The received wisdom is that the Internet is great for small purchases, the most obvious examples being music (and now movies) from online stores like iTunes and Amazon.
But the next big story in online transactions might well involve the largest purchase most people ever make: real estate. Younger people who have grown up using the Internet for all kinds of transactions are now reaching the age at which they start to buy homes.
Sites like Zillow and Trulia offer detailed info on properties across the country, meaning that you can research that fixer-upper from the comfort of your couch. Once you’ve found something you’re interested in, the sites hook you up with a broker.
Seattle-based Redfin has upped the ante even further, helping its customers to completely bypass real estate agents and brokers altogether. In effect, it claims to be the industry’s first online real estate brokerage. The model is working well enough that Redfin was able to open a San Francisco office at the end of August and apparently well enough that some angry agents have threatened them with everything from lawsuits to outright violence.
Will buying property online put traditional brokers out of business? Will heavily financed ventures like Redfin survive as the currently thermonuclear housing market cools off? Will people be completely turned off by Trulia’s lame viral video on YouTube?
Time will tell. What seems clear is that if it the Internet real estate model cuts consumer costs and streamlines a process known for its expense and inefficiency, it’s bound to be big. The traditional real estate industry should learn from the mistakes of the entertainment industry and adapt. Fast.
Burke Smith of Prudential may have put it best: Technology won’t replace agents. Agents with technology will replace agents.