Internet – Have I told you lately that I loved you?
The last few years of the internet have been so empowering.
So much information at your fingertips.
Order apps with apps.
Or scones by drones.
Ushering in the blessings of the current iteration of the internet, for real estate, was Streeteasy in 2005.
Streeteasy, you surely know as a useful tool for buyers to look for apartments.
It
quickly became terrific for sellers, and for real estate professionals.
By 2009/2010, it already was in a dominating position as the most trafficked website for those searching for real estate listings.
In 2011 or so, it began to roll out a series of programs aimed to help agents advertise and to match experts in certain neighborhoods with buyers who need their help, with the idea of being an enhanced marketplace for listings and expertise.
This is every day in NYC
Were it not so user-friendly compared to other means of
property
searching, no one would use it.
But alas, it’s well-designed and always adding functionality.
That said, the website is not all rainbows and unicorns.
While there is no question that more information is better, not all information is created equal.
Streeteasy has created some misperceptions when it comes to real estate.
Let’s count a few:
Want to Be Your Own Agent?
Some buyers want not to be represented by an agent.
I’m all for efficiency, but the wheels come off pretty quickly.
How does the listing agent know that the buyer is qualified and prepared?
Has the buyer been prequalified by a bank?
How does the agent know the buyer is “for real”?
Making an Offer
Once a buyer sees a property, how does the buyer go about justifying the offer he/she has makes?
By simply look backwards at comparables and saying, “Well, this sold for x and this sold for y, so that’s what justifies the offer.”
Does this really work in practice?
No.
This is where Streeteasy really isn’t helpful.
Unless someone has seen the inventory, and really seen the inside of a property, there still is so much information missing from photographs and floorplans alone.
What were the circumstances under which a sale happened?
Perhaps the neighbor bought the unit and overpaid for it.
Perhaps the apartment was in much worse (or better) condition than the photos really show.
Streeteasy has empowered buyers to be a lovely combination of confident and relatively ignorant.
Certainly, at times there is less information necessary, and I would argue that below a certain price point the value proposition of a real estate agent to negotiations is less obvious.
But in fact, the agent may be more important when trying to win in a competitive situation.
Agents know one another, and in a competitive situation, there is comfort in knowing that the agent on the other side is someone they have done business with in the past, and will again in the future.
on the market for too long? Or about to be banana bread?
Days on the Market
“Well, I’ve seen that the unit has been on the market for x days, so this justifies my offer.”
This may make sense in the abstract, but only when put into context can you see how silly this negotiation tactic can be.
Streeteasy offers no context here.
Perhaps the apartment was very hard to gain access to, perhaps there was a deal that a board turndown, perhaps the building is EXTREMELY strict, and average time on the market is consistently, through any market, much longer than normal.
Or, perhaps the apartment had been overpriced, and only now has been adjusted properly.
Again, the confident/ignorant axis comes together to keep a buyer from winning an apartment bid.
What If You End Up OVERpaying?
This is the dirty secret about trying to be your own representative.
Buyers think they will get a better deal by coming in without an agent – but there are many situations where they end up OVERpaying because they do not know what they do not know, and miss out on asking the important questions.
Perhaps the price seems to make sense, but the seller needs to sell, or places value on some aspect of a closing that is an easy give for a buyer (YOU) but is worth a lot to a seller.
If you don’t know to ask, you might overpay in many situations.
Commoditizing Real Estate
Streeteasy has done a great job of helping empower buyers and sellers, creating a marketplace valuable to the entire ecosystem.
The programs they are putting into place are great – but are they trying to cut out brokers?
Will they be successful in this effort, if that’s the case?
After many interviews, I’m convinced that the value proposition of an agent like myself is clear, and the longer I am in the market, the more information I gather.
While I have thought that under a certain price point perhaps the agent is less useful, the utility in putting deals together has reminded me that an algorithm cannot yet replace a human in dealing with other humans.
We are insane and irrational, and that’s not going to change.
Some small percentage of deals could happen without agents involved, but most would fall apart without them.
And while I love Streeteasy, and it has been a boon to my business growth and marketing reach, I have not been convinced that it is a substitute for a quality agent. Like me.
If you would like to discuss how we work with buyers or sellers, please email me at sharris@bhsusa.com or call me and my team, at 646-504-5710. Thank you! Scott