December 11, 1998

More home shoppers fall into the Net

By TOM KELLY
The Real Estate Advisor

As online shopping picks up steam over the holidays, so has the curiosity of consumers who now choose the Internet to research homes for sale. Understanding the necessity of using the medium was a major focus at the recent Real Estate Connect '98 in San Francisco. It is an international workshop that featured 80 of the world's top technology, financing and real estate experts.

If there was any question as to the importance of online customers to e-commerce -- including the housing industry -- Robert J. Davis, chairman and chief executive officer of Lycos, came with a variety of statistical answers.

"Not only are we seeing 36 percent of all consumers online but they are also buying more expensive homes," Davis said. "The average home sold in the United States last year averaged about $127,000 while those who are using the Internet are buying homes averaging $173,000. And, by the year 2001, 12 percent of those homes will be financed online."

That, Davis told more than 1,000 conferees, should be plenty of ammunition for the 600,000 real estate brokers and agents in this country to begin to understand the power of electronic communication.

"The things we do online today, we couldn't dream about three years ago," Davis said. "The concept of buying a home online would have been a concept for Fantasy Island several years ago."

What was repeated by every segment of the housing industry -- buying, selling, financing -- was the need to retain the "human element" as a major focus in residential transaction.

"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 on-line listings seemed to sit heavier with the people who list and show property.

However, just because consumers are able to access listings on the Internet doesn't mean the job of the Realtor is out the window, according to Ian Morris, lead product manager of Microsoft's Home Advisor.

"Consumers love to browse and view homes on the Internet," Morris said. "While they will purchase types of goods like books and airline tickets, they absolutely want the interaction of a professional assistant to walk them through the home-buying process."

Ellen Siminoff, senior vice-president at Yahoo!, says Web portals and online business have a simple, common goal: showing consumers the benefits the Internet.

"You can talk about who the winners are -- but the goal for all of us is to build the media for consumers," Siminoff said. "It's not about grabbing market share, or being No. 1 today. But it's about what we're all doing to evangelize."

The urge to charge for more services is a poor tactic, Siminoff said.

Consumers feel that "free has become synonymous (with the Internet) and expect a lot for free," Siminoff said.

Even now, rather than consumers surfing for their dream home, the dream home will, in a sense, find them. Shoppers simply post their needs, wants, location and general financial situation and wait for a phone call or e-mail when a property that fulfills their fantasy comes on the market.

Jed Katz of RentNet called real estate and technology a "match made in heaven" especially since many services are free to the public. RentNet, for instance, offers unlimited space for descriptions of rentals.

As for the decision to embrace the Web -- well, there is no decision. Analysts are predicting $3.2 trillion in e-commerce business by 2003, about 5 percent of the world's economy.

"Those who wait until the market stabilizes will go the way of the dinosaurs," Davis said. "If you don't take advantage of it, then it could eat away at some of the market share of some of the mainstream businesses in this country.

"Take, for example, Borders Books. They had a specific corner of the market. But look at what Amazon.com has done online. You can't tell me that there are no 'what ifs' being asked there."

Previous columns:

• RV owners can get a tax break, 12-04-1998
• Who owns listing to your home?, 11-26-1998
• Tuccillo sees 1999 as great for housing, 11-20-1998
• Realtors' web site is on a roll, 11-13-1998
• Wake-up call for borrowers, 11-06-1998
• Some folks fall through cracks in refinancing, 10-23-1998
• An update for real estate's 'Bible', 10-16-1998
• A look at why we move, 10-09-1998