July 23, 1999

Realtors debate Net's role

By TOM KELLY
The Real Estate Advisor

Alex Perriello, president and CEO of Coldwell Banker Corp., said the goal in real estate should be a paperless, residential transaction -- yet he was nearly alone in that belief.

"The pieces are still too far apart to pull together what now exists," Perriello said at the recent Real Estate Connect '99 conference. in San Francisco. "The real estate deal now looks like the electrical design of a Toyota. We need to find another way of bringing things together and absolutely including the human element when the consumer wants it in the transaction."

National Association of Realtors President Sharon Millett, who said NAR and individual agents defied critics who predicted their pending demise because of the Internet, said salespersons will forever remain key figures in driving transactions and being the first points of contact.

"We offer things that pushing a button on a computer can't," Millet said. "It's not a book or a CD, but the most important purchase they'll ever make."

Perriello and Millet were members of a panel discussing a new industry study published by Inman News. According to a survey of nearly 3,000 real estate professionals in 30 states, the enthusiasm over technology is greatest among the "new breed" of online real estate professionals. Yet virtually no one in the industry denies the Internet will be a very significant part of his or her future.

Pierriello was in the minority of believers in a paperless transaction. A question about the paperless deal in the survey found only 10 percent of agents and brokers thought the paperless deal will ever become a reality, while 30 percent of online real estate professional had faith it would. Of those who thought digital deals were possible, 41 percent thought they would happen in the next two to five years, while 23 percent believed they would come within 5 to 10 years.

Both the "online" and "traditional" real estate groups agreed that agents and brokers manage the current real estate transaction, but by varying margins. Eighty-five percent of brokers and agents believed they were the ones in control, but only 58 percent of online real estate professionals agreed.

The results include a general belief by the online realty crowd that Web-based services are immune from economic downturns, while the more experienced traditional professionals know better. The survey also showed that online realty services have not yet caused agents or brokers overall to reduce their commissions or fees. For those professionals who did lower fees, there were others who raised them, the study found.

The online players generally believed the cost of buying and selling a home would drop within 10 years thanks to the Internet. Nearly one-fifth of online professionals thought the consumer already controlled the transaction, and nearly a third of all respondents thought the consumer would be behind the wheel 10 years from now.

Agents and brokers may be bullish on the importance of their roles, but they are also aware of the possible impacts on their profession in the future -- again, thanks to technology.

"However, I have not found a computer button yet that I can push to help me with a crisis on closing day," Millett said. "For example, if the seller takes that chandelier out of the dining room and the buyer discovers it's missing on the final walk through, tell me where on the Internet I'm going to find a solution."

The view across all job categories was similar regarding the impact of technology on the profession -- 75 percent said it was an important aspect of their business. Meanwhile, a majority also agreed the practice of real estate has changed moderately since the first online real estate sites were launched around 1995.

Although some analysts say Web advertising is losing its appeal and click-through rates are declining, Marketwatch.com CEO Larry Kramer, former executive editor of the San Francisco Examiner, is bullish on the medium.

"There is so little advertising now that if Coca-Cola decided to start using the Web, the total amount of advertising would double overnight," Kramer said.

Guy Kawasaki, former Apple Computer executive and now president of Garage.com, an Internet site that links start-up companies with investors, said the web is only in its infancy.

"If we were going on a cruise from San Francisco to Honolulu, our ship would just be passing under the Golden Gate Bridge," Kawasaki said. "It's that new."

Previous columns:

• Are too many millionaires ruining the area housing, 07-16-1999
• New tool in online property marketing, 07-02-1999
• Fixing up the home, 06-25-1999
• A father's gifts to his son, 06-18-1999
• Supply, not higher rates, restricting home sales, 06-11-1999
• Make sure mortgage is a safe assumption, 06-04-1999
• Is it time to refinace again?, 05-28-1999
• Slow sale? Suggest a lease option, 05-21-1999