Fast, efficient, stress-free. Consumers and clients do not want to be hassled with waiting for answers.
Many technology-based brokerages are taking advantage of this fact - and are rapidly expanding because of it. In addition, they are lowering transaction fees, sometimes as low as 1-2%.
This raises the question: if you are an agent in a traditional brokerage, earning 5-6% commission on a listing transaction, what VALUE are you adding that other brokerages cannot?
Redfin Estimate allows a seller to get an estimate on their home before it goes on the market. According to Redfin, the tool has a median error rate of 1.71% for on-market homes and 6.25% for off-market homes. Redfin also charges as low as a 1% listing fee, making this customer-first brokerage appealing to consumers.
The market will always tell what a home is actually worth. But with an estimate tool, seller can figure out where they might want to price the home, or if it’s the right time to sell.
With all other iBuyer platforms, sellers input their home, and an offer is extended. On the Real Word episode 045, we discussed how Redfin requires more work from the homeowner. Redfin sends the homeowner 25 comparable properties, and the homeowner picks the five that most closely match the features of their own home and adds in all of their updates.
The problem with estimate tools
When a seller is inputting their opinion and value, there are often emotions that can influence their number.
Agents hear it every day.
You could be sitting in a neighborhood where every house looks the same, and there will be a seller that looks you straight in the face and says, “Nobody in this entire town has what we have here.” Despite the fact that every home in the neighborhood is a 4-bed, 2.5 bath colonial, sellers are often insistent that their home is exceptionally different. When an agent or appraiser comes to look at the house in person, their opinion may be different than the seller had in mind.
So, what is the upside?
The Redfin Estimate gives a lot of information to both the seller and the agent, especially when the seller is able to put emotions aside and remains objective throughout the process.
Remember, even an appraisal, along with any marketing analysis that realtors do, is all an opinion of value.
The seller’s opinion of value can be just as important as the appraiser’s and agent’s opinions. Sellers SHOULD be included. They know their home really well, and their input is a valid data point when able to stay unbiased. Nothing will ever beat an experienced agent’s feel for a market that is selling homes every week.
What do estimate tools mean for agents?
Estimate tools give the agent a data point for the listing price. If the seller goes through the process, puts in all the information, and gets comparisons, this puts you on second base. You can say, “Hey these were three excellent comparisons that you picked. Here’s why these other two, in my experience, might not be to best to compare with.” And then you work through it from there. It’s actually an easy opportunity for a knowledgeable agent.
It shows how serious the seller is. If sellers are realistic about the number and pull the right comps, you know that they really want to sell and understand the market. This gives you the opportunity to prepare how you will go into the listing meeting.
With the technology that is here, it’s becoming more accessible for a seller to get down to the number of what their house is worth WITHOUT an agent.
Wait - the seller doesn’t need an agent to determine value?
Not in the same way they did 5-10 years ago. In 2019, consumers have almost as much data as an agent. I believe they will have 100% of the data in the next five years. The role of the agent is changing, meaning an agent needs to provide value in other places: marketing, transactions, listening and connecting the dots for the seller.
How to provide more value than a 1% listing fee
Stay ahead of new technology. Technology and the demand for immediate action is here to stay. Make sure you are utilizing the best technology and most current resources to make every step as easy as possible for your clients.
Exposure. Marketing is paramount in getting homes sold. Homes must be exposed to the right people through the right platforms. Study the demographics in your market and apply the most cutting-edge marketing strategies so that every property you list is reaching more qualified buyers.
Transactions. During every transaction, there will be questions, setbacks, issues, and negotiations. These moments require a knowledgeable agent who takes action. By continually educating yourself about the current market, real estate laws, and strategies and skills for negotiation, you will always have value to add.
Listen. In the end, it is all about the client. Brokerages, agents, even brands, add value every time they listen and provide excellent customer service. It may be as simple as asking how their child is feeling after getting over the flu, remembering a special anniversary, or sending a handwritten thank you note. Through listening, you will get to know your clients on a personal level, as well as what they need in a real estate transaction. This will enable you to serve your client better than anyone else.
While brokerages like Redfin are gaining more traction, the majority of sellers are still choosing to list with agents who with higher listing fees. Why? Because, in the consumer’s mind, the value the agent is able to provide is worth more than the savings on a listing fee. As the real estate industry continues to change, the agent role will change right along with it. The one question you can always keep at the forefront of your mind is:
How will I add value TODAY?