In 2001 8% of all home buyers originally found their home on the internet, 7% found their home through print newspaper advertisements, and 15% found their home through either a yard sign or an open house sign. Flash forward to 2018, and 50% of all buyers originally found their home on the internet, while only 1% of homes were found in newspaper advertisements and 7% were found through a yard sign or open house. (2018 Profile of Home Buyers and Sellers, Exhibit 3-9) So, what has changed over these past seventeen years?
The short answer is - a lot. American Online (AOL) and dial-up have been replaced by Google and 5G. Myspace has come and gone but Facebook, LinkedIn, Instagram, and other social media networks have changed the way the people interact with one another, personally and professionally. Elected officials communicate to their constituents and followers through messages on Twitter – including the President of the United States. Even new electronic currencies such as Bitcoin have been developed to compete with traditional government-issued currencies. In short, the snapshot of the world in 2018 captured in the report is much more “digital” than it was in 2001.
The Real Estate industry, like any industry, can, and has, benefited from the progress and ingenuity that technology has brought us. Social media, E-mail, and other internet-required communication systems allow buyers to contact agents at a moment’s notice when they find a home they want to buy, and vice-versa when sellers find the right home for their buyers. Multiple listing services allow buyers and sellers the ability to search for homes of all shapes and sizes in a particular area. Even birds-eye-view photos and videos of properties can be shot with drones.
Which technologies do REALTORS® want more of?
For REALTORS®, there are three particular technology tools that are both coveted and gaining traction in the industry. The top tool that REALTORS® most wanted to see provided by their broker, at 36%, was predictive analytics. Predictive analytics is a statistical technique that is used to make predictions about future events based on past data that is available. These techniques typically involve Big Data – data so large, numerous, and from different sources that statistical analysis becomes almost impossible unless one has skills and experience in big data. In real estate, there is lots of data – demographics, locations, homes, buyers, sellers, mortgage rates, etc. - and this data can be leveraged to help REALTORS® generate better leads and ultimately sell more homes. Many potential sellers contact REALTORS® because they are only curious to know what their house is worth – predictive analytics can help predict which sellers are actually serious, saving REALTORS® time and effort.
The second technology tool that REALTORS® most wanted to see, slightly behind predictive analytics, was CRM (Customer–relationship management software) at 35%. CRM are software tools that help manage and organize interactions and relationships with customers and potential customers. The process of managing relationships is certainly not new for REALTORS®, but the days of having a Rolodex to keep track of them are over. Software tools such as Salesforce provide interactive platforms for people to keep track of marketing efforts, manage relationships, and solve customer-service problems, all in one single software.
Transaction management software, at 25%, is the third tool that REALTORS® most wanted to see. Any real estate transaction is going to involve the sharing of important and sensitive information and documents between the buyer, seller, broker, lender, etc. Managing all these documents can be cumbersome, but there are several transaction software tools that help mitigate this. DocuSign, which has already partnered with NAR, as well as Dotloop and BackAgent, are software programs that make the transaction process simpler, more efficient, and less of an inconvenience.
However, technology is still just a tool
Despite all the changes and improvements in technology throughout the past few decades, the REALTORS®’ role in the home buying and selling process is still paramount. Among all buyers, 87% of them bought their home directly through a real estate agent or broker. (Figure 1)
Figure 1: Method of Home Purchase in 2018, Percent Distribution
On the sale side, roughly 92% of all homes sold used an agent or broker in the process, and the particular percentages among each range group ranged between 88% and 91% (Figure 2).
Figure 2: Method of Home Sale in 2018, Percent Distribution
Source: 2019 NAR Home Buyer and Seller Generational Trends
Perhaps what is most interesting is the fact that 92% of those 28 and younger bought their home with help from a REALTOR®, and the percentages steadily decline to the point where those between 73 and 93 use a REALTOR® only 83% of the time (Figure 1). It’s likely that some of this difference can be attributed to the fact that there are likely not too many people between 73 and 93 buying homes compared to Millennials (and 64 to 72 years old vs. Millennials and so on), but it is telling just how important younger and first-time buyers rely on the expertise of REALTORS®, despite the vast amount of data and information that is available to them.
Figure 3: Method used to Sell Home, 2001 to 2018
Source: 2018 NAR Profile of Home Buyers and Sellers
Likewise, for all age groups, the percent of those who sold a home using a REALTOR® or broker has increased by 12 percentage points since 2001, while for-sale-by-owner (FBSO) has decreased by 7 percentage points. Furthermore, despite the rise of iBuyers such as Opendoor and Zillow, only 1% of all homes were sold to home buying companies in 2018 (which includes iBuyers and Opendoor), and only 1% of homes were sold to these same types of companies in 2001, when Opendoor and Zillow did not even exist.
If this trend continues to persist – and there is no indication that this trend is changing – REALTORS® may find that they need new tools such as predictive analytics, CRM, and transaction management software sooner rather than later.