I think I speak for most when I say that it’s a relief to have 2020 behind us. While the real estate industry had one of its best years yet, the trials of the pandemic and the associated economic carnage have left our country with a long road to recovery.
Despite the steady stream of bleak news, I am bullish on 2021. Vaccines are being deployed, interest rates remain historically low and the Fed has signaled no immediate changes. The demographic shift of suburban and second-home housing growth appears to be locking in another strong year ahead.
But don’t pop the champagne yet. Investment capital will continue to flood the space, spurring greater consolidation, technology innovations and change. While many in our industry long for the good old days, I see continued pressure for agents to be flexible or lose market competitiveness.
All this disruption raises a key question for 2021: Can you move fast enough?
Americans pay the highest commissions in the world. Meanwhile, technology has exploded in our industry, bringing with it the promise of making home-buying easier and faster. Why does the largest purchase for most consumers have to be the most painful? It doesn’t. And a lot of investment capital is bet on solutions to prove this.
Each day, new startups are expanding in the search-and-find space with tools that are bringing deep levels of insight directly to agents and consumers. To varying degrees, legacy and new players alike are attacking a similar problem: how to provide more information about homes and then facilitate a seamless, transparent transaction.
The problem for agents is that high commissions and technology acceleration are in conflict with each other. This means the commission pinch is coming, if not already here. The latest data show the average commission on a home is now under 5%. The solution lies in using technology that allows you to move faster to increase sales volume.
Good agents work long hours, are effective negotiators and marketers, and get strong results. They will always play a vital role in every transaction. But I do believe that technology now requires agents to demonstrate their value to consumers more than ever.
I founded HomeSmart after spending the first part of my career in medical billing technology and real estate, so it’s no surprise that I am an evangelist for how technology is an enabler for moving faster, smarter and easier. It would be easy to point to commission erosion and make technology the enemy, but I believe in embracing this change.
That’s why we’re leaning into this challenge at HomeSmart. Our proprietary technology is designed to reduce transaction friction so that agents can focus on generating more business. Our all-in-one capability creates seamless handoffs from lead generation to online document management to final close. This is what consumers expect and how agents can show value.
I see 2021 as a pivotal year for technology. More transactions will be completed faster than ever before because of it, and we’ll have to move quicker in order to succeed. The alternative is to take what the market gives you. Are you best equipped to meet this challenge?
Matt Widdows is the CEO and founder of HomeSmart International. For more information, please visit www.homesmart.com.