Once upon time, finding a new apartment in Manhattan began with the classified ad pages of the New York Times. Perused over Sunday morning brunch, and circled with red ink, these ads led the prospective buyer to brokers' offices, open houses, and apartment walk-throughs until the dream home was found. In the new millennium, however, the search for a home more than likely will begin at a computer terminal, on the Internet, where umbrella websites such as NYToday.com or digitalcity.com have reframed the classified ad, presenting it alongside supporting products like movers, mortgage auctions and furniture retailers. Or one could start with the web pages of an individual brokerage firm which, depending on the site, may have added features like neighborhood analyses, broker profiles, and mortgage calculators and applications, in addition to available properties. Either way, the Internet is empowering and informing buyers, and changing the face of the real estate industry.
Traffic on the Web
No one is really sure how many people are surfing the World Wide Web. Projections range from 250 million up to one billion. When it comes to real estate transactions, the National Association of Realtors (NAR) projects that 23 percent of potential home buyers nationally are looking for properties online, and that the numbers for the Tri-State area may be as high as 60 percent. Local experts say that the average real estate website gets 100,000 hits a month. "You can not exclude the Internet from your strategy for marketing an apartment," says Neil Binder, principal of Bellmarc Realty, a Manhattan luxury brokerage firm with offices throughout the Tri-State area. "The sellers demand it, and the buyers expect it."
All this surfing has led to fears of what is called "disintermediation." Translated into plain English, this is the speculation that real estate brokers will become superfluous to the home buying process, just as Internet trading has undercut the business of full-service stock brokers.
Real estate brokers aren't worried. "The Internet has totally changed the process of advertising," says Marilyn H. Kaye, president of Prudential MLB Kaye International Realty, a Manhattan based brokerage with a multi-lingual staff and worldwide affiliation. "But not the process of buying."
Eliminating the Leg Work
>Individual brokerage firms estimate that sales originating on the World Wide Web account for anywhere from five to 20 percent of total sales. Keep in mind the key word "originating." Says Alfred Renna, executive vice-president and director of New Media at Douglas Elliman, Luxury Brokers, "Our goal is to help the customer self-educate, and to bring them more information about the marketplace."
The mission statement on the website realestate.com reads. "We are the leading provider of online business-to-business applications that reduce the time, cost and effort normally associated with real estate transactions." Renna estimates that utilizing the web can reduce the transaction time by half. Kaye says that the Internet-educated home buyer now looks at six apartments compared to 22.
Websites featuring floor plans, panoramic photographs, video apartment tours, and even lists of neighboring businesses assist buyers in the process of elimination. Manhattan architect Gary Schmidt and his wife began their home search in the fall of 1998. Pregnant with their first child, the couple knew they needed more space, but with both of them working, neither had a lot of time to "trek around looking at apartments." Says Schmidt, "We wanted to make the search as easy as possible." They began looking at the websites of all the major brokers who represent properties in the downtown area.
"It's helpful to look on the Internet because we could discount certain apartments right away," says Schmidt. "I could tell from the floor plans that they were too tiny." Finally, they looked at an apartment with a broker from Bellmarc Realty. "We really wanted more space," says Schmidt. "That's when I got the idea of combining two smaller units. As an architect that would be easy for me to do." But not an easy thing to do using only the Internet. The Broker began making phone calls to locate two adjacent units for sale in Chelsea. The family, their son was born last April, moved in to one unit last summer, and took ownership and began renovation with the other half of the apartment last October.
The "Middleman's" Role
While the Internet allows people to become educated, like the Schmidts, in the end, the complexity of real estate requires an experienced broker. "There are so many personal issues the Internet can't solve," says Kaye. "Through the whole process of negotiating, the board interviews, getting the mortgage, people are still important."
"It's not just a financial transaction," Renna agrees. "It's also an emotional one, and you still need a broker to help interpret the details."
As pictorial as many of the websites are, the Internet can't tell you that the upstairs neighbors have a rambunctious three-year-old, or that a dumpster sits under your window. Home buyers still need to see, touch, and smell an apartment before purchasing.
In order to maintain their value, traditional brokers are having to make friends with the new technology. Says Renna, "People are hungry for information. If you don't provide it, someone else will." The direction the industry is moving in is improving website technology, and expanding to have more of a worldwide influence.
"We'll be seeing more use of the 3-D tour," speculates Binder, "as well as interactive sites with real time conversation available. And brokers will perhaps provide more services related to after the move."
"The direction I'm looking into is more and more exposure," says Kaye. In the Manhattan area, most brokerage firms currently rely on their own web pages and real estate portals like NYToday.com, the site of The New York Times, to generate leads. Outside of New York, many brokers avail themselves of networking websites like RealEstate.com, which features links to services in real estate from mortgages to movers. The site also helps create and host web pages for brokers.
Corcoran.com began as the website for The Corcoran Group, a billion dollar Tri-state area brokerage firm. In early April, the site is going to re-launch as a completely separate entity, featuring properties from around the world. Says CEO James Kim, "Our vision is to operate the best website for the luxury consumer, with over 200 affiliates world-wide." According to Kim, Corcoran.com originated transactions worth over 87 million dollars in 1999. He expects that number to skyrocket for next year as the site goes global. The Corcoran Group will become solely the New York affiliate in a network that currently includes brokerage firms in 80 major cities including Paris, Tokyo, San Francisco and London.
For prospective home buyers, the Internet is an incomparable research tool. It saves time and money by providing information at the click of a mouse. Buyers can narrow down their search from the comfort of home - without the pressure. You can choose a brokerage firm or individual broker on the strength of their web page and profile. All without taking off your pajamas.
Brokers, too, have more time and can work with more buyers, because they show less apartments to each one. But eventually, you have to go outside and look. When all is said and done, it will be the broker who hands you the keys, who makes, as Binder says, "the marriage between buyer and seller."
Ms. Mulhare is a freelance writer living in Manhattan.