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Computers Changed Real Estate in Unforeseen Ways

Technology has changed the way business gets done, but it shows no signs of pushing practitioners out of the transaction.

BY BLANCHE EVANS

Years ago, some people predicted that the Internet and other innovative technologies would squeeze real estate practitioners out of homebuying and selling transactions. Of course, those predictions never came true.

Now, researchers have published a report that explains exactly why real estate professionals are still in demand — from a scientific point of view. The crux of the report: The Internet is an evolution of a real estate practitioner’s services, not a revolution.

"Computers and the Internet have been billed as enabling new ways of doing business, but in the residential real estate industry, people's expanded access to information hasn't rendered the real estate agent a relic," says Steve Sawyer, associate professor of Penn State’s School of Information Sciences and Technology and a lead author of the report.

“The expectation was that real estate agents would go away once consumers could see all the home listing information, but the number of real estate agents has increased, not decreased, in the last 10 years," he says.

Information Overload

The number of people involved in real estate transactions also has jumped, contrary to assumptions that information technology would streamline and simplify the transaction. Instead, the amount of information about real estate has exploded, requiring more people and more specialized professionals to be involved in supporting, understanding, and processing that information.

In addition to Sawyer, authors of “Redefining Access: Uses and Roles of Information and Communication Technologies in the U.S. Residential Real Estate Industry from 1995 to 2005,” include Rolf T. Wigand, distinguished professor of information science and management at the University of Arkansas; and Kevin Crowston, associate professor in the School of Information Studies at Syracuse University.

The researchers tried to determine whether computing could really transform industries, as is often claimed in the rhetoric surrounding the information revolution. They zeroed in on the residential real estate industry for two reasons:

• The rate of information technology adoption by real estate practitioners was exponential between 1995 and 2005, with only 2 percent using computers in 1995 and 97 percent using them in 2005.
• The housing industry is both a fundamental part of and one of the fastest-growing sectors in the national economy.

Drawing on interviews, surveys, data from the federal government and the NATIONAL ASSOCIATION OF REALTORS®, and academic work, the researchers analyzed what real estate practitioners do; how computing has changed what they do; and how legal, political, and economic forces are influencing the new processes.

Unforeseen Effects

The researchers found that the information and communication technologies have provided access to information — such as listings, mortgage rates, fees, and neighborhood demographics — that were previously unavailable to consumers.

That has led to better quality information which, in turn, has led to better-informed consumers. Armed with more information, consumers have demanded more specialized services as well as better service from real estate practitioners, Sawyer says.

However, Sawyer notes that the “transformative nature” of technology is really seen in second-level effects — that is, the unimagined and unintended innovations that give rise to changes in organizations, markets, and social interactions.

In real estate, these innovations include virtual tours that can make actual visits to properties obsolete, and online bidding between sellers and buyers. Neither of those effects were foreseen when real estate practitioners began using the Internet, but they are resulting in new specializations for real estate professionals and new business models.

So what new technologies will affect the marketplace next? The researchers say they have no crystal ball to predict future changes.

“At this time, all we have are hints of the innovations,” Sawyer says. “Agents and consumers are experimenting with new ways of engaging one another, consummating the transaction, and sharing information.”

© Copyright 2006 Realty Times. Reprinted with permission.

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