Many real estate practitioners are wondering what the industry will be like in the near future. Although no one has a crystal ball to the future, several trends do suggest some predictable outcomes. The REALTOR® will change, the buyer and seller will change, and the industry will change. The question is, who is going to blink first?

On-line home shopping is here to stay

The trend of buyers taking charge of their own transactions will be impossible to reverse. Traffic numbers on Internet home search and loan sites indicate that buyers are enjoying the on-line experience too much. Consumers can go on-line, obtain the information they want anonymously, and then act in their own time. Service providers are insuring that they stay on-line by offering access to homes, comparables, loans, buying and selling how-to's and more. Consumers can literally find everything thing they want on-line, including tours of homes.

Currently, consumers outpace Realtors in the adoption of technology. Over 40% of American homes use the Internet, yet Realtors own only 77,739 modems, according to Realtor Magazine.This means they can access and act on information more quickly than they can with the services of the average Realtor. Realtors who are able to reverse that trend and provide services and information faster than the consumer can, will survive.

Technology has raised the bar for Realtors

Realtors must first and foremost realize that they are no longer the first point of contact for the consumer, and that their value to the real estate transaction is diminishing in the eyes of the consumer. Consumers will have no tolerance for agents who can't perform functions faster, more efficiently and more accurately than they can for themselves.

That means the technology bar will be raised very high for Realtors. The educational background, technology investment, and ability to successfully combine high touch/high tech skills will cause the bottom rung agents to drop out of the business. As the investment required to become a real estate agent is raised, the industry will become more sophisticated as a result.

Realtors will alter their services

So what can Realtors do to survive and thrive? They have to restore the consumer's faith in their services and they must provide services that consumers can't perform as well for themselves.

First, they must become more technology-savvy than the consumer, they must know how to locate, retrieve and share information quickly, efficiently, and most importantly - accurately. They can not depend on outside sources for numbers. They must verify home histories, tax data, and comparables themselves, because outside sources, including their own MLS information systems, simply can not be trusted. As buyers and sellers learn that they can obtain the information they need from municipal sources, they will discount the Realtor's services even more than they do now.

Second, Realtors must diversify into specialties. Representation is becoming a more important issue to buyers and sellers. Buyer's agency and selling agency will become more exclusive, someday bringing dual agency to an end. Relocation specialists, senior specialists, new home specialists and first-time buyer specialists will become more common as agents seek to identify and meet market needs.

Agents will charge fees for services

Realtors will find themselves marketing a menu of services to buyers and sellers, creating more of a contractor business model. Like contractors who are paid a deposit, an interim fee, and a closing payment, agents will begin to charge fees along those lines. These may include search services at a fee to prospective buyers and sellers, or a fee to put a seller's home into the MLS system. Instead of giving away comparables for free, the comps will come with an analysis, much like an appraisal. These fees will represent a monumental shift in the way Realtors are paid - from the back end of the transaction, to being paid up front or throughout the various stages of the transaction.

Agents will return to the center of the transaction

The goal of forward-thinking real estate industry leaders is to originate, manage and close the real estate transaction on-line. For that to happen, almost every service provider with a role in the transaction will have to cooperate to meet this goal, including modifying their business models to accommodate on-line service delivery. That means teaching people who have never touched a computer, such as many inspectors, appraisers, and closing agents, to put their information on-line.

The NAR would like to position the Realtor as the transaction manager. The Realtor will initiate the transaction with the contract, manage it on-line in a secured pass-word protected environment and assure that all the pieces fit for a seamless on-line closing. As the pieces of the transaction come in - appraisals, inspection reports, and loan approval, the puzzle comes together. The Realtor will communicate on-line with the client. The client will be able to follow the progress of the transaction, alongside the Realtor, in real time.

Loans will close on-line

Loan closings could happen on-line within five years, but only if the monumental task of getting all information providers to use the Internet is met. Then there is the problem of signature verification. The technology exists to do it now, but no closing agents have come forward who are willing to insure property titles conveyed by electronic signatures. Until that day, homes will not close on-line.

The most important thing for agents to be aware of is that technology will be cheap and indispensable and it will provide instant communication between all parties involved in the real estate transaction. Just as 99% of homes have televisions today, in five years, just as many will have computers or at least access to the Internet. That means the consumer has the same advantages and abilities as the agent.

We think we have instant communication now, but we are far from it. As long as the parties to the real estate transaction use different levels of technology, everyone will be slowed down to the lowest denominator. If one agent can e-mail a contract and the other agent doesn't have e-mail or even a fax machine, then the second agent clearly offers less value to the transaction. Consumers will not tolerate it, and will vote with their checkbooks to lower commissions to agents who don't provide value. Agents will find themselves paid according to their ability to provide service, which will fuel the fee-for-service business model.

The disappearance of the MLS

Within five years, the current MLS system of organizing and distributing listing information will be obsolete. Brokers will take back the responsibility of listing data and choose which Internet portal to place the information.

Instead of hundreds of local MLSs, we will have third-party service providers who can organize listing data, tax roll information, schools, crime statistics, home histories, comparables, and search features into concise, on-line reports for consumers. Agents may have more detailed versions of the same reports at a password protected site and be willing to share that information for a fee.

The technology that will make it all happen - real estate standard code using XML

There are organizations working right now to standardize an Internet code for the real estate transaction. If municipal tax and appraisal districts, MLS vendors, Internet service providers, agents and consumers could all communicate in the same environment - the Internet, the need for expensive proprietary systems would disappear. Everyone - the consumer, the agent, and the lender, etc. - will be on the same page.

What a wonderful world that would be.

Published: March 15, 1999

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.