I write from the perspective of an experienced real estate attorney. I've handled thousands of transactions, often representing clients in transactions involving no real estate agents.
These are invariably the most difficult transactions to get to the closing table. Buyers without agents are significantly less apt to follow the contract's timeline for applying for financing, performing inspections, etc., often finding themselves in a pickle when these contingencies are removed from the contract, deemed satisfied by the passage of time. Sellers, too, are more prone to dropping the ball in terms of timely providing payoff information, cooperating to address title issues, obtaining HOA disclosure documents, termite/septic inspections, etc.
Although I have compiled no data, I can say from my own experience that transactions without agents seem significantly more likely to result in a lawsuit for breach of contract or specific performance than do transactions involving agents.
I have seen this so many times: The relationship between the FSBO (for sale by owner) sellers and unrepresented buyers starts off wonderfully--coffee around the kitchen table, talk about the "win-win" they've pulled off (the savings in commission that will be passed along to the buyer in terms of a lower purchase price), talk of the sellers' satisfaction in finding such great new friends who will love the house as much as they did, ink drying on the contract just printed from the internet--high-fives and warm-and-fuzzies all around! Call me cynical, but based on my experience, I'm more inclined to see these folks as "future litigants" rather than "newfound friends."
In addition to the inherent complexities of even the most run-of-the-mill real estate transaction and the tremendous financial stakes involved, real estate transactions are emotional. You're not dealing with a lawn mower, a refrigerator, or some other fungible good, you're dealing with someone's home--a place where the seller's memories were made and where the buyer wishes to make new ones. This is a highly personal transaction, and the potential for doubt, insecurity, second-guessing, mistrust, defensiveness, cold feet, confusion, paranoia, and, therefore, conflict is extremely high. The role of realtors throughout this process is invaluable.
Previous answers to this question have established realtors as valuable in terms of marketing, negotiating, etc. And I'm all in agreement. Here, I'm specifically addressing the role of the realtor as shepherd, conductor, taskmaster, educator, diplomat, manager of expectations, and buffer between parties whose interests are potentially, if not highly likely, to be incompatible. The advent of the internet will not, in my opinion, diminish the true value of the real estate agent in this regard.
In fact, now that the home selection process is arguably more efficient due to internet tools, perhaps this presents a new opportunity for motivated real estate professionals to deliver even more value by sharpening their focus on those other vital services (apart from showing houses) that contribute to a higher closing rate, greater customer satisfaction, and, thus, a greater number of referrals.
Are real estate agents becoming obsolete? No. I foresee an expansion, not a contraction, of the role of the real estate agent in our future, assuming this opportunity is seized.