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Many people expected the internet would dramatically change the real estate industry and significantly lower real estate commissions. So far, this has not happened, nor really shown any signs of doing so. Still, the real estate industry has experienced a revolution, just not what was predicted. Here’s what’s happened so far.
The Internet Empowered the Consumer
First, the internet took considerable power from the hands of the brokers/agents and gave it to consumers. In the old days (up to the early part the 21st Century), if you wanted to know what was for sale, you had to call a real estate agent. If you drove past a home with a “For Sale” sign in the yard, you had to call the real estate office just to find out the asking price. If you wanted to make an offer, the real estate agent provided you with recent sales. If you were a seller during this period, you faced the same wall. The real estate agent shared the active listings and recent sales with you.
In every case, you had to trust you had a capable and honest real estate agent. One hundred percent of the information you received about listing availability, pricing, recent sales, and valuations all came from the real estate professional, and virtually all of it was unverifiable. I am sure the vast majority of the time customers received fair and quality information but equally sure there were varying flavors of quality, like everything else in the world.
Those days are over. Most buyers and sellers are well-informed about the market before they even contact a real estate agent. Active listings and recent sales, with photos, video, and considerable home and neighborhood data, are available on multiple real estate websites. Today, real estate agents and their customers have access to the same information. This means both parties to a real estate transaction (buyers and sellers) are also looking at the same data. Each party (buyer, seller, and real estate agents) may evaluate the information differently, but all the data is available to everyone.
The Internet Sped Up the Sales Cycle
Prior to the internet, real estate agents depended on direct mail and print advertising to get the word out about their inventory. Print advertising often took 1-2 weeks just to get the property in the local newspaper and maybe a month or longer to get the home into a home magazine. From there, there was a lag as buyers poured over the all the ads and identified the ones that appealed to them. Further, the information available was so thin, about the only action a buyer could take was to call the real estate agent. Most print ads (then and now) just have one small photo and two lines of text.
Price changes went the same way. It took months for the entire buyer pool to get notified about a new listing or a price change that might put an existing listing within their reach.
Now, consumers sign up for automated listing updates through their agent or on their own with third party sites. Listings matching the customer’s requirements are emailed to the customer within minutes of being posted on MLS. The listing information includes dozens of high resolution photos, video, pages of statistics and ad copy about the property and more. The result is that, within a week of entering the listing, the entire buyer pool is notified and fully educated about the listing. To get one customer this far along in the buying process 10-15 years ago took months.
The median days on market for a home (time between listing date and contract date) was just 47 days in 2016 for Sarasota and Manatee counties combined. 46% of all homes that sold, only required 30 days or less of marketing time.
The Internet Made Obsolete All Other Forms of Mass Media Marketing
The 2016 National Association of Realtor’s 2016 report, “Profile of Home Buyers and Sellers”, states 85% of home buyers said they first learned about the home they purchased either from the internet (51%) or from their real estate agent (34%). The yard sign accounted for another 8%, with friend, relative, neighbor, or homebuilder making up another 6%. That leaves 1% for newspapers, home magazines, open houses, TV, and direct mail. A few years ago, this “1%” constituted the entire marketing plan for the typical Realtor®.
The reason for print media’s disappearance is obvious. Relative to the internet, it has the following disadvantages:
- Print media is not searchable. You can’t ask the newspaper only to show you homes under $500,000, for example.
- It’s not complete. The Sunday ads only show a tiny percentage of all homes on the market.
- The images are limited and poor (usually one in a print ad compared to 25 or more online, with video).
- Print media is stale. Newspaper deadlines are close to a week and magazines may be over a month out.
- Your only option to find out more about the listing is to call the agent. Online listings will contain most of the information the average person needs.
Implications for Sellers
If you are trying or about to try to sell your home soon, here is how these changes will affect you:
- The amount and level of information available online is ideal for people that like to research a major purchase (that’s just about everyone). Most buyers are students of the market and often better informed than sellers. Today’s buyer is unlikely to pay you more than your home is worth. Pricing your home at more than it is worth will fool no one.
- Plan on going to contract in 30 days or less. This is the new normal for the typical home because by 30 days, everyone in the market for your home will have a chance to see it. Many listings will literally receive thousands of online views during this period. After the initial 30 days, however, everything slows down exponentially. Now, you are only receiving views from new people entering the market, which is usually a fraction of the existing pool of buyers (everything comes in 1’s and 2’s). If your home hasn’t received at least 1 offer in 30 days, you need to take action, most likely, a price reduction.
- Pricing your home has always been important, but now, it’s critical. And you don’t have to price your home high to get a good price. During 2016, 32% of all residential real estate that sold through MLS in Sarasota and Manatee counties did so at a price equal to or above the listing price. This also means pricing your home above market will make you look overpriced (or a poor value) compared to one third of your competition. Pricing your home at or just a few dollars above the market makes many people believe they are potentially “leaving something on the table”, a feeling amplified when they go to contract quickly. However, selling quickly no longer means you gave away your home. It means you sold into the largest audience you would ever have. It has to mean that you received the best price. If this initial pool of buyers didn’t like the value you were offering, what are the chances the next buyer entering the market will see it?
- Internet marketing is much more passive than print advertising. Sellers often complain their agent is “doing nothing” because they don’t see the home in a print ad every Sunday or the agent is not holding an open house twice per month. Just know that, if all it took was two print ads or an open house to move a home, there wouldn’t be enough paper to print all the ads. Real estate professionals don’t favor these methods anymore because they don’t work (not for selling homes- building real estate brands, maybe). Same for open houses.
[CLICK HERE TO DOWNLOAD “Expired Listings- Don’t Become a Statistic“]
For 45 years, Scott Norris has lived in the Sarasota/Manatee area and has watched it flourish into one of Florida’s most highly sought-after residential real estate markets. Through his myriad of business experiences, including being a licensed CPA, working for a Big 4 accounting firm and a large national retailer, and selling real estate in the area for over 16 years, Scott has accrued a unique cache of knowledge and experience that enables him to serve as a dependable, invaluable resource for his clients. His understanding of business and finance, his knowledge of the local marketplace, with his professionalism and relationship building skills provide Scott with the foresight to address issues proactively before they become a problem and provide him with the ability to take a multidisciplinary approach to navigating today’s complex real estate environment.
Coldwell Banker Residential Real Estate
201 Gulf of Mexico Dr. Ste. 1
Longboat Key, FL 34228