Contrary to the current buzz surrounding high-profile online business-to-business (B2B) alliances, some industry observers say the future for e-commerce is in business-to-consumer deals, with an emphasis on such major purchases as real estate.
By some estimates, up to 50 percent of prospective American homebuyers will use the Internet to search for new homes within the next two years. Even those who may not yet feel comfortable completing transactions on the Web say they will at least begin their search on the Internet before contacting a local realty office or perusing the classified ads.
Last year, 50 percent of prospective homebuyers nationwide used the Internet to educate themselves on the home buying process, according to a survey by research company Weston Edwards & Associates.
As for what online real estate customers are looking for, detailed property descriptions top their lists, followed by disclosure of all transaction fees, customer service contacts via toll-free numbers, performance guarantees from service providers and sales data comparisons.
Realtors Respond to Online Trend
Sensing the public’s increasing comfort level with online home buying, many realtors are moving to the Web in time for the rush. Many real estate companies fear that e-commerce could well squeeze their market share in much the same way that mega-travel sites made it difficult for independent brick-and-mortar travel agencies to compete. In fact, some industry analysts expect massive real estate sites to become the norm, possibly forcing a great number of the one million real estate agents nationwide to close their doors.
Still, incorporating home-buying into electronic commerce is a gradual process. Many U.S. buyers remain uncomfortable with the process of financing a home online.
As reported in the E-Commerce Times earlier this year, a 1999 study by Fannie Mae showed that only 21 percent of the respondents would probably or definitely try financing a home over the Internet — a one percent increase over 1996 numbers.
Bringing the Masses Online
As is the case with other consumer industries, much will depend upon how quickly the public increases its online presence. An additional ten million U.S. households are expected to go online this year, up from 33 million in 1999.
A survey late last year by Media Metrix showed that more than nine percent of households online — about six million visitors — used real estate sites. Users looked at the sites an average of 1.8 days a month for a total of 13.9 minutes a month.
According to Cendant.com CEO Richard Smith, nurturing the online home buyer is still an uphill battle. “Buying a house is an infrequent transaction, a complex transaction and a highly regulated transaction,” Smith said. “It represents the largest single purchase, and the biggest net asset, for most people. And that means you have to provide a large degree of personal service.”
According to some real estate professionals, the key will be in successfully combining online technology with an offline brick-and-mortar presence. Although the consumers most likely to shop online are a technology-savvy, high income, well-educated segment of the population, realtors expect that they will still require some handholding in the home-buying process.