(NEW YORK, NY) — It’s a strange time to be a real estate agent. While many experts are wondering if real estate agents are becoming obsolete, Clever Real Estate’s recent study on the role of the modern real estate agent found that, despite all the gloom and doom, agents are more important than ever.
While there’s a lot of talk about how real estate agents are being phased out of the industry, our study outlined a more complicated picture. We found that 32% of sellers were unsure if they’d end up using an agent, and that 14.5% were planning to try to sell FSBO, meaning that nearly half of all sellers were at least considering selling without an agent. But a similar proportion of respondents also lacked basic knowledge about what an agent does, or how a home sale works.
For example, our study found that only 35% of homeowners know that a standard commission comes to about 6% of the sale price, and that 45% of home sellers don’t know they’re responsible for paying the buyer’s agent’s commission. These findings seem connected. It’s not that these sellers don’t want to use an agent, it’s just that they don’t realize, yet, how much they need one.
Some of the erosion of the real estate agent’s role in the industry is due to technology-driven disruption. Innovative iBuyers like Zillow Offers, or flat rate, low commission startups are driving down commission rates across the industry, and making people ask if they even need an agent to sell their home. This attitude is especially prevalent among tech-savvy Millennials, with that generation 93% less likely to use an agent than members of older generations. They’re also twice as likely to say a real estate agent isn’t important to the home selling process.
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The kicker here is that they’re no more comfortable with or capable of negotiating with a potential buyer than other generations. In our survey, a solid majority of 54% of Millennial respondents said they wouldn’t want to negotiate with a buyer (compared to 50% of all respondents), and this reluctance was even more pronounced when it came to the closing paperwork, with 61% of Millennial respondents saying they’d be uncomfortable filling out the necessary documentation themselves (compared to 62% of all respondents).
This contradictory attitude held even for people who had already decided to sell without an agent. Among FSBO sellers, 46% of them said they wouldn’t feel comfortable negotiating with a home buyer without a real estate agent’s assistance.
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The upshot is that while the importance of agents is perceived to be waning, the reality is that sellers still need them as much as they ever did. Agents have a branding and education problem more than an existential one. Of course, this isn’t to say that the industry, and the role agents play within it, isn’t evolving. Agents were once gatekeepers, but the internet has made industry data available to anyone with a smartphone or laptop. Going forward, an agent’s role should be as a negotiator, a concierge through the closing process, an advocate, a counselor, and, above all, an educator. Buyers and sellers still need agents; they just need to be reminded of it sometimes.
Ben Mizes is the CEO of Clever Real Estate, an online service that connects home buyers and sellers with a top-rated, full-service agent for a fraction of the traditional cost. Ben is also an active real estate investor in St. Louis and a licensed real estate agent.