Do We Still Need Real Estate Agents?

In the age of Amazon, GrubHub, Uber and Zillow, why do we need real estate agents? After all, Priceline, Orbitz and Expedia have rendered travel agents obsolete; soft goods retailers are being squeezed out by Amazon and newspapers are barely surviving with newspaper reporter included in the top 10 worst professions in the U.S.

There’s no denying that to a certain extent real estate agents are still in business due to successful lobbyism (Realtors organization, anyone?) and a monopoly provided by the localized MLS structure. In addition, homebuyers and sellers are prone to inertia just like everyone else, so some people do hire real estate agents just because this is how things are “supposed to work.”

On the other hand, one can make a strong case for a real estate agent, albeit a slightly different one than a typical pre-market crash real estate professional.

1. Numbers show that real estate agents are not going away. 89 percent of buyers retained a real estate agent in 2012, up from 69 percent in 2001. It's the same on the seller side, where only 9 percent sold a home without an agent, down from a high of 20 percent in 1987. People do hire real estate agents and the trend seems to continue, so we can’t blame all of it on share habit. Although many homeowners like to talk about how “useless” real estate agents are, at the end of the day most of them do see value in their services and end up hiring one.

2. Internet is not always right and interpreting data is not what most people enjoy doing. Let me explain this. First of all, everyone who has ever used Trulia, Zillow or Realtor.com knows that these portals are too big to be 100% accurate. This is not some sort of accusation; it’s simply a statement of a fact. Too often properties listed on the above-mentioned portals are not actually for sale, already sold, etc. This leads us to the second part of this argument: most people are too busy and/or lazy and/or impatient to sift through the internet data on their own. They need an agent to access correct data and to interpret it the for them.

3. Some transactions are too complex. Yes, theoretically, you can represent yourself in a court of law, take flying lessons, buy a plane and fly yourself to visit your family. In reality, most of us will hire a lawyer and use commercial airlines. The same goes for short sales, foreclosures, deeds-in-lieu, etc. Most people will opt for a real estate agent rather than deal with these complex transactions on their own.

4. Negotiations are exhausting. While some people love haggling and even thrive on confrontation, many avoid hardball negotiations and detest confrontation. Many will gladly let the real estate agent play the bad guy and have them handle the “crazy” other side (have you noticed; the others are ALWAYS crazy?).

5. We need real estate agents because Warren Buffett says so. Seriously. Isn’t that alone a sufficient argument? One of the first enterprises Buffett is allowing to use the Berkshire Hathaway brand name is a real-estate brokerage. In his address to Realtors, Buffett stated that real estate brokerage operations “will be here 100 years from now.” Berkshire Hathaway HomeServices already encompasses nearly 23,000 agents and more than 600 offices, putting it among the five largest real-estate networks in the country, and Lee expects those numbers to grow as Prudential franchisees rebrand and the company acquires units and expands internationally.