The Virtual World of the Online Estate Agent
Category General Information
With such a busy, modern world, consumers have become accustomed to receiving faster service, convenient click button outcomes and immediate gratification faster than what their parents or grandparents ever did. They want fast food, fast cars, and fast money. Bank Transfers with the click of a button have become the new norm. You don't have to leave your home if you don't want to.
There is no area or industry that is unaffected to some degree by artificial intelligence, hence the introduction and inevitable innovative production of the AI estate agent. Online portals where clients receive promises of slashed commission fees (some as low as 1.5%), better service, more accurate valuations, exceptional service and the list continues. At face value, these promises sound amazing and are tempting to any consumer who is jumping into the property market. Many people are on tight budgets working long days, the option of more money in their pocket, with less fuss, sounds like the perfect opportunity.
Online estate agents have formed a trend that is hard to ignore. They appear in a specific geographical region and take up 3% of the market share before plateauing out and moving on (or so historical stats show). It would seem that the mainstream property buyers and sellers still prefer to use the traditional estate agent. Why is that?
Purplebricks, one of the biggest if not the biggest, UK based online agencies, founded in 2012, has announced after just 7 years in the business, that they have sold their shares to foreign investors. This came a month after they made the decision to shut down all operations in Australia due to a lack of profits. It seems, fast-paced services apply just as much to the agency as it does to the service they offer.
If online estate agencies are what the world really wants, why isn't there a decline in the traditional model. What value does a faceto- face relationship with an estate agent have, that a virtual one cannot replace?
The claims from online agencies that traditional agents receive higher commission is true, however, behind the scene factors are excluded or ignored. In South Africa, agents are required to do an internship under a professional mentor and receive a nationally recognized qualification before being able to trade independently. According to Nikita Sigaba, the acting chief executive of the Estate Agency Affairs Board, these efforts are "not without financial and human-resource costs and time constraints"
South African agencies also bear the cost of marketing the properties they sell. Placing the financial risk firmly on the agency and or Agent, if the property does not sell, no one gets paid. When you move the risk of loss to the owner, a drop-in commission is feasible. If online sales were the only sales medium then this would make sense. Clearly history is proving otherwise.
Rosalind Renshaw, the editor of Property Industry Eye, says, "Online estate agents may suit confident sellers who are able to conduct their own viewings, negotiations and push the sale through. Yet some buyers, she says, prefer to be shown around the property by an agent rather than the owners, who are more attached." She also says that progressing the sale is the real challenge. "Getting the initial offer is the easy bit. It is the getting the sale over the line that is more difficult.'
According to Ted Frazer, Seeff Head of Marketing, "Traditional companies will have to re-examine the way in which they operate and engage with customers. And those companies that don't adapt to this changing paradigm will not survive in the long term,".
Traditional estate agents aren't living in the past. They are fully prepared to walk into the modern world of innovation through constant upskilling, training and technology, nowadays its required to keep up with the fast-paced global revolution. Can an online agency put a client at ease with their up to date, first-hand knowledge of the area, it's people, culture and history? Do they understand that its more than a home, it is a treasure trove of your life's story and each story should be handled with a tailor-made approach? Can a one shoe fits all property model really be the future?
Online estate agents are yet to see their market share increase. The lion's share of property listings, globally, remain with the traditional estate agents. A virtual world may be appearing, in many facets, but in real estate, it may still be some time before people are willing to entrust a vast majority of their wealth to a machine, which they will never get to meet.
Perhaps the value of the Agent is not only in the marketing.... perhaps the structure, legal risks, management and conclusion of a sale is more complex than just viewing a home...time will tell.
Author: Seeff Blouberg
