Informed Consumers Are Reshaping Your Job

March 1, 1997

Get used to it: Today's buyers and sellers are smart. We'll show you how smart here, and introduce you to a particularly savvy Internet-influenced group called Generation X. Contrary to the popular notion that they're just lying around at Mom and Dad's house, they're actually a group who can and do buy property.

You'll also get the skinny on how to work with America's fastest-growing population segment--Hispanics and Asians. If you aren't working with them yet, you will be.

In Bonnie Sparks' corner of the Midwest, where Interstate 80 cuts through the Iowa-Illinois border and over the Mississippi River at the Quad Cities, the notion that consumers are vastly more informed these days on matters of real estate isn't a subject of debate.

What has salespeople talking in Davenport, Rock Island, Moline, and Bettendorf is how consumers are using the mother lode of information in digital databases, in print, on cable TV, and on the airwaves to reshape an industry. ''The number of people of all ages who understand how to find information and use it to their advantage is increasing,'' says Sparks, vice president of Ruhl & Ruhl, an independent brokerage in the Quad Cities.

It's a topic discussed from coast to coast, and it's providing a healthy exchange of ideas that's waking up the industry, which has been called one of the slowest in the U.S. economy to embrace technology.

As sources have grown exponentially in the past decade--on-line databases on property tax records, school district demographics, crime statistics, and property assessments--consumers are arming themselves with valuable information they can use to find and then buy properties. Current estimates are that there are 20,000 real estate--related sites on the World Wide Web, the portion of the Internet that contains graphics and text. And roughly 2,000 sites are being added every month.

''Consumers have shown a willingness to learn, and they're finding all this information. If they come through the door and get the feeling they know more about a property or a town than you do, they'll go someplace else to find a smarter broker,'' says Helen Poivesan, director of corporate technology, who set up a home page on the World Wide Web for Daniel Gale Real Estate, headquartered in Huntington, N.Y.

Sales as a direct result of a home page are infrequent. But that hasn't stopped many from using it as a marketing tool. ''It's all so new, but we think using the Internet helps get our name out there,'' says Susan Geist, a salesperson and director of marketing at Daniel Gale Real Estate. ''The sales will come, but for now, it's another way to market.''

For some practitioners, embracing new technology will be too hard to handle, but for others, there'll be opportunities. ''You're going to see a lot of former practitioners in a few more years,'' says Peter Miller, a Maryland-based broker and the creator and host of America Online's Real Estate Forum. But that doesn't necessarily mean there'll be drastically fewer jobs in the business.

Miller says there's a real fear among some practitioners ''that all this access to information will mean a reduced need for them.'' In fact, ''it has created greater respect for practitioners, because informed consumers understand the complexity of a real estate transaction, with all its disclosure forms and sales agreements.''

In addition, Stuart Wolff, chairman and CEO of Los Angeles-based RealSelect Inc., which will manage, promote, and expand the consumer side of the National Association of REALTORS®' Internet site, REALTOR.COM, says educated consumers who use the Internet are beneficial to practitioners. ''Using the Internet removes barriers, such as fear, that might cause consumers not to enter into or to delay a transaction,'' says Wolff. ''Access to the Internet and REALTOR.COM might empower them in the largest financial transaction of their lives and get them closer to entering a transaction. With REALTOR.COM we're also educating consumers about the products REALTORS® sell.'' The REALTORS Information Network, a wholly owned subsidiary of NAR, owns 15 percent of RealSelect.

Creativity Will Breed More Deals

A Texas study, however, reiterates a fear that real estate practice might be undermined. In the fall of 1996, John Baen and Randall Guttery, professors of finance, real estate, and law at the University of North Texas, argued, in an article for a Texas A&M University publication, that the increase of available information ''will devalue information and services previously available only through real estate licensees'' and could mean a dramatic decrease in commissions.

''I know practitioners don't want to hear that, but that day is coming,'' says Baen, who's also a licensed broker in Texas and a real estate investor. ''There'll be a lot of pressure to be creative to make more deals.'' His advice to salespeople: ''Be proactive rather than reactive in terms of offering associated services and discounts. You'll hear more brokers doing such things as, 'You list with me if you're selling and also buying, and I'll waive the commission on the resale or the purchase.' ''

To salespeople quaking for fear that more access to information and more consumer use of the Internet will inspire a growth in FSBOs, Jack Harris, a research economist at The Real Estate Center at Texas A&M University, College Station, says, not necessarily so.

He cites NAR's 1995 Targeting Prospective Homebuyers and Sellers, which indicates that in 1989 about 16 percent of consumers who sold their property used no real estate professional. The following year the number dropped to 15 percent, and in 1995 to 12 percent.

But the most telling number, Harris says, is that in 1995, 2 percent of consumers who sold a house said they chose a company because the salesperson listed homes on-line. ''That's a category that's never been cited in the past,'' Harris says. ''And I think you'll see that stat grow in the future.''

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