August 8, 1997

How wired will real estate get?

By TOM KELLY
The Real Estate Advisor

SAN FRANCISCO -- Using the Internet to get real estate information will become as commonplace as using the telephone and few if any real estate companies will be able to survive without it. Understanding the necessity of the medium was a major focus at the recent Real Estate Connect '97, an international workshop that featured 80 of the world's top housing, office and computer experts.

"This will become such a part of our industry" said Bellevue resident Phil Jennings, founder and chief executive officer of Teleres, a leading provider of commercial real estate news and information. "Wouldn't it be crazy to hold a conference in San Francisco to talk about how we use the telephone? That's how the Internet will soon be seen."

However, downtown isn't always our town. The need to retain the human element in buying, selling and financing real estate should remain a major focus in residential transactions, panelists stated.

"Value today is connecting the consumer," said Cameron King, executive vice-president for Countrywide Home Loans. "Value is not in an electronic loan application nor the information coming from it. It is helping the consumer find information and then establishing a relationship by following up, face-to-face."

While mortgage bankers stressed the need for continued personal service, the fear of computer access seemed to sit heavier with the people who list and show property. Some real estate agents here said many of their associates have left the business because they don't want to learn new technology or they are upset over once-taboo information now being provided to the general public.

Those decisions were premature, according to Mike Barnett, president of Barnett Technology Group, an active real-estate broker whose Scottsdale, Ariz.-based company develops and designs Realtor home pages.

"Just because consumers are able to access listings on the Internet doesn't mean the job of the Realtor is out the window," Barnett said. "The Internet will simply help them do a better job. If they don't figure that out, they will soon be gone."

Barnett said creative agents have "seen the light." Dallas is a good example. Members of the Greater Dallas Association of Realtors started their own public access system, basically handing consumers listing information on a silver platter. The information includes the seller's name and address and the name of the listing agent. But so far the majority of inquiries from potential buyers have been directed to the listing agents -- not the sellers.

Warren Myer, whose San Jose-based Myers Internet Services, a leading provider of electronic options to banks, mortgage companies and credit unions, emphasized that consumers' expectations will not be met without huge doses of the human factor.

"The Internet can be a cold, unappealing place," Myer told the conference attendees. "Whether you are a banker, broker or agent, you need to make your home page look and feel like your office. Make it personable and inviting. Nobody likes going in to a cold, dark office. Any stop that a consumer will make on the Internet should be no different."

Mark Hilton, vice-president of marketing for Be Here Corporation, a San-Jose-based company specializing in digital photos and "virtual walkthroughs" of commercial and residential real estate, said the best photography will probably not replace the actual tour.

"Agents will continue to spend hundreds and hundreds of hours taking people through homes," Hilton said. "However, this product can give a consumer an immediate idea of the home's style, tradition and contents."

William Millichap, principal of Marcus & Millichap, a real estate investment brokerage, said the broker-principal relationship in commercial and industrial sales probably will never change.

"Investors are not going to spend $20 million on an office building they haven't seen," Millichap said. "They are going to not only see it for themselves but will work through a broker who can facilitate and professionally present the offer.

"They are going to work through somebody who knows what they are doing. I don't see that changing."

Teleres, which announced it had introduced two new Internet products to track and analyze real estate investment trusts, said it would continue to offer dial-up options for the commercial investor.

"The increasing securitization of the real estate industry, especially the phenomenal growth in the real estate investment trust sector in recent years has pushed the needs of serious investors beyond the comparative simplicity of other REIT indexes and information tools," Jennings said.

Research options will be the critical factor for investor clients said David Weissman of REdirect, who, along with Jennings, spent more than a decade in banking.

The Net will put some "intermediaries in peril" Weissman said of broker/agents who fail to take advantage of new electronic tools. However, only "the glorified Xerox artists" who provide little genuine investment insight for clients will be in jeopardy.

"You are not going to see $20 million buildings being bought and sold, sight unseen," Weissman said. "But some major decisions will be made electronically."

Will the World Wide Web be a major factor in actual commercial and industrial real estate sales by the year 2002?

"The Web will not have a major impact on the commercial/multiple residential real estate business by 2002, with the except of the apartment locator services," Millichap said.

"Cost is a major issue and much of the information is available free -- along with the fact investors like to deal face-to-face. By the year 2007, the Web will probably have one or two entities that have figured out how to create value and get paid for it by using the World Wide Web."

Internet set-up and maintenance costs have been the focus of many budget meetings.

"Never have we seen millions spent to make thousands," said Countrywide's King.

Previous columns:

• Taking a look at The Street of Dreams, 08-01-1997
• What to do about that vacation home, 07-25-1997
• Vacation homes and taxes can be a confusing combination, 07-11-1997
• Capital gains change is hot housing topic, 06-27-1997
• More lenders willing to take a big gamble on home loans, 06-20-1997
• Look gift houses in the mouth, 06-13-1997
• Affordability not just problem for first-time buyers, 06-06-1997
• Dr. Disaster fixes notorious properties so they can be sold, 05-30-1997