Youll want robots to replace realtors: a story of real estate, rare gems, and robots
In 2008 Smithsonian magazine introduced us to the story of Apollo Diamond, a company using science and technology to create diamonds of such quality experts cannot differentiate them from diamonds taking billions of years to form deep in the planet.
“Nice stone, excellent color. I don’t see any imperfections.” “Where did it come from?”
“It was grown in a lab about 20 miles from here.”
Then he studies the stone again, pursing his brow. He sighs.
“There’s no way to tell that it’s lab-created.”
In 2016 Inman News demonstrated how robots outperform realtors at finding homes buyers prefer.
“On each of the three days, the home that [John] Rebchook [real estate expert with over 26 years covering the Denver real estate market for The Rocky Mountain News] selected as his favorite was picked by the bot. The bot picked two out of three of Rebchook’s top three favorite homes every day.”
“I couldn’t really differentiate between what the bots picked and the humans picked. I tried to find a pattern to the picks, but could not. I guess if computers can beat us at chess and Go, they can beat us at picking houses, too.” John Rebchook in the Inman News article
Diamonds are rocks; they have no inherent value. Only because of demand perhaps mostly flamed through advertising, and their rarity and difficulty to obtain, are diamonds deemed valuable by mankind.
Similarly, houses have no inherent value. It’s the buyer’s dream, their vision of their perfect life in their perfect home and all of the anticipated events unfolding over a lifetime that has value. The buyer’s vision creates the value, not the structural components or the number of bedrooms contained in the home.
How much more valuable is one Cottage/Tudor style home than the other?
The dreams and means of home buyers in San Francisco are apparently much greater than those of Detroit. But seventy years ago this was not true. Then Detroit was the epicenter of US industry. One of every six US citizens earned their living because of the auto industry. Dreams and means flip over time. There’s no inherent value to a house. The cost of the materials and labor are meaningless. Whatever dreams buyers envision each home fulfilling creates its value.
Will the value of diamonds go down now that technology can replicate flawless gems undiscernible from those taking two-billion years and costing many human lives to obtain?
Will the value of realtors go down now that technology can suggest homes so emotionally appealing to buyers that they prefer the homes offered by bots?
From the real estate professional’s perspective the answer to the second question depends on who applies the technology and for what purpose.
What home buyers most want from real estate agents
What is the #1 service home buyers most want from real estate agents? Year after year the National Association of Realtors survey states that the #1 demand from home buyers is help finding the right home to purchase.
This is more than 400% more important to home buyers than the second most important demand they make of agents: help negotiating the terms of sale. (NAR’s 2016 survey presents that 53% of buyers state help finding the right home is the most important service their agent can provide for them. Only 12% state that negotiating the terms of sale is the most important service you can provide for them.)
If real estate agents use cutting edge technology to better meet the needs of the marketplace, thereby allowing the agents more time for expert consulting and research for each sale, the value of agents may well go up particularly on an hourly basis. (An agent response to the Inman Broker Vs Bot article follows.)
However, if it is a market disruptor using technology to cut costs by automating home buyer services the perceived value of a real estate agent may well decline.
You’ll want robots to replace realtors
As a real estate agent fighting daily for business, all-the-while supporting every structure in the industry through your efforts and fees (NAR, your franchise, your brokerage, title companies, lenders, inspectors—everybody else in the industry) here’s the three reasons you’ll want robots to replace realtors.
#1: On average there are 5,000,000 real estate transactions in the US per year. There are 2,000,000 agents trying to make a living off of those 5,000,000 sales. The only way you are going to increase your market share is to take it from other agents.
NAR does not want to lose members; your franchise does not want to lose members; your brokerage does not want to lose members; but you have to take down your competition so you can thrive. It’s mathematically that simple.
Using robots (automation of your workload via computer algorithms) allows you to better serve your clients, which means more word-of-mouth about you, which translates into taking business some other agent was about to get.
According to the 2016 NAR survey home buyers fifty years old and younger find the home they actually purchase by themselves through the internet 51% of the time. Home buyers also use an agent 88% of the time. By giving home buyers automated internet based tools allowing them to do what they demand to do on their own you have just increased your probability of being the agent they call.
#2: Technology in your world is changing at exponential rates. Every newcomer to the industry intends to take your market share by charging less money and by vastly increasing efficiency via technological innovations
For you to fend off newcomers you need to offer the latest technologies as quickly as or more quickly than the technology driven competition that appears in the marketplace with a group of investors’ $100,000,000 and the sole purpose of removing you from the industry.
#3: Your clients want shiny new technologies streaming across their computers and phones offering them the ability to find the home they love. Those who better meet the desires of the marketplace will thrive.
So even if you take the pacifist conscientious objector position in your real estate career stating that you love all realtors equally and you are only here to help your clients and are not in the business for the money, then you still have to step up and give your clients tools providing them with the one thing they care the most about: finding their perfect home.