- The Washington Times - Friday, May 3, 2002

Online brokerages say they offer customers more control, savings and convenience than traditional real estate firms, and industry experts admit that the influence of technology and online services has changed real estate, even among staid traditionalists.

These days, if you are looking for a house and if you have some Internet savvy, simply log on, search for an online brokerage such as ZipRealty.com, eRealty.com or EIEIO.com, and start scrolling through the housing market. A National Association of Realtors buyer survey found that 37 percent of all buyer searches started online in 2000. Current indications are that number has doubled, experts say.

Eric Danziger is chief executive officer of ZipRealty.com, which serves buyers and sellers in Maryland, Virginia and the District. He says ZipRealty.com is a full-service brokerage that offers all of the same options as the more traditional real estate firms.

"The term 'online real estate' is really a misnomer," Mr. Danziger says. "We are a full-service brokerage that employs real live agents, and a huge differentiating technology. Not everyone has to conduct business the way we do, but the real estate business needs to be about allowing the customer to have a bigger say."

Online brokerages say they give customers more power to handle the search for a new home or to list a home for sale.

A customer registers online, types in specific criteria to indicate the type of home he is searching for, as well as the price range and the number of bedrooms and bathrooms he wants.

The firm then notifies customers by e-mail as soon as a home becomes available that meets the criteria. Customers can contact an agent at the firm to answer questions or set up an appointment.

Buyers also can get virtual tours of homes through the Multiple Listing Service (MLS), the database of homes that Realtors have been able to access for years. Sellers also can use the service to find comparable listings and gather information about other houses in the neighborhood.

Donald Snider, president of EIEIO.com, an online brokerage based in Maryland, says he believes more buyers are turning to Internet-based realty firms because they love the control it offers.

"In the older days, buyers never knew if they were even seeing everything that was out there," Mr. Snider says. Now, after doing their own research through MLS listings, buyers can look at properties from the outside on their own, and then call a Realtor to set up an appointment to view interiors of homes that interest them.

Mr. Snider says he worked with a buyer who was transferring to the Washington area who decided to buy a home based on the gallery of interior photographs posted on the MLS. His wife was able to view the same photos, although she was back home in Richmond.

"She told him to go ahead and buy it, based on the photos," Mr. Snider says. "He knew he had to act quickly."

Hiwote Tadesse of Alexandria decided to take the initiative and manage the home-buying process on her own at her own pace. Mrs. Tadesse was renting a home in the District with her husband when they decided they wanted to buy. She did a search on the Internet for real estate companies and chose ZipRealty.com.

"I liked the fact that I looked at the houses first, and then I set up an appointment with a Realtor," Mrs. Tadesse says. "This way, you can decide 'this is what I want to see.'"

Mrs. Tadesse says that she had many questions during the home-buying process but that the brokerage's resource page answered most of them including providing advice about how to get a loan.

"It was very user-friendly," Mrs. Tadesse says. The biggest benefit: The 1 percent cash back she received at closing, she says.

Besides the 1 percent back at closing, ZipRealty.com says it offers lower commission rates 4 percent to 5 percent compared to the traditional 6 percent.

The firm says it can pass on the savings to customers because it hasn't amassed the overhead costs that traditional Realtors have.

Bob Ross, district manager with ZipRealty.com in Maryland and the District, says his company can give rebates to buyers because the entire home-buying process is streamlined and so much easier.

"The Internet really adds a new flavor and an ease to finding, buying and selling," he says. "We are reinventing real estate."

Ben Clark, regional marketing director for the mid-Atlantic region of eRealty.com, which has offices in Vienna, says he believes the long-established model of real estate is too restrictive and that it places information in the hands of Realtors who may not always have their clients' best interests in mind.

Mr. Clark says the nontraditional, online brokerages are smaller, so their agents are closely supervised to ensure quality service and rapid response.

"Our Realtors have two levels of supervision," Mr. Clark says. "The pressure on brokers today is to deliver quality service, and you can't just let contractors run around and do it."

Real estate specialists agree that the way business is being conducted is changing and that companies that do not take advantage of the available technology will suffer and might not survive.

Still, Realtors who adhere to the conventional real estate models say these newer companies might have bells and whistles but they cannot offer clients the level of service, including the analysis and hand holding many buyers need.

Dale Mattison, associate broker with Long & Foster in the District, says commissions might be lower with online brokerages, but he warns that buyers "get what they pay for."

"Our commissions are always negotiable," Mr. Mattison says, "but if I work with a buyer and I work with them again and again, I can't provide that service at a reduced fee and survive."

Mr. Mattison says the intricacies of home buying call for more face-to-face human interaction than the online companies offer.

Most of his clients search the Internet, too, Mr. Mattison says, but "electronic comfort is not enough to help them through."

Although buyers can do their own research, they may wonder how all of the information meets their needs, he says. They can obtain information about neighborhoods, amenities, schools, lifestyles and property conditions, "but how do they put it all in the blender and come out with a finished product?" he asks. "Traditional brokers help customers wrap their arms around the vast amount of information that is available to them."

Do traditional Realtors feel threatened by fast-growing online brokerages?

"Any well-managed business has to look at the competition," Mr. Mattison says. But, according to some statistics he has seen, "the volume of business being done by nontraditional real estate companies was not threatening."

Online brokerages say business is booming.

Mr. Clark says eRealty started business in Houston in 1998, and then opened its Vienna office in 2000. In the first 90 days, eRealty Realtors sold six houses. A year later, they were selling 10 to 15 houses per month. Mr. Clark says eRealty Realtors currently sell up to 40 homes a month.

"Our business is up by 500 percent over the last year, volumewise," Mr. Clark says. "We are clipping along at a good pace."

EIEIO.com opened its virtual doors for business in 1999. Mr. Snider declined to provide specific numbers but says the company's growth has been "exponential."

"We have multiplied our business fourfold each year," he says.

In the past three months, ZipRealty.com has hired more than 80 Realtors to accommodate its increased demand. Company officials say the goal is to hire 1,000 new Realtors this year across all markets.

"We are aggressively recruiting across all our markets at a time when most companies are conducting layoffs. Our business continues to grow, and we need to add to our Realtor force accordingly to meet the demand of home sellers and buyers," Mr. Danziger says.

ZipRealty.com was founded in August 1999 and accepted its first real estate offer three weeks later. Company revenue has expanded 363 percent in the past 12 months, Mr. Danziger says. Between October 2001 and February, the number of transactions grew by more than 500 percent. The firm says it is now serving more than 6,000 active buyers in the Washington area.


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