Let a Robot Find You a Home
Real Estate’s Turing Test
- Who wins the Broker v Bot contest is not as important as you understanding how technology will vastly change your business, if not today then tomorrow
- Consumers will absolutely run to the website(s) offering superior automated real estate tools, meaning whoever offers the best solutions controls the leads
- You have three choices on applying technology to your own business: 1) leading to a slow death, 2) another vastly improving your effectiveness and efficiency, and 3) the last one completely changing how real estate is sold
Inman News’ Broker Versus Bot article challenging real estate brokers and a computer algorithm seeing who is best at suggesting homes for a buyer just published the day I writing this; the three-day event has yet to occur. I do not know if the “robot” will breakeven with the seasoned pros, do well, or get killed at matching up homes our buyer truly likes. But let’s talk about the future of real estate anyway, as likely sooner than later someone will succeed at fully automating home searches via the internet.
Update: The Bot Kicked-Ass http://www.inman.com/2016/05/10/broker-vs-bot-winner/ But like I said, it really doesn’t matter.
Regardless of the outcome of this automated home search event, if not now then very soon computer algorithms will advance to the point allowing home buyers instant property matches based on qualitative desires such as sunny and bright homes and open flowing designed rooms, as opposed to strictly quantitative ones like bedroom counts and price range. When they do what is your business plan?
When the algorithms are good enough that home buyers cannot differentiate which homes come from a human (broker) or from a robot (computer algorithm) will you use this to your advantage or lose further ground to the technology based players in the industry? How you respond marks a profound change in the real estate industry.
What This Challenge was All About
This was the test: can a machine compete with a human (experienced broker) at suggesting homes which are similar to what a buyer subjectively likes. If so computerized Home Search is stepping outside of matching physical (quantitative) criteria and entering into the realm of interpreting the kinds of homes and subjective qualities a home buyer really desires (qualitative criteria).
The concept of a Turing Test is where a human “interrogator” (home buyer) and two other participants (one human (broker) and the other a computer (bot)) interact from separate locations to see if the interrogator can distinguish the human from the computer.
For the Inman event I proposed a similar experiment specifically from the real estate industry perspective. And instead of the home buyer simply determining which of the other parties the computer or the human is through questions, the buyer judges the quality of homes suggested to them from each source—without knowing which came from whom.
Why This is Important to You
With the public’s interest in home search and technology absolutely exploding as demonstrated by more than 123 million unique visitors per month to the top fifteen US real estate web portals, there is a perpetual escalation of technology being invented and applied to the real estate industry in order to garner the interest of buyers and sellers. Those who control the leads control the marketplace.
The end results could set the entire real estate industry back on its heels if an algorithm no longer just matches defined quantitative search criteria such as price range and bedroom count, but instead offers home buyers properties with qualities they emotionally desire such as “airy, flowing, sunlit rooms”—or “industrial loft with concrete floors, walls of glass, steel beams, and high ceilings”—or “Victorian homes with twelve inch hand-hewn baseboards, renovated but not remodeled qualities, and old-world charm”. Can you compete with this kind of technology which will likely hit your market in the next twelve months?
Referrals and knocking doors and managing neighborhood garage sales take you only so far. Just as you manage your IRA, travel, and many other purchases online instead of in-person, the real estate industry is moving in that same direction.
IBM’s Watson is recommending medical procedures and Google’s DeepMind took on the world champion at a series of incredibly complex thought tasks requiring conceptualizing thousands of potential future outcomes and determining the best action to take immediately.
For brokers change has not come in a single swift event, but instead came through automation of individual segments within the sale process value chain. But none of the vast technological improvements we use each day and accept as commonplace came in a single event; they came into existence through millions of thoughts and actions and failures and successes all culminating in a universally accepted new way of doing something.
Here are Just a very few examples within real estate:
- You no longer dredge through phonebook style MLS properties; your buyers find the home they actually purchase by themselves using the internet forty-four percent of the time (2016 NAR survey).
- You no longer drag paper contracts across town dozens of times for each sale while saying “press hard there are five copies”; you email them and have the parties sign electronically.
- When sellers want an estimate of value for their home or want to know what the neighbor’s place just sold for they no longer call you; they are up on Zillow that minute.
Never before have so many companies from outside of the real estate industry spent billions of dollars to change the industry. The incumbent broker-centric model has never seen such intense competition for what they have always taken for granted. Some innovators will fail, but the overall efforts of all innovators combined will succeed.
Soon a few more individual segments of the sale process with be automated offering superior services to the sellers and buyers. Then before you know it someone will tie together all of the sale process segments into one flowing superior service model. Somebody will do a Charles Schwab to the real estate industry.
You have two choices: 1) continue business as you always have, or 2) embrace and use technology to vastly enhance what you do. Actually there’s a third choice that no one reading this article will deploy: completely change your business model letting technology provide fifty percent—perhaps seventy-five percent of home sale services automatically, while focusing one-hundred percent of your personal efforts on the human elements of the transaction which cannot be mechanized. Through tremendously increased effectiveness and efficiencies and lower costs and higher quality services to your clients, you will devastate your competition and thrive in the new environment.