Thu. May 26th, 2022
here’s-how-the-role-of-real-estate-agents-is-changing-in-today’s-market

The role of a real estate agent is constantly evolving. Whether it’s 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 — and both of which beg the question: Will real estate agents be replaced?

We don’t 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.

“I always feel like there will be a real estate agent involved in the real estate transaction,” says Mike Galbally, a top agent in O’Fallon, Missouri, a suburb of St. Louis. “There will always be a human person involved. I feel like [the transaction] is too important to people.”

With Galbally’s help, plus insights from Jeffersonville, Indiana agent Jesse Allen, and our own extensive research, we’ve 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.

Real estate agents are facing competition

In today’s market, iBuyers and real estate apps are competing with real estate agents for clients (also known as buyers and sellers — maybe that’s you!). Let’s take a closer look at both.

iBuyers and cash offers

iBuyers, or instant buyers, are companies that use an algorithm to value your home and then make you a cash offer. Typically, they buy the home “as is” and close quickly, making for a quick and easy home sale.

But there are fees associated with the process. Redfin, for instance, offers RedfinNow, a service that charges between 5% and 13% in service fees to buy your home.

An agent’s commission is typically between 4% and 6% of the sale price and paid by the seller; if a buyer’s 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%.

Online listing platforms

Raise your hand if you have a real estate app on your phone. Real estate apps like Zillow, realtor.com, Redfin, Homesnap, and Trulia, among others, have taken the real estate world — and our phones, tablets, and computers — by storm.

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’re making dinner, and in bed.

Is the agent’s role changing in today’s market?

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.

“I 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,” he says.

He goes on to say, “how 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.”

For Galbally, he still gets the majority of his clients through referrals, but he also gets leads through other avenues — 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.

Allen, who works with 86% more single-family homes than the average Jeffersonville agent, says, “I don’t think we’ll ever be replaced, but our job description will change over time. The activities of an agent are changing.” He views the sources of competition as other avenues he can use to serve his clients.

Are buyers and sellers still working with real estate agents?

According to the most recent NAR Profile of Home Buyers and Sellers 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.

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.

Based on this data, it’s 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.

Benefits of working with a real estate agent

Understand disclosures, paperwork, and contingencies

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’s disclosure before listing the property. When the buyer is ready to make an offer, the agent will help write it — including any contingencies that the buyer wants or needs to include.

A real estate agent can explain each document and make sure you understand what you’re signing as well as help you navigate the contingencies you should include in the offer.

Negotiate on your behalf

Buyers and sellers can negotiate a number of different variables after an offer is made but before the seller accepts, including the home’s 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.

Access to pocket listings

Real estate agents work closely with other agents to keep up-to-date on current listings and upcoming listings.

A pocket listing is a listing that isn’t marketed through the usual public channels. Instead, it is shared privately among agents or directly with clients who may be interested.

Working with an agent means they may be able to find a home that you’ll love before it’s listed on the multiple listing service (MLS), possibly giving you the first look and a chance to scoop it up quickly.

Relationships with vendors

Galbally explains that “a good agent doesn’t just put the property on the market. They use their relationships and influence to get their client the smoothest transaction.”

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’s network of lenders, photographers, staging companies, contractors, and more.

Even if you decide to work with an iBuyer, Galbally says that an agent can help facilitate the process. “I have a relationship with those people so that when I bring them a property, they’re giving me over what they would give anyone else.”

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.

Handle the logistics

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 are all things that a skilled agent will handle while you go about your daily life — and pack up your home and prepare for the move.

Although it’s 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’s a reason why agenting is a full-time job!

Galbally points out that agents do these tasks every day. Because of this, he says, “I know a lot of the pitfalls that are going to come up along the way, and that’s what I save my clients from. I make the process smoother with far less hiccups and problems.”

Do the legwork

Let’s face it, most of us are busy with our daily lives — work, family, social gatherings — and don’t have the time to contact people who may want to sell their homes in the neighborhood we’ve been dreaming of. Luckily, that’s the real estate agent’s job!

Allen calls this “circle prospecting.” Agents will reach out to homeowners in certain neighborhoods to see if they’re interested in selling.

“It’s almost like creating your own inventory for your buyers because there’s just not a lot out there right now,” says Allen.

Whether they’re reaching out to homeowners in your dream neighborhood or sending out mailers to see who’s willing to sell, they’re doing the work that you simply can’t or don’t have time to do.

How agents can stay relevant in a changing market

Remain flexible

While the real estate industry is always changing, change was put into hyperdrive during the early days of the COVID-19 pandemic. 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 — showings and closings are typically in person, and people were wary about having other people (and their germs) enter their home.

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.

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.

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.

Offer high quality services

While I could definitely take pictures of my home and list them online by myself, I don’t 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 — and you probably don’t, either!

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.

Build relationships with vendors and iBuyers

A definite benefit of working with an agent is the agent’s network of vendors, such as contractors, lenders, and photographers.

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.

Will real estate agents be replaced?

Despite the fact that the real estate agent’s role is changing, Allen doesn’t see a scenario in which agents will be replaced.

“At the end of the day, we have something that [online platforms and iBuyers] don’t have, and that’s a relationship,” he explains. “My past clients and my sphere of influence and my family and friends — they trust me, and I have a relationship with them.”

Working with an agent will give you the best experience

Whether you want to take the traditional route of working with an agent to buy a home, or you’re looking to sell and want a cash offer that you can leverage 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.

Given all the benefits of working with a highly qualified and professional real estate agent, it’s unlikely that real estate agents will be replaced anytime soon. So find one you love working with today!

Header Image Source: (Martin Sanchez / Unsplash)

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