Chattanooga Realtor Doug Edrington used to joke about how virtual reality would someday allow agents and buyers to tour a home without being there.
Like Neo in “The Matrix,” they would be able to plug into their computers and tour a three-bedroom, one-and-a-half bath ranch on the North Shore, complete with a glowing fire in the hearth and birds playing outside.
Subsequent showings would take place in person, Edrington would say, but buyers would first lay eyes on a home made not of brick and mortar, but of bits and bytes.
Edrington’s vision of the future might have seemed like science fiction in 2004, but 13 years later, it’s close to happening. Technology by Matterpower now allows buyers to do three-dimensional flythroughs of a home on any mobile or desktop device – and support for Oculus Rift virtual reality helmets is coming.
“The internet is changing how we do business,” says Edrington, the tech guru for The Edrington Team at Berkshire Hathaway.
Edrington, who carries a smartphone and iPad with him wherever he goes, also understands that there is an old-fashioned element to buying and selling homes.
“There are a lot of tools out there that can assist customers and help Realtors contact more people, but at the end of the day, those things don’t replace the human touch,” he explains.
“Buyers and agents can leverage the technology that’s out there, but real estate works best when it’s based on a relationship – and that takes human contact.”
Even with all of his tech proficiency, Edrington remains a diehard advocate of pressing the flesh.
“Before I got in the business, it was relationship-based; your business grew because of who you knew and word of mouth,” Edrington says. “That’s still a huge factor in our industry, but I see new agents struggling because they’re so focused on getting in front of people through technology that they don’t spend much time in front of actual people.”
Tech helps everyone
While virtual reality is still new, the real estate industry has consistently embraced new technologies. Ever since the first computers made the infamous MLS books obsolete in the 1990s, Realtors have adopted many of the innovations designed to simplify their job or connect them to more clients.
Today, a Realtor can pay home search website Zillow to appear as a premiere agent on listings, create an app to promote their business and utilize client relations software that tells them when to contact a buyer or seller.
Realtor acceptance of new technology has not been limited to a few nerds who were weaned on MS-DOS and flip phones; rather, data from the National Association of Realtors suggests the majority of agents have welcomed the new gadgets and ground-breaking apps.
The association states 27 percent of agents and 21 percent of brokers spent more than $500 on technology in 2015. Also, the top three tools Realtors planned on purchasing or replacing at the time were the iPad (16 percent), smartphone (15 percent) and digital camera (12 percent).
Just as telling are the top sites where Realtors now place their listings – Realtor.com, Zillow and Trulia – and the mass migration of agents to Facebook and Twitter. NAR states 91 percent of Realtors now use social media to some extent.
While technology has opened new doors for Realtors, there’s a flip side to the digital revolution. As the internet placed a world of information at the fingertips of consumers and empowered them to use it, buyers and sellers began to claim territory once controlled by agents.
Nowhere is this more evident than in the initial search for a home, which once involved at least a phone call to a Realtor, if not a drive across town to a real estate brokerage. With the buyer’s criteria in hand, the agent would then haul out the latest MLS book and begin looking for matches.
Price Lechleiter, managing broker of Pilkerton Realtors in Nashville, was around when agents used the thick, phone book-like tomes.
“The MLS book contained pages and pages of terrible black and white photographs and brief descriptions. It was divided by section of town to make it easier to look for properties in certain areas,” Lechleiter says.
“Today, people can view listings on their phone, but in 1992, when I became a Realtor, the only access you had to a house before stepping through the front door was that book.”
Buyers are taking advantage of the ability to house shop online. While they can’t click on a home and buy it like they can a Fitbit 2 on eBay, nine in ten buyers rely on the internet as their primary source of research. What’s more, 51 percent of those buyers end up purchasing a house they found online. Both stats come courtesy of a joint study by the NAR and Google.
In addition, not only can buyers in Nashville find their future home while sitting at the Parthenon, they can also download apps developed by Zillow, Homes.com and Trulia that will notify them when a house in their desired neighborhood and at their preferred price point goes on the market.
Dire prediction falls short
As homebuyers began to do some of the heavy lifting, predictions of a decline in the use of real estate agents began to bubble to the surface.
As early as 1997, an article published in the Journal of Real Estate Portfolio Management entitled “The Coming Downsizing of Real Estate: The Implications of Technology” predicted a dire future for the profession.
The outcome would not be without precedent, as technology has devastated other industries. While travel agents still exist, they are at least an endangered species, Edrington points out.
“It boils down to money. You can go on dozens of websites and book the same room. Those sites are in a price war over the same product. There’s no need to hire an expert to find the best deal,” he adds.
But if money is the heart of the issue, then there’s a disconnect between technology and the impact it’s having on Realtors.
Instead of selling fewer homes, agents today are in the midst of the biggest upswing in sales since the height of the real estate boom in the early to mid-2000s, aided in part by historically low interest rates.
According to data from the Greater Nashville Realtors, nearly 39,000 properties exchanged hands in the city in 2016. This brings sales close to the point seen at the height of the real estate boom in the early to mid-2000s – just over 40,000 units in 2005 – despite a shrinking inventory.
This uptick comes at a time when people are using Realtors more than ever. The NAR reports that 88 percent of buyers in 2015 purchased their home through a real estate agent or broker – a share that has steadily increased from 69 percent in 2001. Meanwhile, for-sale-by-owner (FSBO) transactions fell to eight percent in the same year – the lowest since 1981.
Realtor commissions have seen an uptick, as well. In a Washington Post article entitled, “The real estate industry has something the Internet can’t offer: the human element,” reporter Todd Frankel noted that the average commission for a median-priced U.S. home in 1997 was $16,600, adjusted for inflation. Today, that figure stands at $20,131.
Frankel took a stab at suggesting why commission rates have not fallen, pointing to the complex and sizable nature of a home sale, regulations that have slowed the pace of change and the work of the NAR to strengthen the role of agents through advertising and lobbying. But he concludes that experts do not know why Realtor commissions have survived the online blitzkrieg.
Frankel suggested another possible answer in the title of his article: while the internet and the latest technologies have their uses, they are a cold replacement for something only a Realtor can offer: the human touch.
The touchy, feely side
Lechleiter also says he believes in the importance of developing a personal relationship with a client and spares no opportunity to do so. When showing houses to out-of-town buyers, he judiciously creates an environment in which he and the clients can get acquainted.
Knowing his buyers will be apprehensive about being in unfamiliar territory, Lechleiter invites them to meet him first at his office, where he shows them a large map of Nashville. He then gives them a small map that indicates the locations of the properties they’ll be viewing. This allows the clients to relax, focus on the task at hand and get to know their Realtor.
“The time spent with an out-of-town buyer in your car is like a round of golf. You can’t play golf with three strangers and not be friends by the time you reach the 18th hole,” Lechleiter says. “You build confidence and trust during that time.”
Fellow Nashville Realtor Christie Wilson agrees that trust is an essential component of the relationship between a client and a Realtor. Wilson is owner of The Wilson Group Real Estate Services, which is home to about 50 of the more than 4,000 Realtors who are competing for business in Music City.
Like Chattanooga, Nashville has a lot of qualified buyers but not a lot of product.
“Things move fast in our market, so buyers need someone they can trust on their side – and trust can come only from a face-to-face encounter. They need to see that you have their back, hear the empathy in your voice for what they’re going through and understand that you’re in control and will get them to the closing table,” Wilson explains.
“Sellers need to feel confident that you will secure the right deal on their behalf. Sitting down with them at their kitchen table and talking with them is part of that process,” Wilson adds.
This is even true of millennials, whom many Realtors wrongly assume prefer to use technology to get the job done, Edrington says.
“Millennials are buying houses, and Realtors think they have to communicate with them through Facebook, Snapchat and text. But while that might be how a conversation starts, even the under-30s want to eventually talk with someone. They want to look their Realtor in the eye and see that they’re on the same page.”
While the development of a personal bond is not mandatory in helping a buyer find a house, Wilson says the better she knows her clients, the more equipped she is to find a home they will love.
Plus, the bond that is formed is often strong enough to forge a friendship. As Realtors and clients view homes, make offers and work their way through the inspection, appraisal and financing processes, they spend a lot of time together. This gives the closing table a bittersweet component.
“Buyers often express feeling sad after a house closes because they’ll no longer be talking with you every day,” Wilson says. “But that’s what I love about this business – becoming friends with many of your clients.”
Lechleiter says the Realtors who last are the ones who focus on developing relationships and taking care of their clients.
“When someone knows they can ask you a question and you will give them an answer they can trust, you have a client for life,” he adds. “The bond that’s built when you are dealing with an important investment is amazing.”
The brain trust
In addition to seeking out the human touch, buyers and sellers also desire an expert who can guide through the many twists and turns in the home buying maze.
“The value of a Realtor in 1992 was centered on information. Now, the information is available online, but there’s so much of it that a buyer needs someone who can to tell him what’s accurate and inaccurate,” Lechleiter explains. “The Realtor’s role has shifted to that of a trusted advisor who can filter the information, take a buyer over the hurdles and deal with the legalese and paperwork.”
For sellers, this is especially crucial when deciding on a price for their home. While a homeowner could turn to Zillow and its computerized Zestimate (a market value estimate based public and user-submitted data), Edrington says the website is no replacement for a Realtor with boots on the ground.
“The computer can base its estimate only on the numbers plugged into it. To determine the true value of a home, you have to physically be in the house,” Edrington says. “I have yet to conceive of how home evaluation technology can take the place of a human being who knows the home and is familiar with the neighborhood.”
The Zestimate has been known to be wildly inaccurate. In 2016, Zillow CEO Spencer Rascoff famously sold a Seattle home for $1.05 million – 40 percent less than the Zestimate of $1.75 million shown on its property page the following day.
While Zillow says the Zestimate is just that – an estimate – the incident underscored the need for expert guidance.
The same can be said of the online sources people use to find a home. In the rapidly moving markets of Chattanooga and Nashville, where buyers often snap up houses before they appear on the internet, using a Realtor who is plugged into the market can be crucial to securing a residence.
“There’s a lag time between when a house is listed and when it hits the websites – sometimes up to 48 hours,” Edrington points out. “In today’s market, a house can be gone by that time. So leveraging a relationship with a Realtor is important.”
When Chattanooga homebuyer Victoria Love and her husband Nathan Diener decided to move, their top priority was choosing a Realtor who was dialed in to every community in the city.
“We knew how much we wanted to pay but we didn’t know where we wanted to live,” Love says. “So, we needed someone who knew what was on the market before it was on the market.’’
Love and her husband chose Kadi Brown, an agent with The Group Real Estate Brokerage and a member of the Farmer Brown team.
As Brown sold Love and Diener’s home and has since steered them through the search for a house (they are currently in a rental and scouring the Northside for a home to buy), she brought her expertise to bear each step of the way.
Brown gave Love and her husband confidence that the destination will be worth the journey.
“People who think they can buy or sell their own home don’t understand the process. Kadi has done things for us we never could have done on our own,” Love says.
“I would never trust myself to go through that process on my own. I need a professional to tell me if I’m making a good decision.”
“There are a lot of unknowns as you go from contract to close,” Brown adds. “Sure, there are discount brokerages online that charge only a small percentage and you can conceivably do everything online, but it’s hard to do those things without having someone educated to walk you through the process.”
Perhaps Lechleiter says it best when he compares the use of a Realtor to that of hiring an attorney or doctor.
“If I’m going to go to court, I’m going to ask a lawyer to represent me, and if I’m going to have surgery, I’m going to find a good doctor.
“When families are making what will typically be the most expensive purchase of their life, they need an expert who can guide them through the process and help them to feel comfortable with their investment.”
Tech done right
Although Realtors can breathe easy knowing they are still essential to the buying and selling of homes, they are not off the hook when it comes to using technology.
As more agents become tech savvy, everyone will be forced to adapt or go the way of the travel agent. The trick will be utilizing the tools to build bridges to customers.
In this respect, Edrington is ahead of the pack.
His use of technology is consistently progressive – his agents often use video conferencing instead of a phone call when communicating with a client, and the team’s Facebook page is more about the Edrington culture than its listings.
Both efforts help clients to get to know them as people rather than mere agents.
The Edrington team’s most inventive use of technology might be its combination of automated and live responses to inquiries about properties. With the Chattanooga market moving at a rapid clip, Realtors are in a race to contact potential buyers who are searching for properties online first.
“If we get in front of a buyer on Zillow, then a dozen other Realtors also got in front of that buyer,” Edrington explains. “Then it comes to do who can reply the fastest. How can we contact that client in under a minute?”
It’s called “speeding the lead.” Edrington has set up a system that immediately sends an automated text message to anyone who sends a query to the team. If the potential buyer responds, a person takes over the conversation.
The Edrington Team does this 24 hours a day, seven days a week.
“Say it’s 2 a.m. on a Friday night and a client asks about a house online while in bed. We allow the technology to take the first step. If the person responds, then the next message they receive will be from a person on our team,” Edrington says.
He adds about 60 percent of the people who send the initial query respond to the automated message.
This produces about two leads a night – or 60 leads a month while Chattanooga sleeps.
Wilson has the solution for agents who need less FaceTime and more face time: networking.
“Networking is important. People who are new to the business think their friends are going to use them to buy and sell but often, your friend won’t want to use you as a Realtor; they’ll continue to think of you as a friend and use one of the other dozen or so Realtors they know.
“So, I’m always telling agents to get outside their friend group,” Wilson says.
Agents must be consistently seen and engaged in order for their networking to be effective, Wilson adds.
“You can’t be a one-hit wonder at a Chamber of Commerce meeting because no one will remember you. Find something you enjoy and will continue to do, whether it’s being plugged in at the nonprofit level, your kids’ school, or your church,” she says.
The importance of networking is just one more example of how real estate is not about leveraging technology to make a sale but about the relationship that is formed after two people connect through the digital world and together begin one of the most courageous, emotional and gratifying adventures life has to offer.
At least until the Matrix arrives.