The US real estate sector is primed and ready for a phase of readjustment post-pandemic, writes David Bartels, President Help-U-Sell Full Service Realty in Westlake Village, California

I’m going to be frank: The US real estate sector has, for too long, been in a state of stagnation. Despite the tremendous technological innovations of the last decade, the sector is still defined by a number of antiquated processes and sales models. At some point in time, the current structure in place for the buying and selling of property was considered optimum, a status quo that hasn’t been seriously challenged. Many industries have been revolutionized by new, emerging technologies, while those in real estate have looked on from the sidelines. In order for the industry to evolve with the times, there is an inherent need for landmark disruption from a technological standpoint. Let’s look at how this new reality can be achieved.

Traditionally, when we think of buying or selling a property, we envision hiring a real estate agent to represent us in the transaction. However, when it actually comes to selling your home, the prospective seller is forced to choose between two extremes on the home selling spectrum – bloated full-service agent fees versus the uncertainty of navigating the home selling process independently. Confronted with this reality, only 8% of prospective home sellers grapple with the prospect of listing and marketing their home themselves, with this figure dropping from 15% in 1981, despite the significant technological advancements over this timeframe. 

One of the main benefits of enlisting a full-fee agent is their access to the exclusive Multiple Listing Service (MLS) – the exclusive Realtor database of homes for sale. Prospective sellers and buyers do not have the same access to this breadth of resources, relying on sites such as Zillow and Forsalebyowner.com, which provides them with much less exposure in comparison to what agents can offer via the MLS. The overall complexity of the transaction is another factor contributing to the lack of unrepresented sellers. Buying or selling of property is widely considered one of the biggest and most important transactions an individual makes in their lifetime. As such, the majority of people display natural prudence due to the fear of making a mistake if they manage the more critical elements of negotiations, paperwork, disclosures, escrow, and title themselves.

The United States has the highest commission rates globally, in comparison to other developed countries, where the seller is responsible for the buyer and seller agent compensation. There is a general lack of transparency surrounding the fee, as buyers are not typically aware of how much their agent is being compensated to help them buy a house that they likely found themselves. Buyers do not realize that even though the seller is paying the buyer agent’s commission, those fees inflate the purchase and the cost of the transaction for the buyer. 

With these inflated costs being absorbed by prospective sellers, isn’t it about time there was a hybrid solution that gave them the tools to list and market their home themselves, while also providing them with the full-service professional support pertaining to the more onerous and expertise-driven tasks such as negotiations, paperwork, legal disclosures, contingencies, escrow, and title? With a hybrid, technology-based model, it is likely that the percentage of individuals listing and marketing their homes themselves would expand well beyond the current 8% mark.

While the US real estate landscape has emboldened agents to monetize their advantageous position in the market, we are beginning to see a groundswell of momentum around individuals taking the initiative and embarking on the home selling process independently and successfully. According to the National Association of Realtors’ 2019 Profile of Home Buyers and Sellers, 58% of For Sale By Owner (FSBO) homes were sold in under two weeks – with many owners selling to people they knew. Out of the successful FSBO sellers who didn’t directly know their buyers, 63% explicitly wanted to avoid paying a commission – pointing to heightened seller fatigue with the overbearing costs associated with enlisting the services of full-fee agents.

The current pandemic has changed the way that enterprises across a wide spectrum of industry verticals do business, and the real estate space is no different. This sector has been in need of a revamp for some time, and the stage is now set for the latest technological innovations to intersect with the industry in a new and meaningful way. With a recent report suggesting that 41% of expediters – those who have accelerated their home buying plans during this period of flux – attested to an increase in remote communication with agents via applications such as Zoom, Skype, and FaceTime, we are already witnessing the way that prospective sellers have had to adapt their strategies. This minor league innovation is encouraging, but there is much wider scope for technology to bring major league change to the real estate sector. Innovations powered by emerging tech such as blockchain can be harnessed to store key paperwork and transaction details, for example. The market is ready for a solution that empowers prospective home sellers to market and sell their homes themselves with conviction, while providing much more affordable expert counsel around the key processes typically handled (and overcharged) by full-service agents, creating a new bonafide market category.