Real estate dot-coms are not the only Web operations that have been struggling to attract buyers of high-ticket items.

Jerry Flint's "Backseat Driver" column in the Dec. 25 Forbes explores another group of dot-coms whose experience helps explain the troubles of Web realty companies. Although the article explores auto-buying on the Web, the piece might as well be about online home buying. The two areas are that close in terms of consumer reluctance to complete the sale through cyberspace.

Flint's source, auto analyst Maryann Keller, offered several reasons CarOwner.com and other automobile dot-coms have shut down. Keller herself resigned as president of a dot-com's automotive division because she no longer thought such sites could be successful.

Here are some of Keller's points – and how they apply to the online selling of homes as well as automobiles:

• Consumers "do not point, click and buy a car." They don't buy homes over the Internet either. NAR's 2000 Profile of Home Buyers and Sellers reports that only 1 percent of homebuyers purchased a home they found online, without help of an agent.
• Why not buy a car over the Internet? Keller says the hesitant online auto buyer needs to be coached. Yes. Purchasing an expensive automobile online is not like ordering books, toys, appliances, or other popular e-commerce products. The same goes for homes, only many times over. Online homebuyers need a real live professional to guide them through one of the most important and expensive investments of their lives. They still want the touch and feel. It's the Realtor's responsibility to help them make the right home-buying decision.
• Frequency of sales. Keller says it's difficult for a site to build a presence with customers who purchase the product every three to five years. The challenge for real estate dot-coms is even greater. The NAR survey found that repeat homebuyers in 1999 had lived in their former homes for a median of seven years.
• Auto buyers use the Internet for research, not for purchasing. They comparison shop for specific makes, models and features. Homebuyers, too, use the Internet primarily as a source of information. They want to know what properties in a given area match their specific taste, need and financial resources. According to the NAR study, homebuyer use of the Web as a source of information has risen from 2 percent in 1995 to 37 percent in 1999. Almost 70 percent of those surveyed expected to use the Internet the next time they looked for a home.
• Successful companies use the Internet to their advantage. Even though dot-coms that lack assets are struggling to survive, the Web is a valuable tool for brick-and-mortar companies. Auto dealerships gain additional exposure online. Realtors, too, benefit by consumers seeking homes online. The NAR profile found that 87 percent of homebuyers who looked for properties online purchased their homes through real estate agents.

Flint concludes that the Internet will only supplement traditional dealership business, not replace it. That's the bad news for both auto and real estate dot-coms and the good news for automobile dealers and real estate professionals. Consumers still need them – and us – and will continue to depend on real live salespeople when they purchase high-ticket items.

Published: January 30, 2001

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