'Disintermediation' not occurring in real estate

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While the Internet is eliminating the middle man in some industries, realty isn't one of them|ret||ret||tab|

The real estate brokerage industry is a leader in maximizing use of the Internet to expand business operations and showcase the valuable services real estate practitioners offer consumers, according to National Association of Realtors President Dennis R. Cronk.|ret||ret||tab|

Cronk, a Realtor from Roanoke, Va., with more than 25 years of experience in residential and commercial real estate, discussed the industry's successful transition from traditional to digital business operations Feb. 28 in a speech at Virginia Commonwealth University. Cronk was featured as part of the Virginia Association of Realtors' Distinguished Lecturer Series.|ret||ret||tab|

According to Cronk, disintermediation a term used to describe technology's displacement of intermediaries providing certain services has not happened within the real estate industry. |ret||ret||tab|

"The Internet is bringing fundamental change, but the need for the real estate professional will remain greater than ever. However, this (reliance on real estate professionals) is the result of a commitment by industry leaders to keep Realtors central to the real estate transaction in the new Internet environment," Cronk said.|ret||ret||tab|

He pointed out that while online technology is making more home buying and selling information available to consumers, it has not made the transaction process easier. |ret||ret||tab|

"The explosion of information on the Internet increases the need for experts to place data into a meaningful context for consumers. The Realtor is evolving from a provider of information to an interpreter of information," Cronk said.|ret||ret||tab|

The Internet is becoming an increasingly important tool in the real estate transaction process, for both industry professionals and consumers, he said. NAR research shows that 62 percent of all Realtors use the Internet for business, up from 25 percent just four years ago.|ret||ret||tab|

Seventy-two percent of real estate firms and 57 percent of Realtors generate at least some of their business online. Additionally, 23 percent of home buyers use the Internet for home buying information; and those who use online technology to preview homes spend about half as much time making on-site visits.|ret||ret||tab|

When consumer use of the Internet starting picking up in the mid-1990s, the Realtor organization created a Web site to give consumers direct access to more data on home listings information formerly accessible only to Realtors without making themselves unnecessary, Cronk said. "We decided to ... become the new class of Internet intermediaries who would shape the future of the real estate marketplace."|ret||ret||tab|

The NAR realized the crucial importance of acting carefully in making its real estate information available online, he said. Although posting listings on the Web was viewed by some as "frontal assault" on the safekeeping of priceless data, industry leaders realized that open access to such information was the key to thriving on the Internet, Cronk said. |ret||ret||tab|

However, rather than allowing an outside company to have total control over the availability and accessibility of the information, NAR selected partners and created a company, RealSelect Inc., to operate its own Web site, Realtor.com.|ret||ret||tab|

Now Realtor.com has more than 1.2 million residential property listings and more than 100 million consumer visits a month. |ret||ret||tab|

"Because Realtors own and control Realtor.com, we retain control over the use and presentation of property listings," Cronk said. "We've learned that e-commerce works like a poker game in which the players capable of raising the stakes high enough will never lose, because competitors will simply have to fold."|ret||ret||tab|

In 1996, total capitalization for RealSelect was $7 million; the company began with 10 employees in 1997. The company, which in 1999 was renamed HomeStore Inc., went public and now has a market capitalization of $6 billion and approximately 1,000 employees.|ret||ret||tab|

"With Realtor.com, we have created the platform on which organized real estate can build a more efficient, consumer-friendly digital transaction that secures Realtors as the first point of contact with consumers," Cronk said.|ret||ret||tab|

The Realtor organization is aiming for the same online dominance for its commercial real estate site, Commercialsource.com, as it has achieved in the residential sector with Realtor.com, he noted. In December, NAR announced an agreement with LoopNet.com to create the largest online aggregation of commercial properties, transaction-related products and services in the United States and Canada.|ret||ret||tab|

Cronk mentioned several other initiatives the association is undertaking to keep Realtors at the forefront of online technology. In February, NAR announced a new functional standard for the exchange of real estate property information. The new real estate transaction standard will facilitate the exchange of information between MLS systems, local real estate associations, companies and individual practitioners.|ret||ret||tab|

NAR is also developing REForms.net, in partnership with Homestore Inc. and the California Association of Realtors. This service will give agents and brokers online access to necessary forms.|ret||ret||tab|

Additionally NAR is launching a new professional certification program, "e-Pro." This course, to be offered this spring, will enable real estate professionals to more effectively use online technology to meet the needs of home buyers and sellers.|ret||ret||tab|

Through e-Pro, Realtors will learn how to better deal with the "Internet-powered" consumer, Cronk said.|ret||ret||tab|

"All the evidence indicates that technology will complement not replace real estate professionals," he said. |ret||ret||tab|

"We've reached this point by taking control of the channels of electronic communication and commerce, by leveraging the value we add to the transaction, and leading our members to a new land of opportunity," he added.|ret||ret||tab|

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