrinking margins and the rising costs of technology and lead generation, some real estate companies are trying to combine traditional and web-based services to provide consumers with a single source for all their real estate needs. . One stop shopping sites generally offer or partner with lenders, insurers, title companies, real estate attorneys and others to facilitate all aspects of buying and selling. In addition, some sites add home improvement and related services to stay in touch with consumers between buying and selling transactions.

Web-based discounts

Although many web-based real estate companies appeared in the dotcom era, numerous new companies have emerged to take their place. By offering specific services such as flat-rate MLS listings, buyer discounts, and AVM tools, these sites are attractive to independent buyers and sellers who prefer to take a more active role in transactions. In addition to listings, some sites also offer articles and advice for those who decide to go it alone.

Tradition + technology + turbulence = opportunities

So, given the trends, changes and ongoing evolution of the industry, what can independent buyers, sellers and investors expect in this new era of real estate?

o The web and other technologies will continue to evolve and transform the $1.3 trillion real estate industry. Technology will continue to reduce the time, expense and complexity of manual processes, and increasingly sophisticated search and valuation tools will play a more strategic role.

o Free and low-cost real estate resources will continue to be available and even multiply on the Web. In real estate, knowledge truly is power. Consumers will try to use their power to gain more control of the real estate process and then expect to be compensated in the form of reduced fees and service fees.

o The role of traditional real estate brokers will evolve as web-enabled consumers become more knowledgeable. This will likely trigger some restructuring and consolidation of traditional intermediations, but will also drive the development of new innovative practices aimed at online and empowered consumers. Real estate professionals will focus more on promoting their local knowledge and industry expertise, while consumers will perform some buying and selling tasks on their own.

o Traditional real estate commissions and profitability levels will continue to face downward pressure from various sources. The future will be profitable for brokerages that are able to expand their core expertise in neighborhood and industry insights into flexible new consumer-focused offerings.

o The traditional high-touch, full-service real estate agency is evolving, not disappearing. Real estate professionals who provide exceptional service and value to their clients will always be in demand.

Now you can find more real estate knowledge, tools and resources on the web than ever before, allowing you to buy and sell with more confidence. For real estate professionals, reinventing the industry means making tough decisions, changing processes and managing new opportunities. But for consumers, reinvention in real estate is a winner, hands down.

More information at http://www.homekeys.net

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