The role of a real estate agent is constantly evolving. Whether it\u2019s adapting to new technology or keeping up with the changing markets, real estate agents have to be on their toes and willing to adjust to an ever-changing landscape. Today, real estate agents face competition from iBuyers (instant buyers) and online listing platforms, neither of which requires an agent to use \u2014 and both of which beg the question: Will real estate agents be replaced?<\/p>\n
We don\u2019t think so. While there are more options, and real estate agents have to remain flexible in a changing market, they continue to play an important and integral role in real estate transactions.<\/p>\n
\u201cI always feel like there will be a real estate agent involved in the real estate transaction,\u201d says Mike Galbally<\/a>, a top agent in O\u2019Fallon<\/a>, Missouri, a suburb of St. Louis. \u201cThere will always be a human person involved. I feel like [the transaction] is too important to people.\u201d<\/p>\n With Galbally\u2019s help, plus insights from Jeffersonville<\/a>, Indiana agent Jesse Allen<\/a>, and our own extensive research, we\u2019ve analyzed the sources of competition that agents face as well as the benefits of working with an agent regardless of the way you choose to buy or sell a home.<\/p>\n In today\u2019s market, iBuyers and real estate apps are competing with real estate agents for clients (also known as buyers and sellers \u2014 maybe that\u2019s you!). Let\u2019s take a closer look at both.<\/p>\n iBuyers<\/a>, or instant buyers, are companies that use an algorithm to value your home and then make an instant home offer<\/a>. Typically, they buy the home \u201cas is\u201d and close quickly, making for a quick and easy home sale. But there are fees associated with the process.<\/p>\n An agent\u2019s commission<\/a> is typically between 4% and 6% of the sale price and paid by the seller; if a buyer\u2019s agent is involved in the sale, they receive a percentage of the agent commission. According to data from zavvie, iBuyer service fees are around 5.8%<\/a>.<\/p>\n Raise your hand if you have a real estate app on your phone. Real estate apps<\/a> like Zillow, realtor.com, Redfin, Homesnap, and Trulia, among others, have taken the real estate world \u2014 and our phones, tablets, and computers \u2014 by storm.<\/p>\n Rather than waiting on an agent to show you a list of homes for sale, browsing through the daily newspaper, or hanging out at the real estate office storefront to see listings, we can scan through them in the waiting room at the doctor, while we\u2019re making dinner, and in bed.<\/p>\n Despite these new sources of competition that real estate agents must manage, Galbally says that while agents have to adjust to competition and changes in the market, their role is largely the same: To help their client achieve their goal of buying or selling a house.<\/p>\n \u201cI see the service that we provide the client as far as getting the home sold and what we do to get the home sold is pretty much the same,\u201d he says.<\/p>\n He goes on to say, \u201chow we get to the client or how the client gets to us has changed. In the past, they would typically ask their friends and family, and now they Google it.\u201d<\/p>\n For Galbally, he still gets the majority of his clients through referrals, but he also gets leads through other avenues \u2014 including online platforms such as HomeLight, along with his website and social media. But regardless of the referral source, clients are doing a lot of research online before reaching out to agents so they can review their options and feel confident in the agent they choose.<\/p>\n Allen, who works with 86% more single-family homes than the average Jeffersonville agent, says, \u201cI don\u2019t think we\u2019ll ever be replaced, but our job description will change over time. The activities of an agent are changing.\u201d He views the sources of competition as other avenues he can use to serve his clients.<\/p>\n According to the most recent NAR Profile of Home Buyers and Sellers<\/a> in 2021, 87% of buyers worked with a real estate agent to buy their home. Among sellers, 90% worked with a real estate agent to sell their home, and the final sales price was a median of 100% of the final listing price.<\/p>\n Despite the prevalence and relative ease of listing a for-sale-by-owner home, only 7% of sellers chose to go this route. And of those, 57% knew the buyer of the home.<\/p>\n Based on this data, it\u2019s clear that buyers and sellers are overwhelmingly choosing to work with a real estate professional when it comes to their housing transactions. And for good reason! There are a number of benefits that come with working with a real estate agent.<\/p>\n For buyers and sellers, there are documents that must be created and signed as part of the buying and selling process. Some states require the seller to fill out a seller\u2019s disclosure<\/a> before listing the property. When the buyer is ready to make an offer<\/a>, the agent will help write it \u2014 including any contingencies that the buyer wants or needs to include.<\/p>\n A real estate agent can explain each document and make sure you understand what you\u2019re signing as well as help you navigate the contingencies you should include in the offer.<\/p>\n Buyers and sellers can negotiate<\/a> a number of different variables after an offer is made but before the seller accepts, including the home\u2019s price, who pays closing costs, repairs, and the closing date itself. Having a real estate agent act as the negotiator and intermediary can make the process easier for both parties.<\/p>\n Real estate agents work closely with other agents to keep up-to-date on current listings and upcoming listings.<\/p>\n A pocket listing<\/a> is a listing that isn\u2019t marketed through the usual public channels. Instead, it is shared privately among agents or directly with clients who may be interested.<\/p>\n Working with an agent means they may be able to find a home that you\u2019ll love before it’s listed on the multiple listing service (MLS)<\/a>, possibly giving you the first look and a chance to scoop it up quickly.<\/p>\n Galbally explains that \u201ca good agent doesn\u2019t just put the property on the market. They use their relationships and influence to get their client the smoothest transaction.\u201d<\/p>\n Real estate agents who have been in business for some time have also built relationships with various companies and vendors, so they can help the buying and selling process go as smoothly as possible. Working with an agent gives you access to the agent\u2019s network of lenders, photographers, staging companies, contractors, and more.<\/p>\n Even if you decide to work with an iBuyer<\/a>, Galbally says that an agent can help facilitate the process. \u201cI have a relationship with those people so that when I bring them a property, they\u2019re giving me over what they would give anyone else.\u201d<\/p>\n As a result of these relationships, he was able to get one client $32,000 over what they likely would have netted had they gone the traditional route. So even with the growing presence of iBuyers, the agent is still integral to a successful transaction<\/a>.<\/p>\n There are a lot of logistics that go into a home search. Coordinating showing times, making an offer, negotiating price, and facilitating the closing process<\/a> are all things that a skilled agent will handle while you go about your daily life \u2014 and pack up your home and prepare for the move.<\/p>\n Although it\u2019s definitely possible for buyers and sellers to handle these things on their own, it takes a lot of time away from daily tasks and responsibilities. There\u2019s a reason why agenting is a full-time job!<\/p>\n Galbally points out that agents do these tasks every day. Because of this, he says, \u201cI know a lot of the pitfalls that are going to come up along the way, and that\u2019s what I save my clients from. I make the process smoother with far less hiccups and problems.\u201d<\/p>\n Let\u2019s face it, most of us are busy with our daily lives \u2014 work, family, social gatherings \u2014 and don\u2019t have the time to contact people who may want to sell their homes in the neighborhood we\u2019ve been dreaming of. Luckily, that\u2019s the real estate agent\u2019s job!<\/p>\n Allen calls this \u201ccircle prospecting.\u201d Agents will reach out to homeowners in certain neighborhoods to see if they\u2019re interested in selling.<\/p>\n \u201cIt\u2019s almost like creating your own inventory for your buyers because there\u2019s just not a lot out there right now,\u201d says Allen.<\/p>\n Whether they’re reaching out to homeowners in your dream neighborhood or sending out mailers to see who\u2019s willing to sell, they\u2019re doing the work that you simply can\u2019t or don\u2019t have time to do.<\/p>\n While the real estate industry is always changing, change was put into hyperdrive during the early days of the COVID-19 pandemic<\/a>. As the pandemic picked up speed and stay-at-home orders were put in place, it seems logical that something like real estate would slow down or stop altogether \u2014 showings and closings are typically in person, and people were wary about having other people (and their germs) enter their home.<\/p>\n But agents adapted quickly, leveraging technology like virtual tours or even walking the client through the house on a video chat. They created protocols for showing houses and facilitated curbside closings, where the involved parties could sign from their vehicle.<\/p>\n It is this level of flexibility and willingness to adapt to changing circumstances that will ensure the agent remains a critical part of the real estate process.<\/p>\n Allen, in addition to being a real estate agent and running a real estate team, has leveraged the competition and owns an investment company that runs an iBuyer program. Using this technology, Allen has also been able to serve his clients in additional ways, offering cash to purchase homes that he can then sell or use as an investment property.<\/p>\n While I could definitely take pictures of my home and list them online by myself, I don\u2019t have the time or the photography skills to really make the listing appealing and worthwhile. Nor do I have the time to field showings or set up an open house \u2014 and you probably don\u2019t, either!<\/p>\n Agents can stay competitive in the changing real estate market by offering quality services and keeping the process as simple as possible for their clients.<\/p>\n A definite benefit of working with an agent is the agent\u2019s network of vendors, such as contractors, lenders, and photographers.<\/p>\n Another area where agents can build relationships is with iBuyer companies who buy and sell homes in their area as well as banks and other institutions that buy and sell REO homes<\/a>.<\/p>\n Despite the fact that the real estate agent\u2019s role is changing, Allen doesn\u2019t see a scenario in which agents will be replaced.<\/p>\n \u201cAt the end of the day, we have something that [online platforms and iBuyers] don\u2019t have, and that\u2019s a relationship,\u201d he explains. \u201cMy past clients and my sphere of influence and my family and friends \u2014 they trust me, and I have a relationship with them.\u201d<\/p>\n Whether you want to take the traditional route of working with an agent to buy a home, or you\u2019re looking to sell and want a cash offer that you can leverage<\/a> to purchase your next home, a real estate agent will help facilitate the transaction, using their knowledge and expertise to help it go as smoothly as possible.<\/p>\nReal estate agents are facing competition<\/h2>\n
iBuyers and cash offers<\/h3>\n
Online listing platforms<\/h3>\n
Is the agent\u2019s role changing in today\u2019s market?<\/h2>\n
Are buyers and sellers still working with real estate agents?<\/h2>\n
Benefits of working with a real estate agent<\/h2>\n
Understand disclosures, paperwork, and contingencies<\/h3>\n
Negotiate on your behalf<\/h3>\n
Access to pocket listings<\/h3>\n
Relationships with vendors<\/h3>\n
Handle the logistics<\/h3>\n
Do the legwork<\/h3>\n
How agents can stay relevant in a changing market<\/h2>\n
Remain flexible<\/h3>\n
Offer high quality services<\/h3>\n
Build relationships with vendors and iBuyers<\/h3>\n
Will real estate agents be replaced?<\/h2>\n
Working with an agent will give you the best experience<\/h2>\n