Is digital home marketing pushing the middleman out of the picture?
Toronto has seen a 100% increase in real estate agents over the past 10 years, with everyone from college dropouts to retired professionals breaking into the occupation due to the hot and lucrative real estate market. But in a technologically driven society, which has increased as a result of the pandemic, will real estate agents continue to be the compass we reach out to, to guide us when we sell our homes?
Currently, there are 39,000 real estate agents in the Greater Toronto Area, which has doubled in the past 10 years. The recent real estate frenzy in Canada has caused thousands of people to feverishly complete the real estate exams in the hopes of earning large commissions like the realtors they see on “Selling Sunset” on Netflix.
Make no mistake, realtors have to hustle to be competitive in this business to make a living, but it's usually just a small group of realtors that are selling the elite homes, and you'll see their faces on the bus that travels by you on your local city street.
The trend to work as a realtor is very apparent in Toronto, and there are currently more realtors in the city than there are teachers. In fact, when you look at the labor force in the GTA, approximately 1 out of every 59 workers in Toronto is a realtor - that means that the person standing behind you in the line up at the grocery store or buying their coffee at the same Tim Hortons you frequent is likely a real estate agent.
Home listings on a platform like Realtor.ca, which is a Multiple Listing Service (MLS), allow us to browse home listings as easily as shopping for a favorite pair of jeans. Thus, it seems like real estate agents may be slowly losing ground as the middle man in our real estate transactions.
In the U.S., platforms like Zillow and Redfin show pictures of thousands of properties, and on the website, IBuyer, consumers can upload pictures of their home and sell their home to the IBuyer without ever having to stage in-person showings.
In Canada, the Realtor.ca website, which was created by the Canadian Real Estate Association, is a massive marketing tool with 240 million hits per year by people looking for their next dream home.
In 2010, the CREA changed its rules and allowed private sellers to post home listings on the MLS system for a small flat fee, which is paid to a real estate brokerage. From there, the seller can choose to manage their home sale independent of the broker.
The broker isn't involved in arranging any home showings or negotiating any incoming offers, and homeowners can coordinate their own real estate negotiations while saving thousands in real estate commission.
A flat fee to show your home on the MLS service on Realtor.ca can range from $99 for a basic MLS post to $800 if other realtor services are included. Homeowners who are venturing into this territory should expect to devote a lot of their time and energy towards selling their home if they choose to cut corners and go it alone. It's sometimes worthwhile to pay the broker who posts your ad for add-on services like taking flattering pictures of your home for the MLS listing, staging your home, or even renting their lockbox.
With the preponderance of digital marketing real estate sites, this begs the question: Do we really need to hire a real estate agent to manage our real estate transaction? We can avoid hiring a real estate agent by viewing home showings online. In fact, due to the pandemic, the Realtor.ca website has substantially increased live stream open houses on their website, which cuts out the need for attending in-person home showings.
But even if you choose to go it alone and post your ad on the MLS, you're likely going to rub elbows with buyers’ agents that contact you on behalf of their clients. And don't forget you'll need to pay the buyer's agent at least 2.5% commission, so it's likely that you won't be able to eliminate real estate commissions completely.
Benefits of a Real Estate Agent
It’s worthwhile considering that for many people, their home is their prized possession and their biggest asset. When you're selling your home, you want to be certain that you're going to get top dollar, and sometimes, hiring an expert is the only way to go to make sure you're not falling for low ball offers in a time of increased stress and uncertainty when listing your home.
If you're looking to purchase a home, sometimes it's best to have an agent go to bat for you in bidding wars to make sure that you don't overpay for a property that might not be lucrative in the long run.
In a May 2020 online survey by SLRG, 62% of home sellers reported that a real estate agent’s guidance was extremely valuable. They also believed that an agent could help them find more valuable information about homes online than they could do on their own. Additionally, the majority felt that it's even more important during the pandemic to have a real estate agent negotiating for them when buying a home.
Most importantly, real estate agents can provide a range of services to make sure that you're not shortchanged when you put your home out there in the marketplace. From drone photos of your home and the neighborhood to home staging and attractive photos, your agent can bump up your selling price by thousands of dollars.
Real estate agents are also experts at analyzing your neighborhood and determining a list price for your home. Good real estate agents also have a vast network of connections, including mortgage brokers, real estate lawyers, and lenders, which might help you in snagging a great mortgage rate or finding a good lawyer with reasonable legal fees.
The average homebuyer can perform many tasks online from the comfort of their home, including estimates of their property, researching neighborhoods, looking at property listings, and even having access to live streams of home showings and 3D tours, but a computer can't go to bat for you and negotiate when push comes to shove in the midnight hour.
Your agent also knows how to craft a property description on the MLS that'll attract buyers and put together a contract, which will protect your interests when selling your most prized possession.
They can also act as diplomats and smooth ruffled feathers when disagreements arise during the negotiation process. They’re also experts at understanding complicated sales transactions that can be found in more complex sales like assignment sales or commercial real estate.
If you're a first-time homebuyer and are just venturing into new territory, you're likely unfamiliar with all the nuances of buying and selling a home, and having a real estate agent on your side is probably your best bet.
Likewise, if you're living in a $3 million mansion, you probably wouldn't want to be vetting potential buyers on your own, and you'd be more than willing to pay an agent, who will protect your privacy and sort out the serious buyers from the browsers.
If you're going to put your trust in a real estate agent, make sure that they're savvy with online marketing, virtual tours, and online paperwork with virtual signatures. This will increase the efficiency of your real estate transaction, and you'll be able to conduct most of the cumbersome negotiations with your iPhone.
Look Before You Leap
Even though today's typical homebuyer, a middle-aged millennial, may be motivated to take charge of their home buying venture, it’s wise for them to proceed with caution, especially if they're a first-time homebuyer.
The home buying process can be fraught with anxiety and can take up all your time searching for your dream property. Real estate agents, with their expertise in negotiating, marketing, and their myriad of connections with other real estate professionals can pave the way for an easier and more profitable home buying and selling experience that will put money in your pocket.
If you do choose to market your home on your own, it might be worthwhile to spend a few hundred dollars to obtain extra real estate services, such as professional photography and home staging, which can bring you thousands more when selling your home. Real estate agents, although they are in a tenuous position in today’s high-tech society, are likely to remain the pivotal point in our real estate transactions.