SAN FRANCISCO – Real estate agents are not an endangered species – they are just an evolving breed – according to a panel of executives who are leading real estate companies that have a flair for technology.
Just as station wagons evolved into SUVs, real estate is changing to accommodate new consumer preferences, said Eric Danziger, president and CEO for ZipRealty who spoke during a panel today at the Real Estate Connect 2005 conference.
“The customer spoke, this company responded. It’s just an evolution,” Danziger said. We are to the (real estate) business what Amazon is to Borders. It’s just an evolution.” ZipRealty, which has about 1,300 agents, drums up most of its new business through Internet leads – about 70 percent of leads are generated online, he said.
Also, the company’s agents are employees who receive benefits, including 401k plans and stock options, he said. Consumers who work with the company’s agents receive a rebate or commission discount.
While new business models, which in some cases offer discounts compared with traditional pricing for real estate services, have excited a negative reaction from some well-established industry players who charge that lower price equates to lower service, Danziger said, “There is plenty of room for everyone. All models have the opportunity to succeed. We’re in the same sport (but) we’ve got different uniforms.”
Other panelists at the session, “Innovating to Success: Turning Old Models on their Heads,” included Ian Morris, CEO of HouseValues, a company that offers lead generation and customer management systems and training; and Van Davis, president and CEO for Foxtons USA, a discount real estate company that focuses on efficiency through specialization of real estate duties.
Foxtons, like ZipRealty, employees its agents and offers them benefits. Foxtons agents work for a discounted commission. At most real estate companies, agents are independent contractors and pay for their own health coverage. And unlike traditional real estate agents, Foxtons agents work either exclusively with home buyers or exclusively with home sellers.
There are employees who handle Internet and telephone leads, a team who follows the transaction process from contract to closing, and a team who are in charge of multimedia displays for property listings, including virtual tours and photographs.
“The key to our success is the productivity piece,” Davis said. “(Employees) are going to show up at work at a certain time.” There are performance-based bonuses, and the average agent at the company will earn about $100,000 this year. Listing agents typically get about 19.5 listings per month while the company’s buyer’s agents get about 4.5 deals per month.
“What we do is so hard to replicate. It is based on specialization and leveraging technology,” he said.
HouseValues, meanwhile, is an “enabler” for real estate professionals, said Morris. The company offers a subscription-based package of tools and services that guarantee agents a certain number of exclusive leads for a given geographic area. The company also provides software and training to assist agents in managing and cultivating these leads.
Morris said that the company is essentially competing for agents’ advertising dollars, which have traditionally been spent on print advertisements in newspapers and magazines.
HouseValues has an agent-centric business model, and Morris said he believes that agents will remain at the center of real estate transaction. “If you talk to consumers, 80 to 90 percent of consumers are not looking to eliminate real estate professionals from the transaction. There is absolutely a role.”
Davis agreed, “I do not see the day when the core transaction goes online fully. You will continue to see the Realtor be at the core of it.”
Davis and Danziger said they believe that property listings information should be widely available to consumers, and Danziger said that any rules relating to the sharing and distribution of this data should be applied evenly and fairly to all real estate companies.
“Let people have access to the data but treat everybody equally,” Davis said.
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