real estate agent? Hasn’t the internet gotten rid of them yet?
I hear this question all the time. Most people assume that real estate portals in India are working to eliminate agents and facilitate direct interaction between the seller and the buyer. Although this is partially correct, real estate agents are the main clients of these portals and the portals are doing their bit to facilitate their growth. We interact with agents every day and see that most of them are doing good business. I want to take some time and explain the dynamics behind Indian real estate, the role agents play, and how the role of agents is going to change in the future.
Note – Throughout this article, I have focused only on the rental and resale market and have not gone into the sale of new properties by developers, since the dynamics of that market are radically different. Also, the scope of this article is limited to Indian real estate.
“MakeMyTrip has eliminated travel agents. So why hasn’t the same happened with real estate agents?”
You need to understand that ticketing is now a point-and-click industry: travel agents have been replaced by computers. The process of obtaining travel information AND purchasing tickets can be done online. Real estate is fundamentally an offline process. Although information aggregation is an important part, site visits, negotiations, and paperwork must be done offline. Even from an owner/seller perspective, renting/selling a home isn’t as simple as posting it online – the process can take months. This is where real estate agents come in: guiding clients through the offline portion of the transaction, getting both parties to agree to the terms, and finalizing the paperwork.
Why don’t real estate portals try to eliminate agents and become virtual intermediaries?
A real estate portal provides a platform for a seller and a buyer to interact (a seller can be an owner, builder or agent). If we remove agents from this equation, portals are left with a C2C platform where owners are the sole source of inventory. Although many prefer a scenario like this, we need to figure out how the platform provider is going to monetize this setup. They have the following options –
commission list – They may charge a fee to the owner/seller to list their property. There are few owners who are willing to pay for premium listings (last time I checked, about 5% of owners who post online were willing to pay), but this is simply not enough to sustain business. Indian consumers are ready to use a service that is free (free listings) OR pay for a service once it is provided (brokerage), but they are not okay with anything in between.
Charge property finders to obtain owner information – Another option would be to charge property finders a fee to provide them with information about the listed owner. This is also not a sustainable option because owners who list online tend to list on multiple portals and you can always find a portal that gives you the owners information for free.
Brokerage fee when deal closes – This would be an excellent monetization scheme that everyone would be willing to pay for, but it is very difficult to implement. To do this, portals need to keep track of every deal that is closed offline and that would be next to impossible.
There may be more options, but I really don’t see them becoming big ‘income generating machines’. Running a real estate portal is a VERY expensive affair and portals would need a strong revenue stream to offset that cost.
This is where real estate agents come in: Agents are willing to spend a good amount of money to market their properties on a platform that would give them good leads. Real estate portals see this as a steady and sustainable stream of income. This, apparently, is a match made in heaven.
So are you saying that real estate portals have not been successful in the brokerage industry?
They certainly have. Big time! With many owners listing their properties online, agents are starting to feel the pressure. Coupled with the fact that the number of real estate agents has nearly tripled in recent years, you’ll see that the average real estate agent made MUCH less in 2014 than they did in 2011. Agents are starting to realize there’s a paradigm shift and it’s time to make amends, before the game is taken out of their hands. There has to be a change in your mindset and it has to happen NOW.
Role of the 21st century real estate agent
10 years ago, agents practically charged money for information arbitrage: “I have landlord/tenant contact information and you have to pay me money to get this contact” was the mantra and it has worked. A disproportionate amount of money was charged for this seemingly simple service and the world continued unscrupulous mainly because there was no alternative. But now there is. Increase in owner listings on portals, multiple increase in the number of real estate agents, internal portals in corporate companies that help employees find accommodation, Facebook groups, etc. all have impacted the brokerage industry and need to be reviewed.
“What is dangerous is not evolving, not inventing, and not continually improving the customer experience”: every real estate agent in the country should understand these words spoken by Jeff Bezos, CEO of Amazon. Information arbitrage can no longer be the game of real estate agents: we are moving towards a world where access to information is becoming easier and this can no longer be the USP of why a property seeker comes to to a real estate agent. I believe agents should adopt the following practices:
Save time for your clients: In today’s world, no one has time to do things (even if they do, people don’t want to spend their time house hunting). Saving time for your customers is probably the best value-add an agent can provide. Be updated on the latest inventory that is available in the locality. If you’re not sure if the client will like your property, tell them! Don’t drag them into a dreary apartment in which they will never, ever be interested; they will lose trust in your sense of judgment and will never come back to you again. Learn to truly understand what your customer wants, be equipped to find the most relevant inventory, walk them through site visits, and close the deal. A really good agent should be able to close a rental requirement in 7 days and a resale requirement in 1 month, tops.
Provide as much information as possible: Instead of hoarding information, agents should dispose of it freely. Tell your clients exactly which apartment society the property is in, tell them exactly how far it is from the bus stop, and tell them if the landlord/tenant isn’t comfortable with someone in your demographic. In the long run, this helps build a better relationship with customers. Sure, other agents (or your own clients) can contact the owner/seller without you, but in the long run, this is what will work.
Embrace technology, don’t fight it: Apart from WhatsApp, agents don’t use their smartphones for any business activity. Why is this so? For starters, there are plenty of CRM apps on the app store that you can use. This alone will improve your productivity 100 times! Other applications for inventory maintenance, marketing, etc. they are available but are not being consumed by the agents.
Develop skills that a computer/technology cannot do: a computer can never negotiate a good deal for the customer; that’s a job that requires a human touch. A computer can never have an idea of what the customer really wants: agents can since it is always with the customer. This is a relationship driven industry, make sure you always remember that.
Use Social Media as a Marketing Platform – When property owners use Facebook as a marketing platform, why shouldn’t agents? Creating a Facebook group to market your listings is a great way to reach new customers. There are some agents that already do this and are getting good feedback from it.
Be professional: As cliché as it sounds, going back to basics is something every agent should do. Being punctual, dressing formally, and speaking politely to customers are some key skills agents need to practice. Again, there are agents who have good manners, but the number seems to be dwindling.
The list can go on, but I can sum it up this way: If you’re a real estate agent, think about what you were doing for your business 5 years ago and compare it to what you’re doing today. If nothing much has changed, understand that he will be laid off in the next few years. The world is changing and only those who change with it will live to fight another day. Portals have evolved, house hunting has changed for end-customers, and it is time for the role of the real estate agent to change as well.
How are we positioned in this complicated market?
Our vision has always been to build a technology-driven real estate agency that works to help our clients find a home they truly love. We do this by combining cutting-edge technology and experienced brokerage. We are adding great real estate agents to our team, providing them with next-generation mobile apps/desktop products to better run their business, helping them understand the market as it is today, providing training sessions and learning material, and ultimately helping them serve customers better. Given the amazing response we’ve received from customers and agents so far, we’re confident about the way forward.
