The Effectiveness of a Web Strategy for Real Estate Brokerage

Article excerpt

Abstract

This study examines empirically the impact of information technology on real estate brokerage in Hong Kong using regression models to investigate how page "views" on the Internet affect real estate transactions and commissions. The results are also examined using an error-correction model.

Introduction

Information technology has recently started, what appears to be, a revolution in real estate brokerage services. Real estate sales professionals are increasingly investing in technology hardware and software. The real estate brokerage business is in the midst of dramatic changes brought about by online technology and enhanced accessibility to information. A large segment of the real estate industry is using websites, so that anyone with a home computer and Internet service can get access to real estate sales information. An essential element in the changes taking place is the creation of an industry standard in order to make the exchange of data between real estate brokers, mortgage bankers, property inspectors, and other parties quicker and easier. Heightened interest in Internet online searches by consumers has led most real estate professionals to change the way they operate their businesses. Real estate brokers/ agents can use the Internet to send up-to-date information to potential clients at very low cost, accurately and quickly. The Internet can also help real estate agents increase sales, save time and provide a noticeably higher level of service to both buyers and sellers. Virtual "model" homes may also be distributed on CD-ROM, very much like brochures, and can even be accessed directly through the Internet. The use of the Internet is predicted to result in a gradual decline in the total number of active real estate agents. Consequently, the actual amount of "face" time spent with buyers and sellers may be reduced in the future.

Technology is also having a tremendous impact on the products offered by real estate firms by allowing them to offer additional products and services. A vast amount of brokerage related research has been undertaken. However, relatively few empirical studies to date have focused on the impact of information technology on real estate brokerage. This study is the first attempt to link web page usage to real estate transactions. With the potential impacts of information technology, the institutional structure of the industry is changing rapidly and novel forms of operation merit exploration. A key objective of this study is to examine empirically the impact of information technology on real estate brokerage and explore whether Internet services make real estate agents more profitable. This study is a complement to the existing literature on real estate brokerage. The next section presents the empirical model and the results, followed by a presentation of the limitations of real estate firms for the use of the Internet. The last section summarizes the conclusions.

Estimating the Impact of IT development, financing, investment decision making are becoming very dependent on information technology.

Limitations of IT

There are other possible factors that might influence or account for a customer's decision to use Internet services. This section addresses a number of possible issues that may limit real estate firms' ability to sell real estate services to consumers through the Internet.

The individual broker is more important than the firm to home sellers selecting an agent, since prior acquaintance with the agent is the primary factor in considering an agent (Johnson, Nourse and Day, 1988). Webb (2000) found that education before licensing remains the single most important thing that could be done to enhance the professional image of real estate brokers. Despite the technology boom on and off line, the real estate industry will remain "high touch." The Internet is often viewed as a business opportunity, but few would plan to use the Internet to reduce marketing and customer acquisition costs. …