Will the Real Estate Industry Cease to Exist?

[James H. Bushart]

By James A. Crumbaugh III


RISMEDIA, June 3, 2010—I recently had the very distinct privilege of being invited to speak at a meeting that was attended by many of the leaders in our industry. I can say that it was an honor and a privilege to speak to such an esteemed group.


I would like to share some of the things that jumped out at me during this conference.


The first item that really stood out is that there was only one other CEO that I spoke with that agreed with me that the Realtor is our customer. I’m sure there were other CEO’s in attendance that shared my attitude, however only one other CEO came up to me, to tell me they shared my belief. I truly believe with today’s technology that the Realtor no longer needs the broker as much as the broker needs the Realtor. I believe that we as a brokerage are in the Realtor business and our Realtors are in the real estate business and it’s our job as a brokerage to support our Realtors and help them become more profitable.


The second item that nearly destroyed my elation of feeling like we are the future; and that we have the business model of the future, was the technology panel. By the time this panel finished speaking, I felt like a dinosaur. That night I lay awake and realized that our entire industry will disappear eventually. It could be in as little as 10 years.
Let me share why I say this.


I think most of you would agree that within 10 years, most homes will have 3D televisions in them. So imagine if someone creates a channel that any homeowner can place their home for sale on for $200, and then everyone in the world can access that channel and see their home in 3D in their living rooms. With just one swoop, no more listings, no more MLS, no more commissions.


But it gets worse. Let’s say someone writes an application for buyers, where the buyer goes into a site for $200 and gets a security code. The first thing the system does is run a criminal background check on the buyer. Once they pass the criminal background check, the system then runs a credit check. Once the credit check is run the system then sends this information to a couple of different lenders that will be best for this particular buyer. The lender then gives the buyer a security code number and an approval number that says this buyer is approved for the following loan.


The system has already determined what a home will sell for so at this point the system sends all the properties that the buyer qualifies for in the area and size that the buyer has an interest in. The system then makes the appointments for the buyer to see these homes.
A completely seamless transaction. The buyer knows all his or her exact costs from loan amount, to tax’s, to Title Insurance to Homeowners insurance.


When this happens, the entire industry disappears. The Boards, NAR, MLS, websites, Consultants, appraisers—the entire industry.


If you don’t believe this can happen, let me share a little story with you. I flew into San Antonio to visit with our Texas state broker and to drive up to Dallas with him. On our way to the Conference we passed a huge HUMMER dealership. It was vacant.


I rest my case.


James A. Crumbaugh III is CEO of Allison James Estates and Homes and may be reached at jcrumbaugh@allisonjames.net.

[Steven C. Waskewicz]

Interesting article Jim, thanks.

I noticed they didn't mention the home inspection as part of the industry.

wonder why... obviously you can't outsource something that "reality" has to be included in...like touching, testing, first-hand observation, etc...

[James E. Braun, CMI]

For the appraiser to be left out of the loop, the condition of the property will need to be determined, this is why I think inspections will be performed before an actually value of the property will be determined. The demise of organizations such as NAR will need to happen first. It will take more than ten years for NAR to disappear.

[John McKenna]

People will always want a test drive and will ask questions that cannot be answered by
the TV presentation (in the example above). This idea for selling houses via 3D presentation
can already be done via the internet but there is not yet a great demand for it.

[Joseph Burkeson, CMI]

Jim,

Great article, although I think it will take longer than 10 years to become a reality I'm sure that along the way everything associated with a real estate transaction will become "standardized", including our profession. The one thing that standardization guarantees is lower prices, and most likely a drastic move away from independent Mom-&-Pop business models for the home inspection profession. Glad to know that in 10 years I'll be retired.

[Bob Elliott]

Last time I heard this,For Sale by Owner was going to be the culprit.

[James E. Braun, CMI]

There are more homes being sold by owner every year. The Realtor will always have a job but will be very limited in their precipitation.

[John McKenna]

The growing mindset of bigger gov't wanting to control, monitor and tax
everything and keep the courts free of lawsuits seems to drive the
real estate market into the hands of the growing real estate commissions
in each state. There is good and bad in this approach, but I doubt we will
see less gov't control and less licensed realtors in the process...IMHO.
Changing marketing methods will not mean the gov't wants less control.
The realtor is an agent of the gov't. Home inspector will also become
more controlled as time goes by IMHO (ie... just like lawyers, doctors
and other professions).

[Doug Edwards]

Ten years isn't an unrealistic number. Everything has been accelerated. Your big screen tv is virtually obsolete before you can get it into the truck, get it home and connected. Technology is growing so fast most of us can not keep up with it. Even those in the technology profession have to stay one step ahead of the curve or get left behind. When you consider the condition of the economy and what a Realtor gets for their commission it isn't inconceivable that the need for a Realtor can quickly become a thing of the past. I have customers now who bought their home over the internet, never laid eyes on it other than the photos from the internet and what photos I provided along with detailed phone conversations during and after the inspections. The Realtors commission being based on the selling price of the home in most cases is commensurate but when they sell a multi-million dollar property and get thousands of dollars for little work, that tends to stick in the sellers craw, especially if the home value has diminished and already cost the seller money. As HI we all have seen a drastic reduction in the volumn of not only sales but in calls alone. Some regions are still vibrant but on the whole, things are way down from a couple of years ago. I know things are bad for some local Realtors, I see some now driving old beater cars when they used to drive a Lexus, BMWs, Explorers, Escalades and other huge SUVs. I know some who have had to downscale the homes they lived in and ended up going T.U. I know even more who have gotten out of the business. I know of one lady who went from selling homes to running a fruit stand and the side of the highway....Big change from selling homes to selling peaches and kumquats on the side of the road under a tarp.

I agree about the mom and pop HI business as well. Once Sears and other national companies start looking for new threads of income for them, they will start offering cheap inspecitons and run the independent guys and gals out of the business. I have been busy restringing all my fishing reels cuz the day is soon approaching that I will simply turn off the light in the office and retire retire....again.

[James E. Braun, CMI]

Originally Posted by jmckenna1

The growing mindset of bigger gov't wanting to control, monitor and tax
everything and keep the courts free of lawsuits seems to drive the
real estate market into the hands of the growing real estate commissions
in each state. There is good and bad in this approach, but I doubt we will
see less gov't control and less licensed realtors in the process...IMHO.
Changing marketing methods will not mean the gov't wants less control.
The realtor is an agent of the gov't. Home inspector will also become
more controlled as time goes by IMHO (ie... just like lawyers, doctors
and other professions).

Been listening to Glenn and Rush again.

[John McKenna]

Originally Posted by jbraun

Been listening to Glenn and Rush again.

Look at the last 15 years and tell me if gov't control of real estate
has increased or decreased? No spin.

[Erol Kartal]

Originally Posted by dedwards

Your big screen tv is virtually obsolete before you can get it into the truck, get it home and connected.

My year and a half old 30 inch Sony flat screen TV is already too old to be compatible with a 3D DVD player...

Jim's post is right on the money but I do believe there will always be some inspection work but with lower demand comes lower fees. I know from personal experience that a virtual listing in the eyes of a buyer takes away some of that feeling of home inspection necessity. My wife has a For Sale By Owner real estate web site, and boy these people don't spend a penny unless they have to.

[Robert W. Jude]

as soon as it gets close, the real estate industry will lobby for laws to change and require realtors on every deal or get the 3d television business banned from selling real estate so some stupid s h i t. it's the way America manipulates the underprivileged and maintains certain profit levels.

[Joseph Burkeson, CMI]

Originally Posted by rjude

as soon as it gets close, the real estate industry will lobby for laws to change and require realtors on every deal or get the 3d television business banned from selling real estate so some stupid s h i t. it's the way America manipulates the underprivileged and maintains certain profit levels.

Please send some of what you are smokin'.

[Erol Kartal]

Real estate agent lobbyists, if there are any left, will have zero say so as to what technological methods buyers and sellers use to conduct their business. It's basically none of their business. Their clout as a group will never again be what use to be.