While the Internet is proving to be a valuable tool for homebuyers, offeringinformation about prices, neighborhoods and mortgage options, the Web isunlikely to replace the local real-estate agent anytime in the near future, analysts say.
Real estate brokers and agents, however, have to keep pace with anincreasingly better-informed clientele, because online real estate companies — particularly market leader Homestore.com (Nasdaq: HOMS) — are feeding consumers a lot of information about listings, prices and more.
Web sites that work in tandem with local agents are likely to be the most successful, according to one analyst, who cautions against cutting out the middlemen.
“Any Internet application that triesto disintermediate brokerages is going to fail,” Mike Bell, vice presidentand research director at Gartner Group, told the E-Commerce Times. “Peoplestill very much depend on brokers and agents to guide them through theprocess.”
“I’ve had a number of people who’ve bought homes from me who actually found their house online,” Gene Cooper, an agent with Long & Foster in the Washington, D.C., suburb of Silver Spring, Maryland, told the E-Commerce Times. “It’s a really good starting point for people to get a feel for different areas.”
Cooper is not afraid of being replaced by a computer inthe near future. “I think people still need live help,” she said.
Despite the volume of information being provided online to new home shoppers, some say the problem with online real-estate shopping is that real estate Web sites are notupdated often enough.
In the currently red-hot housing market, many homes are often going under contract even as they arelisted on the Internet, according to some industry observers.
Brick-and-mortar real estate agencies, however, can use the Web to make their businesses work better, Bell said.
Not All Web
Homestore.com’s main site, Realtor.com, is the biggest playerin the online real-estate arena and the official site of the National Association of Realtors.
Realtor.com provides links to local real-estate agents, along with its home listings. Because the site does not list addresses of the homes it features, buyers have to contact local agents to get more information.
There are sites that have “attempted to proceduralize” the home-buyingprocess online, said Bell. Those sites are looking to provide contract, mortgage and other services that are part of the home-selection process, entirely via the Web.
“They’re having mixed success,” the analyst said. “Peoplestill very much depend on brokers and agents to guide them through the process.”
Around the Block
Other companies that provide home-buying services online include zipRealty.com, which works with agentsin 15 metropolitan areas across the country, and Homes.com.
The MSN portal of Microsoft (Nasdaq: MSFT) is also running a real estate site, HomeAdvisor.com, that was initially hawked as a site that would help automate home mortgage transactions and provide tools to automate electronic applications, underwriting, property valuation and other time-consuming mortgage loan processes.
More recently, the site has been described as a location for finding homes for sale, and information on relocating, financing and home improvement.
In the Field
Internet auction giant eBay is also in the game, having picked up HomesDirect, an online auctioneer of foreclosed properties, in early August.
eBay said at the time that the acquisition would “significantly expand” its real-estate category. HomesDirect was responsible for the sales of more than 116,000 homes last year, all auctioned over the Internet, according to eBay.
Homestore affiliates, however, control the market for listings and other information, and the company’s Realtor.com site boasts access to about 90 percent of realtor-listed homes in the United States. Over the summer, the U.S. Justice Department closed its antitrust investigation into Homestore.com, including Homestore’s acquisition of rival Move.com.
Although still in business, Homes.com filed for bankruptcy reorganization in March 2001.
Overall, said Bell, real estate has been one of the last industries to embrace theWeb.
“The property industry in general is very slow and conservative” whenit comes to new technology, said Bell, who also follows commercial realestate. “They’re definitely a lagging industry.”
Like car dealers, though, agents are learning to embrace the Web, as theircustomers turn to sites like Homestore’s Realtor.com to familiarizethemselves with a neighborhood and local property values before venturinginto a traditional real-estate office.
“This is not transformational,” said Bell. “What we see is the Internetmaking things more efficient, streamlining the process, making things moretransparent.”
Bell also sees an opportunity for companies that help brokers promote theirpresence on the Web, charging monthly fees for customized sites and softwareto streamline administrative functions.
In the real-estate industry, “the real play is information,” he said.