You’ve been seeing it everywhere. Businesses closing up shop left and right because of the COVID-19 pandemic. The real estate industry is no different, agents are getting out of the business and some of the large and newly popular big-box brokerage companies have announced massive shutdowns and layoffs. What does that mean to you? We’d love to weigh in on that.
Companies like Zillow, Redfin and Open Door are three different models with some similarities in their makeup. Technology changed the game in nearly every industry. These three companies responded by trying to give buyers and sellers a “more efficient” experience that seemed to make agents less significant, if not unnecessary in the process. Buyers and Sellers were given more “control” or access to the data about the housing market. They justified that since the consumer was doing more of the work, they would pay the agents less. In some cases, consumers were given a rebate of sorts and the company pocketed the rest.
What was in it for the agents who agreed to make less? The company provides them the leads, they save time, and if commission is lost they figured it was worth the company feeding the leads. Some agents like this type of model because nothing is truly required of them to grow their business.
Nothing could go wrong, right?
That “any circumstance” scenario couldn’t foresee the times we are living in today. Letting technology do all the work is okay until it isn’t. You see, transferring any sort of property is an emotional process. Humans play a key role.
Here’s what we are seeing in the industry today:
- Appraisers are refusing to walk properties. Let me give you an example: recently we (Verity Group) represented a buyer on a house who’s appraisal came in 45,000 less than the home was pre-appraised for just weeks before. What a significant difference! The process of valuing property is too subjective and too human to automate with any tool including a “Zestimate.”
- Lending Guidelines are changing. Lenders are changing the criteria up to the last minute. Not every lender can offer all the loans, they could a month ago. We recently had to switch a buyer from one lender to another a week before closing in order to actually close on the house. Without having a seasoned agent who knows how to maneuver with ever-changing targets, home sales could fall apart.
- Contractors are difficult to come by. Closing companies are running behind and if home inspectors are even inspecting properties they won't let anyone, even the buyer inside in some cases. It’s harder to find contractors like plumbers and electricians and handyman type services at this point. Buyers and sellers are confused and upset. No scientific equation can make up for that.
How are some of the companies responding to all this?
They quickly say shut it down. People need stability when buying and selling houses. They need to be able to build relationships with seasoned agents representing them through the process. They need to have the space to ask questions, change the plan, find a space to stay in the transition. They need agents with a network of resources to come up with a plan B, C, D if necessary.
Where do the agents fall?
If companies are stopping all realty processes, how do the agents that work with these companies survive? Well, an employee minded agent who gets handed "deals" and sees them as a paycheck might feel the sting of relying on companies. A career business-minded agent who is truly running a small business that is service-oriented and based on consumer experience and referrals may see a slight dip, but they remain steady because of rapport.
Not all agents and companies are created equal. Right now there's heightened awareness about small local business patronage. Verity Group is a small, locally owned business founded on principles of customer care, fiduciary, exceeding expectations, and delivering consistent experiences. There’s no guarantee of a paycheck. Verity Group runs 80%+ based on referrals. Our network of people we work with refers out to friends and family. It's why the Verity Elite program is so important.
And even amidst what is going on in our world today, Verity Group is still here. Our team continues hiring staff, showing houses in masks, and pulling out every hat trick because we believe through all this real estate will still happen and people will still need representation in the process.
The big guys? The companies everyone thought were the end-all of traditional real estate? They are shrinking to the detriment of their customers and the agents who had a false sense of security.
Verity Group won't stop being here for you. If you're ready to close your deal or transition into something new, we will be there every step of the way!