The future of buying and selling real estate will be easier, faster and more affordable, fuelled by data-driven technology that removes the complication and friction of today’s awkward processes. And all this will be guided by a trusted professional who understands and supports each client, working to reduce their stress and maximise the value of their investment.
These are the key outcomes of the themes that came through from the INMAN Connect 2018 conference in San Francisco, where 5000 real estate agents and technology experts came together to pull apart the ideas and issues driving the industry as it undergoes disruption.
Automation, AI, voice driven commands, and big data algorithms powering ever more insights were all identified as the technology affecting the change. But the good news is that the tech, which has made life so hard for so long with so much new to learn, is about to get easier – if we approach it the right way.
Here is a quick summary of the key lessons:
1. We’re moving from a sales industry to a service industry
From being focused on the product – the house – to being focused on the needs of the people as they embark on a new lifestyle, the challenge for real estate is in moving to a service model, said INMAN CEO, Brad Inman.
We are no longer guardians of the information – we are guardians of the people and their assets.
The change is going to take courage, conviction and curiosity as agents move towards identifying their true purpose in the transaction – which is to guide and support people as they uproot their lives and help them resettle.
2. Do we want agent enabled tech, or tech enabled agents?
The industry is at an inflection point, said Gary Keller, CEO of US franchise group Keller Williams, which will decide if the technology is to serve the agents, or if agents are going to serve the technology.
He argued that the model to date has leaned towards making technology the rock stars rather than agents, with models such as Purplebricks, OpenDoor and Redfin in the US only using agents because they have to.
The industry needed to learn from the example of Facebook, Amazon and Google – who developed and owned their own software and technology – and invest back into itself quickly and generously or it risks giving away its own power.
3. We’re not one industry
Approximately $7 trillion is spent on real estate globally ever year. In the US alone, real estate is 17% of GDB and commissions are worth $62b annually, which actually represents a plethora of micro-markets where the sales process is being disrupted.
From residential real estate to commercial, to construction of new housing, to property management to short term stays, to retirement planning – the industry is being deconstructed to be rebuilt many times over as the sum of its parts – and each element is being raked over by the geeks to identify new, better and different ways to transact. But the underlying asset is a key asset in everyone’s lives and that market is not going anywhere, even if economic circumstances change in the short term.
There is currently an estimated $200m in venture capital going into proptech with significant increases expected in future years, meaning the change is not going to stop any time soon and in fact, a whole lot of smart money is banking on it.
4. The technology is getting smarter and more connected
Technology is no longer being built in silos, but using models that can ‘hand off’ to the next step in the process and automating time consuming and laborious tasks allowing them to be done faster and with more accuracy. Big data overlaid with automation and artificial intelligence is both driving new insights, and identifying ways to gather even more data. Good service is being determined by pre-empting individual customer needs – which can be done by analysing the data.
For agents, this means systems that more accurately identify customers who will list or buy through them being connected to CRMs which are seamlessly connected to marketing, document management processes and accounting systems. These changes will make our offices more efficient and cheaper to run, reducing data entry, double handling and a myriad of ‘busy’ tasks that suck up so much of our time and are not client facing.
5. The technology experience is getting simpler
Voice activation is the next major technological step change that will revolutionise all aspects of our lives, not just real estate. From the current state where every task must be accomplished by peering and tapping into a screen, voice activation is the next new operating system allowing users to simply speak their request.
No more UX, no more needing to learn the technology, searching for files or hunting for information – ask and it will be given. Voice activation will be the driving force that reduces technology complexity in our lives and genuinely makes life easier.
While most of us type at about 40 words a minute, we can speak at about 150, meaning voice recognition will allow us to be three to four times faster in our daily business. Bring it on!
6. Transparency will drive pricing
If I can get lists of properties and prices read out to me from my device, if it’s as simple as speaking to book an inspection time, or place an offer, won’t this drive down agent commissions?
Yes, probably. But it will also drive down costs for agents, allowing current business models to function on lower commissions, while also removing the friction and difficulty that has prevented agents from offering other services – such as repairs and utility connections, insurance, finance and removals.
Vija Williams from The Vija Group said; “When clients are given a menu of services, we get higher commissions.”
Transparency speaks to the “power of the people” age that we are living in. In opening the books to consumers, they do not need to use every service, but they like having a choice. And understanding the range of options helps them see the value in the few they select.
Transparency will therefore not be about leading with a cost, but about delivering experiences.
7. The thing holding us back is not technology, but psychology
Real estate technology commentator Mike DelPrete summed it up when he identified that behaviour trumps technology. Unlike Uber, or AirBnB where the transactions being disrupted are low value and high frequency, there is a greater psychological barrier taking place in real estate which creates serious loss aversion.
“Our industry is about transactions that are ultra low frequency and ultra high value,” DelPrete said. “We’re no longer waiting for tech to replace agents. People are always going to want the insurance of having someone to hold their hand.”
For agents, the challenge is about overcoming their own psychological aversions to understand how the new tech advances creates a bold new world allowing them to deliver a higher level of service and give consumers greater choice.