In a world enamored with all things digital and AI, one would think that real estate agents don’t serve any purpose, but it’s totally untrue. Moreover, the concept remains a central theme of some arguments contained in the plethora of lawsuits that are now carpet bombing the real estate industry.
Despite the claims, a critically important truth is missing.
The basis of the idea goes something like this: in today’s high-tech digital world, there exists abundant online resources whereby any buyer can review any property, compare any property value, draw an accurate opinion of any property value, and even reach out directly to sellers to negotiate a transaction.
The centerpiece of this concept is the belief that sellers have the time and the money and are willing to spend the requisite amount of both to market their property effectively. If true, this would require every seller to be willing to invest in accurate keystroke data input of the property details, take and upload flattering photos, wordsmith the best marketing phraseology possible about the property, and then enter all that into each of the online real estate portals. There are many: Zillow, Realtor.com (which has not been owned by anyone in the industry for years), Homes.com — just to name a few. Complete market exposure would involve about 25 more sites.
The theory is further dependent on every seller returning to each site following the sale to accurately enter the final sales price AND all seller concessions. Here’s a fact: tax records are frequently inaccurate on the actual sales price, and they never account for seller concessions. Both of which, as any appraiser will attest, are fundamental key components of an accurate valuation. Likewise, both of which are a constantly moving target throughout the transaction process.
So where does all the information currently come from that the consumer sees when viewing the online digital world?
Contrary to belief, it’s not magic, and it does NOT just fall from the sky. Nor does all of it come from public records.
It comes from the local Multiple Listing Service (the MLS) which performs the critically important function of aggregating the property information in an efficiently structured manner. Thereby making it readily available to subscribers, and further syndicating that data with the numerous online portals…automatically, every 15 minutes.
Great. We all love the MLS now, but exactly how does the information get into the MLS? From the boots-on-the-ground, every day, run-of-the-mill real estate agents who physically capture and enter every minute detail, and who take and upload every photograph, but only after verifying all of it for accuracy and completeness.
Here is the key component that keeps getting missed by the external critics: without the work of the real estate agent inputting and aggregating their work product via the MLS, the digital real estate world would be microscopically smaller than it is today. This is THE critical argument that everyone seems to be missing.
When the choices available to the consumer narrows, competition declines, and that is harmful to both the marketplace and the consumer.
Real estate agents are the ones out there every single day, grinding it out, doing the grunt work that sellers don’t want to do, in many cases overcoming obstacles inadvertently created by their own clients. It is their collective work product that comprises the single largest component of the Gross Domestic Product of this entire country.
Let’s take the soundbites out of it. What would the real estate world look like without the agent and the MLS? Someone, somewhere, sometime must still collect, verify, and input every single property detail into every one of the individual online platforms. Today, those platforms don’t communicate with each other. They rely solely on data feeds from the MLS, so what you input into one, the consumer must input into each, individually. That’s a pretty big task.
A quick check of Zillow this morning shows 35,577 total listings for sale in my state, with a whopping 571 input by the individual seller – a little over 1%. Even with exponential growth of this segment, the magically proposed digital real estate world would be a mere shadow of the currently available market. How does that help the consumer?
More research adds weight to that question. Every single data report I can find (and I have searched for two days) shows that a seller employing an agent and the MLS will net $50,000 and $100,000 more than one who does not. Far above the typical commission paid for the value rendered. Is it truly realistic to believe that a buyer, who only transacts this event once every 7-10 years could significantly negotiate that lower?
All that is to say, a better result for the consumer does not lay in destroying real estate agents, the MLS, or the single largest component of our nation’s GDP. The consumer needs these services. We need to figure out how to deliver them better.
Phillip Cantrell is the CEO of Benchmark Realty LLC based in Franklin, Tennessee and the executive vice president of Strategy for United Real Estate. He is a 20-year member of the National Association of Realtors and has served on his local Realtor association’s board of directors, budget committee, grievance committee, professional standards committee and scholarship committee.
Editor’s note: This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Phillip Cantrell at phillip@benchmarkrealtytn.com
To contact the editor responsible for this story:
Tracey Velt at tracey@hwmedia.com
