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Ideology on Technologies Impact of the Future of Real Estate
Academic affiliation: Oklahoma State University
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In the later part of the twentieth century the introduction of information technology has significantly altered the ways in which real estate is bought and sold. With the inception of technology in the real estate field, realtors are concerned about the future, particularly the future role and demand of real estate agents. Some argue that the advancements in technology are unrelated to realtor success, while others believe that the technology is an advantage for the realtors, and some appear apprehensive about the future demand for real estate agents in the increasingly technologically based market. The purpose of this paper is to examine a select few scholarly articles concerning the costs and benefits with the introduction of technology into the real estate workplace.
In her book The Real Estate Agent's Field Guide: Essential Insider Advice for Surviving in a Competitive Market, Bridget McCrea observes the introduction and complications associated with the Internet in the real estate business (50). The introduction of technology has been problematic for old fashioned realtors who must determine whether they will change their business framework. Some defend that technology has no impact on realtor income, like the study given by the National Association of realtors which suggests there has not yet been a detrimental impact on the business of realtors with the introduction of technology in the workplace (Benjamin, Roth, Jud, and Winkler 55). Others tend to dispute that the evidence shows, under a study held by Stacy Sirmans and Philip G. Swicegood in 2000, that the use of computer technology has a positive impact on the compensation or income of the real estate agent (52). Yet others still believe that technology, though good for the real estate business now, will soon encroach on the realtor's job itself:
When RE/MAX International cofounder Dave Liniger saw technology coming down the pike about ten years ago, he made several comments to the press to the effect that most real estate agents need a customer, not technology. "The vast majority of the real estate agents out there didn't have enough buyers and sellers to keep themselves busy,' says Liniger. "At the time, the only agents who really needed technology were the top producers, who were handling twenty or thirty transactions and needed tools like desktop publishing, e-mail, and voicemail to handle the volume of customers. (McCrea 54)
For those "old fashioned" realtors who found this technological dilemma invading the way they propose business, Glenn E. Crellin, James R. Frew, and G. Donald Jud's article "The Earnings of Realtors: Some Empirical Evidence," clarifies the past real estate business from present. When looking at the history of the real estate market, many people had the mindset of Liniger and believed that technology did not positively or negatively impact realtor income in the late 1980s (75-76). This was the time when the real estate professional was the gatekeeper to all property information through its multiple listing service (MLS) which is now open to the public through the Internet. James R. Follain, Terry Lutes, and David A. Meier also looked at the history on realtor income, and did not report findings of technological interaction with realtor income (73). In the past, realtors found that experience and hard work would result in higher realtor income than others. Today, some believe that if one does not embrace the use of technology, then one will encounter severe drops in income over the coming years.
Although some believe that technology is essential for success, Sirmans and Swicegood in their article "Determining real estate licensee Income," believed that, "Being familiar with and having access to the latest technology may also affect productivity. Variables are included in the survey to account for the use of computers, digital cameras, color printers, scanners, cellular phones, and video cameras" (191). Even though the authors envisioned a positive outcome on realtor productivity and efficiency, the 2000 survey found no significant change in income with the use of the information technologies considered (198). On the other hand, Benjamin and Chinloy argue that technology is much more favorable to the consumer as well as favorability among realtors due to the potential returns (42). This is because consumers are able to make more intelligent choices with the benefit of searching listings on the World Wide Web with the least amount of cost involved. "The decision on whether or not to adopt the innovation is based on the change in utility" (Benjamin and Chinloy 37). Utility is the amount of pleasure one receives from the innovation. More and more realtors, without decreasing demand for their services, are seeing positive income, and therefore will adopt the innovation. McCrea expresses interest in short term gains rather than long term cost when she states:
If you're an agent or broker who enjoys testing the latest productivity tools and gadgets, you're in luck. Rolling off the assembly line on a constant basis are new gadgets that promise to make their users' work and personal lives easier and more efficient. In the future, look for gadgets that handle more than just one function. (75)
Scientists over at Centrino agree with McCrea insofar as technology is ever-changing and is necessary for realtor client relations. In the article "Realty World Uses Wireless," Intel Centrino mobile technology is promoting the short term business solution of advanced technology to build success in the real estate market. With this new technology one will create greater communication with one's client, create crisis free transactions, present extraordinary presentations, as well as generate efficiency for one's time spent. This new wireless technology, will also present detailed maps for locations of properties with proximity to schools, freeways and shopping centers with just a few clicks of the mouse. Centrino President Dan Tealdi stresses that, "the widespread availability of wireless connectivity has been a key enabler for improving agent productivity... and the high level of competition in the real estate industry is pushing realtors to look to technology to gain competitive advantages" (2).
Gail G. Lyons, Donald L. Harlan, and John Tuccillo all agree that when in today's market the consumer is king. In their article "The Future of Real Estate: Profiting from the Revolution," it is clear that if one wants to become successful they must communicate well with the consumer and meet all of their needs. The article states that, "Technology is putting consumers on a level playing field with their agents by providing them with market information through the World Wide Web…and is available today at no additional cost to the consumer" (67-68). This means that realtors benefit more from technology by lowering their time commitment while maintaining a constant income. It also states that such technologies allow consumers to "surf" the information without interacting or utilizing the resources of a real estate agent. This is can become very problematic and detrimental to the future existence of real estate agents in the real estate business.
When we look into the future and the costs associated with the introduction of technology into the marketplace, a recent report by Bank of America Securities predicts that real estate brokerage commissions will fall 11 percent over the next three years (Benjamin, Jud, Roth, and Winkler 54). Jud teamed up with Stephen Roulac and found as did Lyons, Harlan, and Tuccillo that although technology will make real estate markets more efficient, in the future it will reduce the demand for real estate brokerage services. Also in the future, the demand for realtors will be more elastic, because consumers have the easily available substitute of searching the real estate market using the Internet (24). Elasticity refers to the flexibility of the consumer when associated with the demand for the agent's services. With increased technology, consumers needing a realtor will become more elastic due to the option of web based searches. In this case Jud and Roulac agree with earlier statements that realtor demand will decrease with increased technology, but they go as far as suggesting that the consumer will have a substitute of the Internet in place of real estate agents.
As realtors continue to be impacted by ever-decreasing costs of information technology and its wider usage by consumers, they will continue to undergo changes in the processes associated with the buying and selling of real estate. These changes will impact both productivity and the income level of realtors. (Benjamin, Roth, Jud, and Winkler 63)
John D. Benjamin, G. Donald Jud, and G. Stacy Sirmans believe J. S. Baen contributes an excellent summary and analysis of recent technological trends on the brokerage industry when he foresees "continued pressure on fees due to increase compensation, easy accessibility of information directly by consumers, and…rebate schemes…" (22). This need for increased compensation would be in response to the low demand for realtors because of easy accessibility to technologies used in place of realtors. McCrea expresses her feelings for those realtors who are uncertain about the future when she warns:
If you happen to be an agent who is still unsure about just what role technology will play in your career's future, get over it. The fact is, your customers aren't confused at all. They know that they want to visit websites that are jam-packed with useful information, they know that they love the listings that feature virtual tours, and they know that they want to contact you via email, cell phone, or pager when they find the right one. (77)
In contrast to RE/MAX International cofounder Dave Liniger's perceptions of the future, we now see that technology has transformed from having no influence in the real estate business to perhaps becoming essential to success of real estate agents. The vast majority of real estate agents who need that customer, that Liniger insists realtors must have, may be in that situation due to lack of the use of technology in their business framework. It will be interesting to see if technology will become the life or death of the real estate business. Even today, some agree with Liniger and say it has no impact, while others believe it will generate a much needed boost for the markets, and more, who do not repond to McCrea's advice, are still troubled by the idea that technology will take the place of their job. One thing is certain; technology is creating a stir, no matter what position one takes.
Benjamin, John D., G. Donald Jud, and G. Stacy Sirmans. "What Do We Know About Real Estate Brokerage?" Journal of Real Estate Research 20.1-2 (2000): 5-30.
Benjamin, John D., G. Donald Jud, Kevin A. Roth, and Daniel T. Winkler. "Technology
and Realtor Income." Journal of Real Estate Finance & Economics 25.1 (2002): 51-65.
Benjamin, John D., and Peter T. Chinloy. "Technological Innovation in Real Estate
Brokerage." The Journal of Real Estate Research 10.1 (1995): 35-44.
Crellin, Glenn E., James R. Frew, and Donald Jud. "The Earnings of Realtors: Some Empirical Evidence." Journal of Real Estate Research 3.2 (1988): 69-78.
Follain, James R., Terry Lutes, and David A. Meier. "Why Do Some Real Estate Salespeople Earn More Than Others?" The Journal of Real Estate Research 2.1 (1987): 73-81.
Jud, G. Donald, and Stephen Roulac. "The Future of the Residential Real Estate Brokerage Industry" Real Estate Issues 26.2 (2001): 22-30.
Lyons, Gail G., Donald L. Harlan, and John Tuccillo. The Future of Real Estate: Profiting from the Revolution. Chicago: Real Estate Education Company, 1996.
McCrea, Bridget. The Real Estate Agent's Field Guide: Essential Insider Advice for
Surviving in a Competitive Market. New York: AMACOM, 2004.
"Realty World Uses Wireless." Realty World . 2004. 24 Feb. 2005 <http://cache-www.intel.com/>.
Sirmans, Stacy G., and Phillip G. Swicewood. "Determining Real Estate Licensee
Income." Journal of Real Estate Research 20.1-2 (2000): 189-204.
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