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Virtual realty: Will real estate agents go the way of travel agents?
Customers can find a wealth of information in cyberspace
Wednesday, May 03, 2006

Like travel agents and stockbrokers before them, real estate agents are facing changes in their profession that could leave many of them looking for a new line of work.

The same growth in computing power that has made it easier for them to do their jobs also is making it easier for potential customers to do without them entirely.

That day is still a ways off, but each day, more online tools are emerging that bring it a few steps closer.

"It's not rocket science," said Colby Sambrotto, chief operating officer of forsalebyowner.com.

Founded in 1999, his Web site offers homeowners who want to sell their homes themselves a range of packages that allow them not only to post "for-sale" ads of varying complexity but also to obtain yard signs and other marketing materials.

"In the U.S., there's three steps" to selling a home, Mr. Sambrotto said. "Pricing it correctly, marketing it and the transfer of title. Marketing has typically been the biggest obstacle to people selling their own properties. The Internet solves that, as long as you're willing to put in a minimal amount of time."

Historically, real estate agents have represented sellers, but in recent years, a growing number of sellers have decided to go it alone, aided by not only such Web sites as Mr. Sambrotto's and another online site, fsbo.com, but also such venues as craigslist.org.

The Web set is effectively an online classified ad that allows sellers to share information about their homes with the world -- craigslist draws more than 4 billion page views per month. Even the traditional outlet for real estate ads, newspapers, have caught on to the virtual world and begun offering online listings, including the Pittsburgh Post-Gazette.

In recent months, sellers have gotten additional tools that make do-it-yourself seem even less scary. The sites, Zillow.com or RealEstateABC.com, promise to simplify the pricing process, long considered an area of professional expertise.

Type in an address at either Zillow.com or RealEstateABC.com, and each will search public records to see what nearby properties have sold for and massage the numbers to produce an estimate of value for the given property. The sites also allow buyers to download legal documents, order appraisals and apply for mortgages.

In other words, thanks to the Internet and these new sites, buyers can do nearly everything online except actually visit the house and attend the closing.

Brokers and agents' responses to these new tools offered to consumers are understandably mixed.

Exclusivity of information has long been a bedrock of the profession through its independent multilisting service books -- thick volumes of information about listings that brokers share among themselves but not the public.

In order for sellers to include their home on the so-called MLS, they had to list it with a member of the National Association of Realtors. Likewise, a buyer has to call or visit a Realtor in order to obtain information that's on the MLS.

While Mr. Sambrotto, craigslist founder Craig Newmark and other cyber-adventurers were staking out territory on the Web, the Realtors sought to protect their turf. The group has opened its doors to Internet marketing, by publishing MLS information on its own Web site.

Now, www.realtor.com boasts 2.5 million listings, making it by far the largest repository of for-sale listings on the Web. Depending on where one is looking, however, the site doesn't always provide the address to a specific property -- to get that, a seller or buyer has to contact to Realtor. That's the case in the Pittsburgh region.

The NAR, the country's largest trade association, says its 1.2 million members are uniquely qualified to help both buyers and sellers navigate what for most is the biggest transaction of their lives.

For one thing, they say, buying or selling a house is too complicated legally to do alone. And laws can change too quickly for self-sellers to keep up. Staying on top of them is a job for professionals.

"Someone going on forsalebyowner or craigslist won't know that they need a dye test, and it could affect them long term," said Kasondra Valas, an agent with the Squirrel Hill office of Howard Hanna Real Estate Services, referring to a city ordinance enacted last month requiring homeowners in certain neighborhoods to have their sewer lines tested when selling a home.

Agents also contend that someone who has sold dozens, or even hundreds of homes, will have a knowledge of the market that no Web site can match. The point may be valid: in a brief test of Zillow.com and RealEstateABC.com, their estimates of value varied wildly, not only from each other, but from known sale prices and/or county assessments. Algorithms have no eyeballs, and cannot see cracks in a foundation or judge the age of a roof.

But the Web sites themselves carry disclaimers regarding the incompleteness of their information, and invite readers to contribute information to enhance their accuracy. Their real power may not become evident for several years, as more eyeballs contribute to each Web site's knowledge base.

Oh, and there's another thing: some agents are themselves using the very Web sites that others view as a threat.

"I suspect that the agents are the majority" of real estate advertisers on craigslist, said Jim Buckmaster, chief executive officer of craigslist.

Forsalebyowner.com and fsbo.com both have programs for agents to sell MLS listings at reduced commissions. RealEstateABC and Zillow invite agents to partner with them.

John Prell, of Plano, Texas, is part of forsalebyowner's agent network and a Realtor. If a seller enrolls at the Web site and wants an MLS listing, he provides it and receives a slice of forsalebyowner's fee. He also is available to assist sellers who opt to forgo an MLS listing.

"I'm the safety net, so to speak," he said. "If there's a problem or they have a question about what to do, they know there's somebody there to help."

But in his experience, "Almost all of our clients are very competent in being able to handle things on their own."

As more buyers and sellers become more knowledgeable, not only by picking up information online but also by buying and selling homes more often than previous generations did, the true future of real estate agency may lie in serving first-time home buyers and niche markets.

"I think there'll always be some agents around to handle weird properties or high-end properties," Mr. Sambrotto said. "But I think in five or 10 years, it'll be an Internet-based business exclusively, and [with] very few agents out there."

First published on May 3, 2006 at 12:00 am
Elwin Green can be reached at egreen@post-gazette.com or 412-263-1969.
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