Warning shot?

Can the Internet disintermediate the real estate industry as it did to the travel industry? The Internet was largely credited or blamed for the demise of travel agency business as those storefronts gave way to Travelocity and Expedia. Air, Hotel and Cruise lines suddenly had the leverage to virtually eliminate commissions as wide spread use of online services grew. This article from the CBS affiliate in San Diego suggests the same sort of thing might be pressing upon the RE industry: TECHNOLOGY: INTERNET LOWERS REAL ESTATE COMMISSIONS

Real estate and mortgage brokers have less of a hold on clients from the start of the home-buying process, according to a national study which researchers at the University of Arkansas at Little Rock helped organize.

More Americans are doing Internet research before they make their first calls when starting to buy a home - a practice that's lowered commissions in certain regions, the study concluded.

It is axiomatic that where a large enough market exists for middlemen or sales reps to craft a reasonable business from aggregating service or packaging data or access, that the Internet can probably displace or significantly reduce the rents that can be collected for those services. Travel research, booking and reservations were ripe for overhaul.

Note however, that just 5 short years later, we are seeing the Air, Hotel and Cruise industry increasingly erecting and marketing their own sites/services directly to consumers - thus disintermediating Expedia, Orbitz and Travelocity. Insurance is certainly one of the those consumer products that can be easily bought, paid-for, serviced and sold online. Training and education are ripe for online delivery. Information and research services, even libraries of various sorts are certainly candidates for being replaced with a click and URL. Filing taxes, business and personal will be done almost entirely online within a decade. Real Estate?

Not so easily as consumers will still require considerable customer interface from agents or attorneys for so large a transaction. State laws will exert tremendous influence on the direction and type of online transactions that might occur with real property. Elements of the industry have already undergone significant transformation - online loan applications, mortgage servicing, title and documentation services.

There will be a noticeable impact on real estate brokers and their business as indicated in the article as much of the directory services and marketing will move online. Like the travel industry, consumers will initially gravitate toward portals (e.g. realtor.com) that aggregate and make searching easier. Ultimately? It remains to be seen.

The fundamentals of the RE industry make it unlikely that Realtors, Agents and Attorneys will be eliminated from the process of buying and selling homes completely, but their role and services are likely to be very different. Open Houses will become the exception rather than the rule, replaced in large part by location based services (mapping apps + demographics) plus streaming video. Initial research of comparison homes, recent neighborhood sales, crime statistics, school test scores and chamber of commerce info will be easily done from a networked computer. Mortgage calculators, live interest rate feeds, online banking, electronic fund transfer, other transaction tools and data are already available. Digital signatures, authentication and authorization will eliminate the need to go to the local realty, escrow or attorney’s office to sign/notarize documents. Marketing and property presentation will probably benefit the most from use of online resources and other technology, replacing the grainy photo and 15 word description in Sunday classifieds.