The Internet is changing the way the real estate industry is doing business - but not in the way originally predicted.

Initially assessed as a potential threat that would allow buyers and sellers to find each other and bypass agents altogether, preliminary findings are showing that the Internet has become a beneficial tool that has been added to a real estate agent's resource kit.

An interim report from the University of Alberta-based Canadian Institute of Retailing and Services (CIRAS) indicates that the profession is adapting to the Internet and utilizing its benefits to provide more services more efficiently.

"In about 1995, it was believed that the Internet was going to lead to disintermediation - having buyers and sellers using e-commerce to find each other instead of using a real estate agent," said CIRAS director Paul Messinger, who along with Jane Lee Saber, originally a U of A doctoral student in marketing and now a faculty member of the University of Texas at Tyler, are the co-authors of the report.

Jack Dagley, Business Edge
Paul Messinger co-authored a report on the effect the Internet has had on the real estate sector.

"There was a fear that a lot of buyers and sellers would find themselves. That hasn't materialized nearly to the extent that was initially feared," said Messinger. "Nevertheless, it is a case where 'For Sale By Owner' still exists and has been facilitated by the Internet, just in the same way that real estate agents' activities are facilitated by the Internet."

So far, studies conducted in the United States show that employment in real estate has continued to increase at the same rate it did before the Internet became a factor, while real estate agents' incomes have also increased at similar pre-Internet levels, said Messinger.

"The Internet is generally not viewed as a threat as much as it is a tool," he added. "What the agents are finding is that it's a help rather than a burden. It's more of an opportunity, rather than a threat."

The study, looking at the effect of the Internet on the real estate profession, began a little more than a year ago, evolving out of a larger research project on harnessing the web interaction cycle for Canadian competitiveness that Messinger is also working on.

Messinger and Saber are now in the second phase of their project, having conducted a number of focus groups as part of the study's first phase.

They're in the process of putting together a follow-up survey for a cross-section of real estate agents and real estate clients.

"We're trying to benchmark how the profession has changed, and ultimately what we're finding is that real estate agents need to recognize whether they're dealing with someone who uses the Internet or not, and adjust their services accordingly," said Messinger.

"For those using the Internet, there are opportunities for the agents to enhance their services and to be more efficient."

Early results show that the Internet has become a targeted communications tool that is focused and efficient.

On the buying side, agents can use the Internet to allow buyers to screen houses online, which in turn makes buyer visits more efficient as only homes that have passed an initial inspection are being viewed. Agents can also use the medium to their advantage by keeping clients advised of new properties of interest via e-mail. Both allow for a more effective use of time.

The sellers, however, sent a different message through their focus group. The sellers' agents indicated they didn't benefit as much as the buyers' agents did.

"Even though the sellers' agents don't identify the benefit of the Internet as much in the focus groups, they still gain because of the efficiency in helping the buyers find them," said Messinger.

The study is expected to be completed by September. It will then be provided to the Alberta Real Estate Foundation (AREF) and disseminated to its members. It is also slated to be published in an academic journal, and while the research centres on Alberta, Messinger believes the results can be extrapolated and used on a national level.

"There's not a lot of research that's been done in or around the real estate market, particularly on the residential side, so it's great to have this kind of information coming forward so individual members can make informed decisions on how they spend their marketing dollars," said Gael MacLeod, executive director of the Calgary-based AREF, which has provided financial support and guidance to the project.

When it comes to the Internet, agents have been operating on anecdotal evidence, said MacLeod, based on what people believe is successful or what they think has been successful.

"What do you need to do with your online marketing and how effective is it?" asked MacLeod. "It's a bit like operating in the unknown and that's what this marketing research will tell them."

(Laura Severs can be reached at laura@businessedge.ca)