Finding a Home Online

If there's any lingering doubt about how the Internet is transforming the way people buy and sell homes, here's eye-widening proof: Marnie Azadian and her husband just moved from Scottsdale, Ariz., into a $410,000 home in Tulsa that they bought 100 percent over the Internet.

They never visited Tulsa, Okla., where Marnie had accepted a job. They never opened the front door, or a kitchen drawer. Never drove around the neighborhood.

"I did have some moments of "Oh my gosh, what did we just do?' " says Azadian, 57, but no regrets about the house they'd fallen in love with from a virtual tour. (Though her commute is a bit more of "a pain" than it looked like on mapquest.com.)

Risky? Maybe so. But this is just a glimpse of how rapidly and radically the Internet and other techno-gadgets are reshaping real estate sales. Already, 80 percent of buyers use the Internet to help find a home, according to the National Association of Realtors. Day by day, new real estate tools are surfacing on the Web.

Technology is shifting knowledge and power to buyers and sellers. In doing so, it's loosening Realtors' long-standing control of vital information and cutting into their sales commissions. For more than 100 years, Realtors have guarded the details of homes for sale via their multiple listing services. At least 900 regional MLS systems exist nationwide. Unless the MLS systems become more open, unified and technologically sophisticated, they risk being replaced by a Web search engine.

"The Internet is a significant threat to Realtors, who in previous decades have had iron-grip control over all necessary information for those seeking to buy or sell a home. Today, that's not necessarily the case," says Stuart Gabriel of the University of Southern California's Lusk Center for Real Estate.

Compared with the patchwork of MLS systems, each with its own board of directors, "The Internet search engines may be very competitive and very efficient."

Signs of an upheaval in the industry were evident by late 2005, when the Justice Department filed an antitrust suit against the National Association of Realtors. Justice wants the Realtors to drop a policy that lets brokers withhold their for-sale listings from low-cost Internet competitors.

The Realtors' policy is on hold. But Brian McDonald, a deputy assistant attorney general for Justice's antitrust division, says the policy's restrictions still exert "a chilling effect in the market," because some companies won't risk introducing new Internet business strategies if they could be undercut in the future.

But even as the two sides file motions, delaying the trial, the Internet is leveling the playing field and prodding the industry to adapt faster than you can say, "Your honor, we'd like a recess to consider new developments."

In just the past few months:

Zillow.com, which created a stir last year by posting its estimated values of millions of homes across the country, has started showing homes for sale. In the past two months, nearly 32,000 people have listed their homes for sale.

An additional 16,000 have put "Make Me Move" prices on their homes. That feature lets homeowners who aren't really looking to sell put a kind dream price tag on their home, just in case someone wants to make a sweet offer. Zillow says the Make Me Move prices tend to be about 17 percent higher than its "zestimates," which means owners are taking the option seriously.

Trulia.com is asking real estate agents to post homes for sale and has introduced "heat maps" that show the price and popularity of home sales by state, county and neighborhood.

Google.com is trolling for real estate agent listings for its classified-ads system, known as Google Base. The Houston Association of Realtors, for example, announced in December it would put all of its listings on Google.

By the end of the month, apartment hunters will be able to use some cell phones with GPS technology to find places to rent. From the national database of apartments.com, customers can see a list of the 70 closest apartments from where they are standing. On their cell phone screens, they'll be able to see apartment details, floor plans, area maps and call the property manager to see the property. (Gannett, which owns USA Today and the Asbury Park Press, also owns a stake in the parent company of apartments.com.)

This summer, the inventor of the technology, SmarterAgent.com, says it'll launch a similar service for houses on the market.

Forget grainy aerial photos of homes. Microsoft's Live Local lets people use their Xbox 360 or other video-game controller to take 3D street tours of 15 cities. The company is busy adding more locations.

"It used to be, five or seven years ago, that our job was about helping clients find the right home," says Pat Lashinsky of ZipRealty, a discount real estate brokerage. Now, "The clients are very involved in finding their own homes; there are so many tools and ways they can do it."

The role of the agent, which for years was mainly to bring together buyers and sellers, increasingly is "to help clients with all of the paperwork," Lashinsky says. Nearly one out of four buyers last year found the home they wanted on the Internet, up from 2 percent a decade ago, according to the NAR.

There's no hard data on how many people are quite as bold as the Azadians, willing to buy a home with only a high-tech tour from afar. But there's anecdotal evidence that buyers are increasingly willing to make a leap of faith in cyberspace.

Virtual tours

J.R. Crawford, an agent on Vashon Island, Wash., said she had three buyers last year who made offers after taking virtual tours. Though each bid was contingent on a walk-through of the home, Crawford recalls that one buyer from Texas opened the door and said, "I know where I'm going; you don't have to walk me through the house."

That said, buyers should beware: For anyone hunting for homes, the quality of the information and the tools offered on Web sites can vary dramatically, as a simple search can reveal. When USA TODAY tested 10 of the most popular sites, we received very different results for available homes, prices and lenders.

For now, the vast majority of home buyers still use real estate agents in some way during the sales process. The Azadians said the good telephone rapport they developed with the seller's agents in Tulsa gave them the confidence they needed to put their trust in technology. They sent all their documents via express mail.

But fewer buyers think they need agents to supply vital information. Last year, 69 percent of buyers said their real estate agent was a "very useful" source of information, down from 72 percent the year before, according to the National Association of Realtors.

Sellers take on work

Sellers, likewise, are doing more work themselves, from scheduling appraisals to holding their own open houses. As homeowners bear more of the labor, and agents less, many sellers don't want to pay as much for an agent's services. Rather than pay the traditional 6 percent sales commission, more sellers are saving money by turning to agents who provide a la carte services — such as advertising the property on the Realtors' multiple listing service and filling out contracts.

These limited-service brokers are especially popular in high-cost areas, like the Washington, Northern Virginia and Maryland region, where the typical 6 percent commission on the average-priced home of about $400,000 could cost the seller $24,000.

Which is why four of the top-10-producing real estate agent teams in that area offer a la carte services, says David Charron, president of the MRIS, the multiple listing service for the Washington area, the largest in the country.

"That shows the business is evolving," Charron says.

Federal regulators, however, say the industry hasn't changed enough. The Federal Trade Commission already has made the Realtor multiple listing services in seven metro areas drop policies that protected the traditional real estate agents by hampering limited-service brokers. The FTC is suing one MLS operator in Michigan for refusing to accept listings from limited-service brokers.

"There are more (actions) in the pipeline," says Maureen Ohlhausen, director of the FTC's office for policy planning.