By Conrad Zurini | Owner and Broker of Record
I hate to admit it but I have had a long life in Real Estate. Being born into a real estate family and emerging as an SOB (Son-of-Broker), I had a front row seat for the intense and sometimes nonsensical realm of real estate technology. Often, real estate markets are defined as being one of three distinct categories: a buyer's market, a seller's market, or a balanced market. Considering how inventory seems to be shrinking within most North American markets over the last 5 years, we seem to fluxuate between a buyer's market and a balanced market within the span of only a few months, and even weeks in some cases.
In addition to these classification categories, markets are often described as being either up (unit sales and dollar volumes increasing), or down (unit sales and dollar values plummeting). How then do we explain the real estate market in 2022, where unit sales dropped 30% compared to 2021, yet the dollar values remained practically unchanged? These definitions need to change. Perhaps a solution can be found in using animal analogies like in financial markets. A Bull market (optimistic), indicated an expanding economy, or a Bear market (pessimistic), indicated a contracting economy. In real estate, I am inclined to think of a much wider variety of animals like donkeys, chickens, and sharks (although those comparisons may get me in trouble).
Being a bit of a tech enthusiast I see the markets primarily from a technology and data driven lens. As such, allow me to take you on a brief journey into how technology has shaped how consumers, agents, and the real estate market interact. The Seventies and Eighties were a period of paper...lots of paper. Back then we had a big book which was the size of a phone book (some may not even know what a phone book looked like, so imagine a soft-cover bible). It was called the MLS® Catologue and it contained front photos of homes in black and white, 1 across the top and 4 down, with a description of the property adjacent to the photo. It came out monthly, so by the time it was published, it was weeks old.
The primary way we advertised listings was through newspapers. Client marketing was done via mailing lists, and personal advertising was by signs and billboards. In the ‘90’s, MLS® systems were born, desktops ruled the back office, and CMA software was developed. Before we had CMA software, REALTOR®S would carefully scan the old catalogues (which were a separate smaller phone book) for similar properties and make photo copies of those properties to present to the sellers.
At that point, neighbourhood farming was all the rage. Contact management was born, and direct mail was how we advertised to consumers. The real estate newsletter was alive and well and featured everything from recipes to decorating to composting. In the 2000’s, IDX websites were all the rage and portals like Zillow, Trulia, Realtor.com and Realtor.ca ruled the internet landscape. Forms went digital, automated evaluations began their steep climb, and CRM’s emerged, although they were primarily used by emerging mega teams. SEO started to infiltrate advertising, but again only a few savvy realtors began to embrace it. In the 2010’s collaborative search began to take off, and with real time notifications, transaction management began to take hold making the paperless office the gold standard. 3D tours and video became commonplace and dovetailed with social channels as a client marketing tool, and a dominant advertising platform.
Then came the 2020's, and AI searches began asking questions like, "If you liked this 3 bedroom 2 bath at 750k in a trendy neighbourhood, how about this 4 bedroom 2 bath in the same neighbourhood for slightly more?". Using data like market predictions, scans of photos, and an address, AI can take that information and generate a complete listing of a home with detailed material highlights, neighborhood attributes, and a predictive market growth in 5 year increments. In fact, AI is now capable of creating several bespoke advertisements and marketing materials for the same listing, which can speak to consumers at any point in their various home buying or home ownership journey. Gone are the days of agonizing over what information to post about your listing or what flowery descriptive words are best suited to that particular home. It is my hope that the AI gods will eventually eliminate the need for every last real estate cliche like 'cozy', 'charming', 'fixer-upper', or the proverbial 'it won't last long' and will instead speak with the depth of predictive analytics.
Will AI Replace the REALTOR®?
The quick and self serving answer is...no. AI is currently in its early stages, but has taken a front seat when it comes to game-changing technology. This blog will not be the first, and definitely not the last opinion piece on the merits and controversies of AI. For my current commentary, allow me to label this generation of the technology AI 1.0. If you thought Google was a revolutionary tool when it came to search, and indeed it was and still is, AI will be nothing less than transformational. AI in its current 1.0 form will help us all become more efficient. As it evolves it could replace the mundane in our work lives. AI experts feel the 80/20 rule will prevail, where the AI may account for 80% of what we do but we will continue to be responsible for the last 20%, the polish, or the proverbial icing on the cake.
AI has been landing planes since 1991, yet we still have pilots don’t we? Now more than ever, it is critical to reclaim face-to-face time with clients, especially since we were robbed of that ability by Covid-19 for so long. Using AI assisted technologies can help make us better REALTOR®s who are equipped to anticipate the needs of our clients as they continue on their home buying (or selling) journey. Ultimately, AI can help us develop a new gold standard that we all strive for as REALTOR®s: the lifetime family-REALTOR® relationship.
Allow Me To Digress to the Shiny Object
Real estate definitely has its fair share of distracting 'shiny objects', or fancy technology that claims to revolutionize the real estate market, but ultimately falls short of their claims. This raises the concern of whether AI is yet another 'shiny object' doomed to join the list, or whether this tool is capable of changing our methods of productivity and ways of communicating with each other.
When discussing these 'shiny objects', four recent examples come to mind: Blockchain, Crypto, NFT's, and the Meta-verse. When Blockchain was first being introduced, it was claimed that eventually every single property would be identified in a digital ledger and have a series of blockchains attached to it. Properties all over the world were going to be bought using Bitcoin. It was toted as the so-called currency of choice to purchase real estate. NFT’s - I’m not even sure of how to describe this, besides the fact that everyone was going to have some cartoon of their property which was worth something. And lets not forget the Meta Verse, a parallel universe to ours where consumers would go to invest in properties in various video game-like worlds.
In summary, I think AI is a tool that all of us can eventually wrap our heads around and is therefore not just a 'shiny object'. Just like Googling something is now a verb, AI can hopefully bring about the same kind of large scale changes for the better.
Pitching will Never Go Away
We are constantly pitching our services and value as agents, and AI will enhance what we do. Remember that we as humans feel first and then we think, our emotional mind makes the decision with the backing of our logical brain centre. Think of how powerful AI can be when we use it to zero in on how clients are feeling in the moment, and respond to those needs and wants with precision and customization. We as service providers will be the purveyors of bespoke information to help our clients make a better decision.
In order to do all of that we need the top of the funnel. I hear it over and over again from REALTOR®S, “once I am in front of a client (sellers mostly) I get the listing!” That’s all fine and good but what are your doing to nurture, engage and close. I have always said there are only 2 things our clients ask of us…. ”Are you always thinking of me” (the client) “Are you an expert in your industry”.
1 - AI will provide us with some very powerful tools to help us personalize the experience. Erase the term ‘past clients’. It denotes that they are gone. Think of yourself as an account manager with a book of business that you are in constant communication with.
2 - If you are unaware, this is the ‘pitch’. How are you showing your tribe that you are an expert in your craft, an influencer or a guru?
AI can help you create the educational content and expertise, but it is inherent upon you to strategically distribute your message and most of all your brand promise.
AI Can Damage Your Brand
When we begin to adopt new technologies, there is always a sense of anxiety and worry, especially in areas like the real estate industry that are notoriously resistant or slow to adopt new technologies. AI is capable of taking what we know of Google searches and put it on steroids, allowing it to shape opinions, conversations, and help us formulate decisions. But it is important to remember that AI is a tool - a utility that can be abused and under- or over-used. It can have an effect on your individual brand, if left to its own devices. For instance, if it becomes your de facto lead nurture tool and is left unchecked, it could affect both new and long-standing client relationships. It is especially important to recognize where the AI is obtaining information, especially when entrusting it to client care.
I heard a quote from the MoxiWorks CEO, York Baur recently who put it in perspective for me. "99% wine mixed with 1% crap, still tastes like crap". In other words, if there is one small inconsistency in the information derived from an AI platform that you did not fact check, it could damage your credibility. AI should enhance what we do as real estate practitioners, not replace it. If e-signature adoption rates in real estate are an indication of where AI can take us as an industry, look out.
The Emotional Quotient (EQ) Will Rule The Day When AI takes Over
Remember when the internet came to real estate? Many thought we were going to be replaced, yet the usage of REALTOR®S actually increased with the dawn of the internet. The consumer was empowered and we took on the roll of knowledge brokers. Many old school agents weren’t happy when the consumer could access listings on their own devices, as we had always been the gatekeepers of the information, and many a REALTOR® thought that was their value proposition. Back then search was something we did for our clients, but we still did all that great stuff that consumers want, like negotiations, facilitating the process etc. All that happened was that consumers got direct access to the database, which allowed us to shine when it came to interpreting the speed of the market and all the nuances that bring value to a property. AI will up our game, and bring more analysis to the table. It is our role to pick up the slack where AI fails - the intangible 1%. I have always said real estate is 99% emotion, 1% business.
The Customer Journey is Where Your Next Client Will See Themselves
Let’s all remember the true cornerstone of wealth in North America, and most of the world is home ownership. As a result, anything that we can do to improve that journey will likely result in client referrals. Stop chasing the business and focus on attracting with a ‘WOWED’ customer experience and data driven content. Find your sphere’s pain points, and reinforce the notion that you have the tools, relationships, and know how to admonish their pain, and bring about success. AI is developing predictive concierge services which will identify service providers or guides (as I like to refer to them), which will be there at every point in your client’s journey and beyond, from showing negotiating (real estate agent), due diligence (home inspector), financing (mortgage specialist), and closing (lawyer), plus a roof needing to be replaced in 5 years based on home inspector’s estimate (roofer).
AI vs EQ
I believe the real estate industry is at a moment of truth, our services will be re-defined and refined. Our ability to work collaboratively with our buyers and sellers will be heightened. Make your bets now, take some risks. Get out of your comfort zone with all things AI. Pick your partners wisely, be it your tech partners, and, more importantly, your service providers, because the customer journey is what is going to define you and your team going forward. AI could be the great equalizer, but your clearly developed EQ will be the beacon by which you are able to ‘WOW’ your client base. Remember, a real estate agent is what you do, and a leader is who you are, so lead the charge and embrace the technology that will make you a better and more responsive agent. Let’s all define this market for our consumers and each other. Its not about balance and unbalance; its not about being in or out of the market, or waiting on the sidelines; its about the fact that our lives change and our relationships with real estate are always evolving. It’s about imparting the best knowledge you can in any market which will fit the needs of your consumers in their moment.
The following are some standouts in AI and real estate, check them out, the future is here!
Milestones.ai - Home owner management system
LandOnEarth.com - matches consumers with properties
Roof.ai - real time consumer sales enablement
Likely.ai - Pre-market artificial intelligence