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Wednesday, January 25, 2017

In This Internet Age, What’s the Future of the Broker-Centric Real Estate Model?

When I earned my real estate license back in 2003, web-based software was just beginning to take hold.  There were still vestiges of the “old school” around, best typified by the bound books of listings which were still being printed and used by some long-time brokers.

It wasn’t until a few years later that the printed books were discontinued and the older brokers either retired or came kicking and screaming into the 21st Century.

Then the iPhone was introduced in 2007 — 10 years ago this month. I’ve been reading Thomas Friedman’s latest book, Thank You for Being Late, in which he devotes a chapter to “What the Hell Happened in 2007?”  Facebook had just opened to non-college students and started to scale globally. Twitter was created in 2007 and Google launched Android. Kindle was introduced that year. So was LinkedIn.

Sustainability began to go mainstream, too. According to Friedman, 2007 was “the beginning of an exponential rise in solar energy, wind, biofuels, LED lighting, energy efficient buildings, and the electrification of vehicles.”

Now, just 10 years later, we’re in a different world. Travel agents have been decimated by the public’s ability to shop for and book their own travel online, and online purchases are threatening brick and mortar stores, cutting into the sales tax revenues of local jurisdictions.

Will real estate brokers go the way of the travel agents, now that over 90% of buyers do their own house hunting online, and sellers can list their homes online at little or no cost?

There are good reasons why the answer is “no.” Although there continue to be off-MLS sales of real estate — as there were before the Internet —  people still see the need to hire a professional on both sides of the real estate transaction. After all, buying a home is a far more complicated process than buying a car or refrigerator, and, unless you buy and sell homes frequently, there’s a lot that you may not know about the process.

Just last weekend, a first-time homebuying couple came to our office, curious about, and somewhat overwhelmed by, the process ahead of them in moving from renting to home ownership.  As I answered their questions, I was reminded of how much I have learned about real estate that I didn’t know before I entered the business — even though I had bought and sold a half dozen properties in New York, Hawaii and Colorado before becoming a Realtor.  Yes, experience really does count!

For any seller, getting under contract is only the beginning. A whole series of tasks and challenges lie ahead.  And what if there are multiple bidders for a home? At you’ll find several columns in which I shared strategies for buyers and sellers to succeed in this highly competitive seller’s market. But, again, that’s only the beginning of a long process in which an experienced broker like the ones at Golden Real Estate can help both buyer and seller get under contract and reach the closing table without problems.

For the seller, nothing can take the place of a trusted showing service, which is only available through a licensed agent. Yes, you can buy a lockbox at any hardware store, but you need a showing service to grant showings only to licensed agents and not to people pretending to be licensed agents. Only licensed agents are fingerprinted and subject to criminal background checks. A good showing service also has an automated system to collect and forward feedback from showing agents.

Buyers need guidance on finding a trusted local mortgage lender.  (We discourage the use of online lenders.)

The first big hurdle after going under contract is inspection. Buyers need help finding a trusted inspector, especially here in Colorado, which has yet to license that profession. Then both parties need help reaching resolution on which inspection issues the seller will and will not address.  I could write an entire column on this subject.

There are legal requirements regarding HOA documents to be provided as well as about lead-based paint hazards in homes built prior to 1978. In the latter case, failure to complete the proper disclosure on time can result in a 5-figure fine.  (It also voids the contract!)

There are other times between contract and closing when an experienced real estate professional adds value, not to mention such benefits as, in the case of Golden Real Estate, free moving trucks and packing materials.

NOTE: Buyers typically don’t pay for professional representation, because their agent gets a split of the listing commission paid by the seller. Moreover, if you have a home to sell, you can negotiate a lower commission on the sale of your home if you allow your agent to earn a commission when you buy your new home.

Published Jan. 26, 2017, in the YourHub section of the Denver Post and in four Jefferson County weekly newspapers.

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