Real Estate News & Commentary

How Will the Role of Real Estate Agents Change in 20 Years?

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Real estate is changing.

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Between iBuyers, new technologies, and the instant gratification economy, the traditional real estate industry of slow-moving mechanics and inefficiencies isn't going to survive unless something changes, and fast.

We’re already seeing companies like Carvana removing the necessity for someone to go to a salesman or car dealership to purchase a vehicle. So, why couldn’t Zillow or another major player do this with real estate?

But most importantly, how could these changes affect the job market for the 1.3 million real estate agents in the United States?

How could their roles change over the next 20 years?

Let’s talk about it.

Real Estate Brokerages Could Centralize

This isn’t a common belief but it’s certainly an interesting idea.

When companies within an industry or even massive empires throughout history are faced with adversity and conflict, one of their first instincts is to centralize and consolidate their power.

They need to control their fate and the only way to do that is by taking charge and directing its employees and assets to overcome the competition.

As we know, real estate agents operate as 1099 independent contractors. They simply “hang their license” under a brokerage. At the end of the day, it’s their own individual business.

man on the coast searching house on a real estate application on his smartphone. All screen graphics are made up.

They hold special values, host a unique culture, and conduct business on their terms.

Large brokerages have little to no control over their agents, therefore, as of right now, they do not have the power to compete with Zillow or iBuyers, effectively dooming the future of real estate agents.

However, if brokerages were to centralize, as in, remove 1099 contractor status and employ their agents under an hourly wage or salary, with benefits and all. They may be able to stand up to the big dogs with controlled agent performance, mandatory use of systems, and the effective use of structured budgets.

Related: The No. 1 Way to Drive Business Growth in 2020? Build a Solid Online Presence—Here’s How

Centralizing May Reduce the Total Number of Active Real Estate Agents

One of the major attractions to become a real estate agent is the idea that you can operate your own business, schedule your own hours, and create profit relatively quickly, all while having an exceptionally low barrier of entry.

All you really have to do to become a real estate agent is take a class, pass a few tests, and boom, you’re licensed.

If brokerages were to centralize, this all goes away.

Sure, the licensing process may stay the same. But the incentive isn’t there anymore. You’re simply just going after another “nine-to-five” job with no freedom.

This would dramatically reduce the number of real estate agents in the marketplace.

Real Estate Agents Will Become Less Important for “Finding a Home”

Over 90 percent of all buyers are beginning their search online. If we dig deeper, we find that 99 percent of millennials are beginning their home search online.

What does this mean?

It means real estate agents are less important than ever when it comes to finding a home for their clients. In fact, only 28 percent of all buyers are finding their homes due to a real estate agent’s recommendation. That number is only declining.

The days of the real estate agent being a gatekeeper of homes are over. The MLS books are gone, information is everywhere, and people know what they want.

I personally advise my clients to find a home themselves at this point. They were already searching on Zillow. They can see everything I can see except pocket listings. So other than pocket listings, how can I possibly help them find a home more efficiently than they could themselves?

If I see something that fits their criteria, I’ll send it to them to make sure they’ve seen it. But I’m no longer actively searching for homes on behalf of clients anymore unless specifically instructed to.

My role as an agent has already changed.

Related: Will Real Estate Agents Be Made Obsolete by 2025?

What Will Agents Become Then?

Real estate agents will become something akin to a consultant. Technically we’re already consultants, but our roles will become less active over time.

We’re going to be the people you go to after you’ve gathered all the necessary information you need to buy, sell, or invest in a home.

Nowadays, when someone needs an attorney, the last person they end up speaking to is an attorney. They’ll scour the internet for all the information they can possibly soak up, sleep on it, and then make the dreaded phone call to a legal expert.

At that point, the lawyer is simply clarifying and explaining in simpler terms what the person already knows.

This is no different from real estate agents.

talking-future-goals

Clients are looking for information before they ever approach us. Things are different now. Younger people don’t want to talk on the phone. They don’t want to interact with professionals until it becomes necessary.

Therefore, the real estate agent needs to become the best at explaining things in simpler terms and guide clients through the sales process instead of telling them how it’s going to go down.

In effect, this may make it cheaper to use a real estate agent. Instead of the average 3 percent professional fee, we might be seeing more and more of agents asking for 2 percent or less.

Specialties Will Matter More

You'll often see a lot of real estate agents stating that they are specialized in helping first-time homebuyers, luxury real estate, investing, VA loan sales, foreclosures, and literally every other field imaginable.

While sure, there may be some agents who have been around for so long that they’ve genuinely seen it all. But for the ones who haven’t, there is no way you could specialize in so many fields.

In fact, at that point, it’s not even a specialty.

Specializing in something means that that’s basically all you do and you’re super good at it.

In this alternate universe of real estate 20 years from now, specialties will matter way more than they do now.

Especially if brokerages centralize. You’ll see different pay scales for agents who specialize, just like attorneys have.

Luxury agents would be the highest-paid due to the complexity of marketing campaigns and the higher fees. First-time homebuyer agents would be in abundance since nearly a third of the market consists of those type of buyers.

This increased focus on specialization is actually fantastic for the industry since clients will start receiving the best possible service, raising the perceived value of a real estate agent.

Final Thoughts

While it’s impossible to predict the future of anything, let alone real estate. It’s important to at least anticipate something.

I believe the idea of a centralized brokerage system is very interesting and I’m curious to know if it’s in effect already within certain firms.

If you have any thoughts or comments about real estate agents and the future, I’d love to hear your thoughts in the comment section below.

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What do you think the role of agents will be in the future? 

Join the discussion in the comment section below.

Matthew Myre is a residential real estate agent and the CEO of Berri Properties, serving the Asheville and Charlotte regions of North Carolina. Matt...
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    Jimmy Davis from Wichita, Kansas
    Replied 3 months ago
    I believe this is the role of the agent in the future - which the future is now!! As a Real Estate Broker and Team Leader of agents here's what I tell my buyer agents their "real job" is as their client's agent/advisor/consultant: - Potentially saving our clients 1000's of dollars!! 1. Explain the real process of buying a home and how complicated it can be...especially when problems arise. Probably a little different that what you see on HGTV. 2. Help find anything wrong with the home and point out defects...we show homes every single day so we have a better idea of what to look for. 3. Negotiate the purchase contract/inspection repairs/appraisal issues. 4. Help our clients find the best service providers that service the industry: Lenders; Insurance; Title; Flooring; Painting; Plumbing; Home warranty; etc... 5. Protect our clients legal rights. 6. Help the clients find their home...this is our last priority. Because you're right the internet can help, but the internet has just as much misinformation as it does accurate, and a home search setup thru the MLS is by far the best as long as the client's search is setup correctly by their agent. That's just on the Buyer's side...the Listing side...well that's a whole other can of worms!
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 3 months ago
    I agree with everything you said. My main argument against actively helping the home search process is that there's enough "good" information on the internet that buyers can find homes that excite them on their own so that we have more time as agents to provide other services. I still think it's important for us to keep tabs, of course. We need to understand the market and its inventory, but we've come a long way since MLS books and in another 20 years I can see Zillow and its friends becoming equal to, if not better, than the MLS. I love your advice for buyer's agents!
    Edward Seid Real Estate Agent from Seattle, WA
    Replied 3 months ago
    In an industry where things are SLOW to change, the most successful agents will be the ones quickest to adapt to new environments.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 3 months ago
    That sort of business advice will never die. Great insight.
    Michael P. Lindekugel Real Estate Broker from Seattle, WA
    Replied 3 months ago
    i doubt the role of the real estate broker is going anywhere fast. Discount brokerages have been around a long time and barely make a dent in the market. The ibuyer model only works with homogenous product on volume because margins are thin. thinking an ibuyer to purchase your house is a good deal? maybe, maybe no. straight from the redfin SEC ipo filing redfin says it saves home-sellers time, but also reduces the amount of money homeowners earn from a purchase. could be some legal equity skimming. redfin revenue spikes 39% last august from one year ago and still can't make a profit. After 14 some years in business there have been only a few profitable quarters. Redfin raised costs to sellers twice and cut discounts to buyers twice then cut the cost to sellers and raised the discount to buyers. redfin Q2 revenue is $197.8M for net loss of $12.6M. The redfin buysing/selling scheme brought in $39.9M and manage to lose $998,000. the redfin pyramid scheme continues to use debt and equity investor capital to subsidize its unprofitable real estate brokerage and now flipping In May of 2019 how is the zillow house flipping business going? not so well. Since its ipo in 2011 zillow reported has annual losses. House flipping brought that to all new low in losses. Sold 414 homes Revenue - $128.5 million sales proceeds ave selling price of $310,400 Cost of Sales - cost of homes $122.4 million ave purchase price of $295,700 Net $6.1M for ave gross profit (selling price minus purchase cost) for only $14,700 or 4.9% per flip Oh, but wait. There are more costs to buy homes, ready them to flip, market, finance until sold, and deal with the transactions in a corporate manner. Expenses associated with its home flipping operations: $20.8 million in sales and marketing expenses $12.3 million in tech and dev expenses $14.4 million in general and administrative expenses $3.8 million in interest expenses Revenue $128.5m OpEx $173.7m Net Loss <$45.2m> Loss $109k per house or 37% $128.m is a 51% increase to corporate revenue with a soaring 263% increase in losses.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 3 months ago
    Michael - I definitely don't disagree with you on the fact that Redfin, Zillow, and iBuyers are losing tons of money consistently. That's an entire article series in itself. But in terms of real estate agents and the role they play. I can't see us being the exact same in 20 years. I feel as though agents have a hard time creating a "value proposition" to their clients that go beyond "I have MLS access" or whatever tips their brokerage gives them to say. While I definitely haven't quite found the remedy to this issue as a whole (my value comes in the form of being a very good digital marketer for my clients), I think it's important that agents begin thinking in terms of the future, as the industry clearly seems to be at a crossroads. Thank you for the economic data btw. I haven't looked into Redfin's numbers as much as I should.
    Michael P. Lindekugel Real Estate Broker from Seattle, WA
    Replied 3 months ago
    part of that is for the brokerage and the agent to understand what their value is and why hiring a real estate broker is important. for example, electronic desktop valuation models such as zillow, redfin, and what all big banks and lenders use is full of algorithm problems and mistakes. big banks are willing to accept those statistical errors because they feel the financial risk is low. the vast majority of the public has no idea how inaccurate zillow is because they dont bother to read the FAQs. EDV is fine for homogeneous product of a housing development. with non homogeneous product there are too many qualitative data points that cannot be quantified easily plus public records are full of mistakes. frequently, i see buyers over pay and sellers under sell with erroneous internet values.
    Barry H. Investor from Scottsdale, AZ
    Replied 3 months ago
    MICHAEL - I agree that Redfin and Zillow tried the Amazon scorched earth approach to overtake the industry, even if at a loss, to change the industry permanently. It is doubtful they will continue to be funded by investors as they burn through cash. Add a housing downturn to the equation and they could in fact fail permanently. However, the author's points as to how the role of the real estate agent will change are well-thought out. I am a turn key investor / Seller in Kansas City MO and I do not use the MLS or real Estate agents because they slow down the selling process. As a FSBO Seller, I am on top of everything immediately and my homes sell typically in less than a month.
    Michael P. Lindekugel Real Estate Broker from Seattle, WA
    Replied 3 months ago
    redfin started mid 2000s and survived the Great Recession because investors continually pumped money into the cash burning machine. markets are different and very geographical. markets with a lot of homogeneous housing stock tend have a little better data. in Seattle FSBOs sit on the market over priced and dont sell. that has been the case in all the academic research. in WA if you are not a real estate broker, then you dont have access to all the real estate data without paying for expensive data collation services which mimic the NWMLS. our MLS does send IDX data feeds to non brokerages. zillow does not get data. there are a lot of dead weight real estate brokers that should be not be practicing. the barrier to entry to pass the exam is very low. if you fail the RE license exam, then you have to be dumber than a box of rocks.
    Barry H. Investor from Scottsdale, AZ
    Replied 3 months ago
    MATTHEW - As an admitted "not a big fan" of real estate agents (I have only found one agent in 25 years who checks every box on efficiency and responsiveness), I could not agree more with the focus of this article (role change of a valuable agent). As a seller of Turn key remodeled rental properties in Kansas City MO with tenants in place producing high cash flow / ROI to the Investor-Buyer, I went through 3 different real estate agents who did nothing but get in the way. Once I went to a FSBO model, there was no middleman. I still work with Buyer agents and pay their commissions - but ironically the Buyer agents will (usually) not even show my home to their Buyer because it is a FSBO and not listed on the MLS. They (agent) don't even take the time to read the Ad description which says I will pay 3% commission to a Buyer Agent. The client/Buyer has to drag their agent into the process. Great article. I hope we get some long awaited changes to the existing model. The marketplace seems to be taking care of it in small steps.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 3 months ago
    Barry - I cover FSBOs a lot on my website's blog. I think the issue between agents and FSBOs is simply a lack of training for the agent. The approach we're taught is flawed. We seek to earn your trust by "getting in the door" and having a face-to-face conversation to somehow convince you that you're doing it all wrong. I find it amazing to see new agents making FSBO prospecting calls (I'm very against cold calling btw) without logically thinking about the fact that they're purposely trying to deceive a human being and convince them that they are not capable of selling their own home. Now, on another note, I will support the fact that 90% of FSBOs never sell their home and the longer it sits on market, the worse it gets. But if you actually know what you're doing (clearly you do), then I would never even attempt to convince you otherwise. Thank you for sharing your thoughts.
    Katie Rogers from Santa Barbara, California
    Replied 3 months ago
    At least you found one agent. I haven't found one yet. And finding one will become even harder if brokerages merge. Agents work for their broker, not their client, regardless of "fiduciary duty." If you reject one brokerage's agent, it is difficult to work with another agent from the same brokerage because according to the agents, it is the clients who are difficult.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 3 months ago
    That sounds frustrating. Before I got into real estate, I always knew about the "problems" with agents and if I'm completely honest with you. A lot of agents are not good. I'm not sure what the root cause of it is. Perhaps it's the culture firms attempt to create, the low barrier of entry, or the fact that most are being taught old methods of marketing and lead generation (waiting for sign calls and cold calling). It's definitely annoying when you have to work with agents like that to broker a deal as well. But on the flip side, I've met many great and fantastic agents. As well as people in the street who have nothing but praise for their agents. Either way, there's bad and good in every industry. Thank you for your thoughts!
    Robert Horton Professional from Camden, South Carolina
    Replied 3 months ago
    I predict the old business model will change once the class action lawsuit Moehrl vs NAR, et al is settled. Commissions will slowly come down and real estate agents will start charging fees based on "service" as opposed to a "commission". Hopefully, the business will become more professional with about 30% of the agents we have now. I agree that a buyer can find just as many homes on Zillow and other online resources than you can as an agent, BUT your access to the MLS gives you real time information on the availability of a home. (I know you've had buyers send you homes to view from Zillow that actually closed 8 months ago!) And the MOST important information you have as an agent with access to the MLS is the HISTORY of a property. Zillow may show a home has only been on the market for 2 days when it's actually been for sale for 28 months with 3 different agents. As an investor, access to the history of a home is very important to me....something I will never get from Zillow, Trulia, Realtor.com, Homes.com or even the local GIS system or register of deeds office! I can look back at a property that has sold 3 times in the past 15 years on the MLS and have access to each property disclosure (how old is the roof and HVAC?) and much more info that just looking at the "history" on Zillow.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 3 months ago
    I agree that as of now, the MLS is superior. But this article accounts for 20 years in the future. With the amount of progress that's been made by Zillow and other companies in terms of real estate information and access, I can't imagine the MLS will always reign supreme, as a higher concentration of money and technology continues to fight it. At the end of the day, it's all about competition, and so far, I feel as though Zillow and others are growing the fastest despite economical losses and whatnot. Thank you for your thoughts!
    Ryan Lin
    Replied 3 months ago
    Hi, Currently, the real estate agents have no bigger work because of online and it is quite better for them to learn some techniques to save themselves!
    Paul Balzotti
    Replied 3 months ago
    Another way to summarize all of this is that brokers will either need to up their skill set (speciality or marketing skills or pro active consulting skills or all of the above) and value proposition, or work in the discount brokerage model, or they will be out of the business. Discount brokers only make up about 5% of my market, and I could easily see that double or triple to 10 or 15%. Then the firms with more training/support and tools to help their brokers add value will continue to thrive and likely buy out the firm's that are not adapting. Ultimately what is dying is old school firms and old school sales agents who believe they deserve 3% just for being a friendly helpful agent with MLS access. As your article and many of the comments note, our role is now to step up in new ways and create a new level of service. One other note I would add is I do think being involved in the search process with the buyer can still be be a value add. Buyers need help preparing to buy, and they often search for their "wants" instead of their "why's". We can help them sort through priorities and guide them in the search process. We also should know about new construction upcoming, and be more in the know then the average consumer. But that takes a skill level and a commitment to raising the bar that 50% of the industry is not committed to.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 3 months ago
    I like your points on discount brokers. There's no reason to not choose a discount agent when you're getting pretty much the same service. Thanks for your response!
    Vaughn K. from Seattle, WA
    Replied 3 months ago
    I think the post and most comments hit on stuff that is likely to happen. I think the best way of thinking of it is by analogy: The auto dealer industry. I have a little experience in this from when I was younger, and have some relatives who hold high paying gigs in the dealer business.

    Basically before the internet the customer was left with VERY limited information. You could buy a physical Kelly Blue Book and check stuff, but it wasn't great anyway, because there was a lot of data that was off, and regional pricing has always been a thing too. It was so so at best. You couldn't get info on what dealer cost was on new cars. Finding reliable info on financing was not easy to come by either.

    The internet came along, better data came to KBB/Edmunds and others, and dealer invoice prices started getting posted online! What was "normal" for financing rates at various credit levels also became available. NOW you had a TON of info. Thing is, you still have to actually find a car you like in real life, and actually buy it. The truth is there is a lot of nuance to finding a car with the options you like, even being made aware of all the options you may want (You didn't even know they offered COOLED seats on the model you're looking at until the salesman told you!), negotiating price, and then finding and securing the best financing possible, because most people (usually a bad call) don't pay cash.

    So nowadays buyers can go in with a lot more info, but still need to be walked through a lot of the minutiae. Most people don't know how financing a vehicle works: debt to income and how/why it matters, what percentage of book value somebody with your credit can finance with a bank, the fact that some banks offer lower rates than others for people with certain financial situations even though those same banks might flip for others as to who is the best deal, etc etc etc. What about dealing with title stuff? What about if you want to trade in a car that isn't paid off? On and on. Lots of details to sort out IRL.

    RE is the same but with more zeros on the end and a LOT more complications. So while it's fine for some to just snag houses private party, as with a car, for many others they'll always need to be walked through and advised on some stuff... And that is a value add proposition. Houses are just too expensive and too infrequently bought for your average guy to learn how to deal with it himself.

    That said, as with car dealers, they tend to be working with a lot lower margins nowadays, and pay structure for salesman has shifted a lot, with some going outright salary at some dealers, many dealers have smaller sales staff too for the same volume of sales. I could see RE getting streamlined where there are fewer agents, lower commissions, and each one pushing through more volume because of technologically streamlined paperwork systems...

    But there will always be a place for an advisor to walk people through the complicated process. Who consolidates this system is up for grabs. If Zillow etc get their act together it could be them... Or it may be traditional brokers who lead the way. It will likely involve all of the theoretical possibilities to some degree. Did I forget to mention that salesmanship IS A REAL THING, and who can sell the home sellers and home buyers on them being the best option will carry a lot of weight too.

    We'll have to wait and see how it plays out, but I would assume fewer people will be needed to sell the same number of homes 10-20 years from now. That is how streamlining things with technology works.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 3 months ago
    Love your expanded points on auto dealers. Whenever I hypothesize about the future of real estate, I almost always think about what Carvana is doing in the auto industry. Essentially, becoming the Amazon of vehicles. Job automation is real. Thanks for the response!
    Vaughn K. from Seattle, WA
    Replied 3 months ago
    Yup. Technology can radically change the way things are done.

    What's funny is iBuyers are actually moving TOWARDS the current car dealership model. As it is now owners and buyers retain ownership of houses and only use an agent/broker as a middle man... This is like owning your car but contracting a guy to handle the sale for you. Zillow etc are buying and keeping in inventory the homes, doing minor reconditioning, etc like an auto dealer does with cars. They of course pay less and try to sell for more because of this too, at least in theory.

    So sometimes odd things can happen! The very tech that made many people more prone to buy/sell cars private party is pushing RE industry to do the opposite! Weird.
    Renee Olivia Milton
    Replied 19 days ago
    I'm new to the real estate industry. And you don't really mention the specialty of commercial real estate sales. How do you think technology changes will affect that.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 18 days ago
    Commerical will always require human-to-human interaction. That isn't going anywhere. Some of those deals take years upon years to go through. If technology won't have much of an effect. The general rule of thumb, in my opinion, is that anything with a higher price tag will be harder to streamline with technology. If you're getting into residential real estate right now and want to make it your career, then I highly recommend moving into the luxury market as fast as possible. Luxury sales are far more protected from technology than general sales. Hope that answers your question.
    Matt Myre Real Estate Agent from Asheville, NC
    Replied 18 days ago
    Meant to say "Technology shouldn't have an effect"*