Net neutrality and real estate

Is the net neutrality repeal a hit for realtors and lenders?

Bethany RamosFirst-Time Homebuyer, Home Buying, Industry Professionals, Loan Officers, News, Realtors

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Dec. 22, 2017.

You might already be familiar with how the FCC’s vote against net neutrality may impact your day-to-day Internet use. But only time will tell how our new Internet rules could affect buying a house. Industry experts predict that one of the biggest changes in the housing market after the net neutrality repeal in late 2017 will be in how homebuyers connect to their realtors and lenders.

New net neutrality forecast: Prices go up, small businesses affected

In December 2017, the Federal Communications Commission voted against the existing net neutrality rules, set in place by the Obama administration in 2015, which prevent broadband providers from slowing down websites and charging more for faster Internet use. Now that the Internet is deregulated, packages and pricing for website users are expected to change. Many anticipate that prices will go up.

The controversial vote not only affects the average Internet user, but it may crowd out the small business owner too. Making Internet use more like cable television, Ohio Congressman Tim Ryan says, could make it harder for smaller businesses, like Etsy sellers and individual proprietors, to keep up with bigger businesses advertising in the “fast lane.” Realtors and lenders who rely heavily on the Internet for advertising and building client relationships could also be impacted by the shift.

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4 ways the net neutrality repeal could change how you buy a house

Access to the Internet has made it easier than ever to buy a house. You can get prequalified for a mortgage online and in minutes, and you can also house-hunt and find a realtor. Younger, first-time buyers are usually the ones most likely to find their homes on the Internet. Buyers are also more likely to walk through the houses that they’ve already viewed online.

So what happens to this seamless online-to-offline buyer experience now that the Internet’s rules have changed? Realtors and financial experts share their insights:

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1. You may see fewer real estate videos.

Net neutrality and real estate
Jeff Miller, co-founder of AE Home Group of local real estate agents in Baltimore, says that there’s no doubt the repeal of net neutrality will change the way realtors market properties to their clients. “With the cost of bandwidth affecting access, it is likely that fewer people will opt to access bandwidth-heavy forms of media like videos,” he explains.

Prediction: “More emphasis put into low-bandwidth media like text and low-resolution photos could allow for broader access,” Miller says.

Since July 2017, the National Association of REALTORS® (NAR) has been vocal in their stance against the repeal as a means of “supporting the little guy” in real estate. New real estate technologies, the NAR said, like virtual reality, drone photography, and mobile apps, are some of those most likely to be affected.

 “Ryan was able to explain difficult mortgage concepts in an easy to understand and entertaining way. [He used] realistic scenarios from past housing markets and current. His enthusiasm and knowledge of the housing market really helped with our final decision to purchase a home.” – Connect with a Cornerstone loan officer who cares.


2. Local realtors and lenders could lose business.

Net neutrality and real estate
Just like the indie artisans of Etsy, local realtors and mortgage lenders beginning to build their business may also experience setbacks. One possible consequence of the net neutrality repeal, Mark Ferguson, real estate agent, real estate investor, author, and creator of, says, is that agents who manage their own personal websites to get leads might not have the same success.

Prediction: “[Local agents] might see reduced traffic on their sites if they’re not paying extra to get the preferential service,” Ferguson says.

Ralph DiBugnara, President of Home Qualified, believes net neutrality’s potential impact on real estate marketing and advertising could slow business. Most agents are considered self-employed, even if they work through an agency. Meaning, they are commission-only and cover their own expenses. “The less established agents and even some veterans all advertise through social media (YouTube, Facebook, Instagram), as well as Zillow and Trulia,” DiBugnara says. “All of which have become necessary tools in marketing listings, services, and new properties to the market. 97 percent of searches start online. If net neutrality makes it more expensive to advertise for those who can’t afford to, they will be at a disadvantage.”


3. Independent realtors might charge more.

Net neutrality and real estate
What happens when smaller proprietors are feeling the squeeze? Added costs, unfortunately, often pass down to the consumer. Jeffrey Berthiaume, founder and CTO of LoanBot, a lead-generating service for realtors and lenders, explains, “The net neutrality repeal means that ISPs are not restricted from arbitrarily limiting bandwidth to online sites. In practice, they could decide to slow down websites from companies that don’t pay additional fees or slow down the websites of competitors that do pay them.”

As an example, if a major real estate website paid for “enhanced bandwidth,” they could ensure that other small realtor sites get reduced bandwidth. Those smaller realtors would have to pay additional fees to that ISP and could pass on those fees as part of closing costs to the end consumer. Berthiaume explains, “If they targeted specific metro areas, it could even start to affect housing prices. There would be no upper limit to what an ISP could charge. Or what certain realtors or mortgage lenders might pay in order to get an advantage.”

Prediction: “Our industry is all about getting as much attention as possible in order to generate leads,” Berthiaume says.

Berthiaume believes that if this option is available (and is not federally monitored), it is very quickly taken advantage of by companies with deeper pockets looking to get an edge over their competition.

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4. Realtors and lenders will have to change the way they connect to buyers.

Net neutrality and real estate
With their backs against the wall, smaller realtors and lenders may have no choice but to innovate, Randy Nieves, CTO of the full-service IT provider Cal Net Technology Group, predicts. “In reality, the Internet has never been fair or neutral,” Nieves says. “ISPs have always charged different rates for access speeds, and traffic prioritization has been around for years. What’s different about this repeal, though, is the theoretical concept of bundling sites into packages like the cable company does with channel lineups.”

This begs the question. What happens to the realtor or mortgage lender whose website generates most of their revenue if they de-prioritize and some of their market can’t even find them? Can an agency or lender “pay off” the ISP to include them in the lineup? Many consumers fear this newfound competition will only create conflict, Nieves says, with potential fights between real estate agencies like those between CBS and Spectrum.

Prediction: According to Nieves, we avoid unhealthy competition in the real estate and lending industries by reinventing the wheel.

He says, “The reality is that innovation always wins. No matter what the ISPs try to do to control traffic, there will be innovators who will find ways around it and/or create new business models because of it. Look at what Hulu, Roku, and Netflix did to cable.”

For realtors and lenders, this newfound innovation may mean going back to basics — by focusing first on the customer experience. Buyers who have difficulty accessing a website may not return, making that personal touch and word-of-mouth reputation more important than ever.

Even with the big changes happening in our digital space, one thing remains the same. Buying a house can still be easy. Download our free LoanFly app and get prequalified for a mortgage in minutes.*

*During normal business hours.

For educational purposes only. Please contact your qualified professional for specific guidance.

Sources deemed reliable but not guaranteed.

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