The Real Job of a Real Estate AgentWigand, Crowston and Sawyer (2001) observes that thereare seven distinct steps in the real es-tate process: listing ahouse, marking the listing, finding a buyer, helping abuyer select a house, ne-gotiating a contract, removingcontract contingen-cies and closing the sale of the house.Whether rep-resenting the buyer or the seller, the realestateJournal of Real Estate Portfolio Management149
Waleed A. Muhanna, James R. Wolfagent plays a key role in each of these steps. The Internetmay provide buyers and sellers increased real estatetransaction information, but having gathered all thatinformation most people need someone to help them sortthrough and interpret it. This is probably why the Internethas had little effect so far on the public’s perception of theagent’s role. An NAR study cited by Freedman (2000)shows that buyers using the Internet to search for homesactually utilize real estate agents more often than non-Internet home shoppers— 87% vs. 76%. According to thatstudy, sellers want a real estate agent to find a buyer, sellwithin a time frame, set a price, negotiate with the buyerand complete the paperwork. Freedman reports that thesame study found that buyers expected agents to find theright house, negotiate price, com-plete paperwork,calculate purchasing power and to arrange financing.The Internet can provide only some of the servicesmentioned above. For example, several online real estatesites and financial services and allow buyers to calculatetheir purchasing power and even ob-tain pre-approval fora home loan. The Internet also makes listing a home to aworldwide market fairly simple. However, it may bedifficult for a seller to choose the best website to list theirhome without the help of an experienced agent. In addi-tion, it is difficult to imagine that the tasks of ne-gotiatingwith the buyer and seller or of trouble-shooting the widevariety of problems that may arise could be successfullyautomated.When making a home purchase, typically the sin-gle mostexpensive investment and complex trans-action for mostpeople, buyers feel the need for a relationship with aprofessional real estate agent. When putting their home onthe market, sellers need assistance in setting a price,marketing the property, finding a buyer and closing thesale. Real estate professionals fill the dual role of amarketing / sales agent and counselor, making it unlikelythat they will be disintermediated by on-line services. AsWigand, Crowston and Sawyer (2001) notes, real estatesales agents use social capital—the set of social resourcesembedded in re-lationships—to establish their stake in thevalue chain, and that agents actively manage their socialcapital. This idea seems to be supported by NARresearch that shows realtors’ incomes increase withexperience. As realtors develop richer social networks,they are more able to exploit their net-works for gain.