Though there is lots more real estate information online–e.g., Zillow–when people sell and buy houses, they still go to real estate agents, 5-6% commissions and all.
Either this is a niche that needs filling–if you can do so, remember me when you come into your billions–or this particular industry demonstrates the commercial limits of the internet.
Which is it? What makes real estate agents immune from competition from the internet?
Illustration from Pixabay, Creative Commons, Public Domain
From Todd C. Frankel, In internet age, homebuyers still turn to Realtors, The Washington Post:
While the internet has pummeled the middlemen in many industries — decimating travel agents, stomping stock-trading fees, cracking open the heavily regulated taxi industry — the average commission paid to real estate agents has gone up slightly since 2005, according to Real Trends. In 2016, it stood at 5.12 percent.
“There’s not a shred of evidence that the internet is having an impact,” Murray said, sounding like he almost can’t believe it himself.
The stickiness of the real estate commission is a source of fascination for economists and curiosity for consumers who are doing an increasing share of the homebuying legwork themselves online. It also offers potential lessons for workers in other industries worried about the Internet’s destructive powers. The Web has changed how agents hustle for a share of the estimated $60 billion paid each year in residential real estate commissions. But it hasn’t taken their jobs. In fact, the number of agents has grown 60 percent in the past two decades.
It wasn’t supposed to be like this.