NAR general counsel Katie Johnson was among a distinguished group of panelists at What’s New in Residential Real Estate Brokerage Competition(link is external), a June 5, 2018, workshop on competition in real estate sponsored jointly by the Federal Trade Commission and the Department of Justice. NAR asserts that innovation, competitive forces, and consumer choice have never been stronger.
Johnson’s prepared remarks are below. REALTOR® Magazine will recap the entire workshop the following day.
There are three important takeaways for this workshop.
First, over the past decade, technology has positively enhanced the consumer experience, and has added to the cost of doing business.
Search is a great example because property listings are now available on thousands of websites and apps. Technology also helps brokers deliver better service through diverse business models, enhanced digital marketing and CRM tools. And the transaction itself has become almost entirely electronic with the advent of transaction management platforms, electronic signatures and now, electronic notarization.
But all that costs money. Brokers and agents are spending money to make all that happen for the consumer. And I didn’t even mention lead generation which has been an increasing cost these past ten years. For example, just five years ago in 2013, the average agent spend on Zillow was $3,000 a year and now it’s tripled to about $9,000.
And, as in many other industries, while technology has improved the customer experience it has not displaced the worker. Real estate professionals are not mere order takers, button pushers, or door openers that can be replaced by technology. Every house is unique – it’s not like buying airline tickets or books. That leads us to the second takeaway.
Even with these great advancements in technology, consumers still choose to hire real estate professionals to help them buy and sell their homes.
Brokers and agents are valuable resources. Real estate is local; brokers and agents are local. They live in the neighborhoods and communities they serve. A home is often the largest and most complex purchase anyone will ever make in their lifetime. Consumers want a local, trusted advisor to guide them through the entire process.
There’s just no technological substitute for a local, trusted advisor.
And third, the real estate industry is robustly competitive, the market is working, and government intervention could stifle this competitive environment.
The real estate industry is unlike any other industry in the world because competitors agree to cooperate for the benefit of their customers. Without the MLS, consumers would not have access to accurate information like they do today and new brokers would have a hard time entering the business.
But the MLS only exists because brokers are incentivized to voluntarily participate. Destroying broker incentives through government intervention will harm consumers – not help them. This is a free and competitive market. There’s no need for government intervention today.