February 27

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Artificial Intelligence and Real Estate: iBuyer Won’t Replace a REALTOR®

February 27, 2020

artificial intelligence, behavioral analytics, buying a house, consumer behavior, customer service, database marketing, database organization, email marketing, ibuyer, marketing, predictive analytics, real estate, real estate agent, realtor, selling a house, service industry

by Maya J. Paveza, HG Staff Writer, REALTOR and Associate Broker (DE)/Licensed Salesperson (PA).

It Takes a Human Eye to Assist a Real Estate Buyer or Seller

Recently, all this talk of artificial intelligence and analytics replacing a real estate agent, has become rather amusing to me. I spent a great part of the last 30+ years working in the real estate industry and one thing I can tell you is that no AI or analytics program can tell you how to read intonation, or a facial expression when you are heavily into a negotiation for a client.

There may be a lot of things I wouldn’t mind automation handling for me, such as cleaning my floors, thank you iRobot. Cooking dinner—some Samsung and LG stoves can be programmed to run and some models even offer refrigeration. Feeding my pets with automated time-release food bowls. Opening a doggy door—yup they got those too, with collars that are programmed to trigger them to open. I just can’t see a day—or time—when a “robot” will replace a REALTOR®.

irobot won't help you find the right house to buy it will keep your floors clean

There is too much nuance to the process of buying and selling homes. A human eye is necessary, and I don’t care how amazingly well a computer can see through a lens, it’s still not going to replace a real estate agent. You have to know things, and some of that knowledge is in your intuition, that thin-slice moment (as Malcolm Gladwell writes about in his book Blink), you just know. You don’t know why but you do. Side note: if you haven't read Blink, read it, then read Outliers, Gladwell is a genius.

That same feeling is what tells a real estate buyer that they've found “the one.” The house that is meant to be theirs. I’ve always said if it's meant to be it will be, or it'll all come together for any real estate consumer. I've lived the experience therefore I'm confident when I make that statement. You can’t keep a real estate transaction together with hope, glue, and glitter if it’s not meant to happen. So—when it all falls apart—how exactly is that “Robot” going to counsel the buyer? Or, when a first-time buyer has that moment of “oh my god, what am I doing...” after an offer is accepted and they figuratively run for the hills. Buyers remorse isn’t something many agents learn about in real estate pre-licensing school, you've got to experience it firsthand with a client (or ten).

After you've talked a few "first-timers" off the metaphorical ledge, and back into a solidly confident state, you can will see it coming before the remorse train arrives next time. I don’t care how much predictive analytical software is developed, tested, implemented or perfected, it still won’t replace a humans ability to feel what is right or wrong. Expertise comes from experience. Far too many consumers don’t realize how much training a real estate agent has to obtain, and maintain, to keep on top of their industry and obtain that level of expertise. Continuing education requirements for license renewal added on top of the countless pre-licensing hours, add to that the additional education in many markets to be able to test for a Brokers license.

Somehow, through various forms of media most obviously, consumers have the mistaken concept that a real estate agent gets their license like this:

  1. Gee I would like to sell real estate, because I can make a LOT of money.” (Reality, not how it works, but we’ll save a commission break down for the average home sale in the United States for another blog post).
  2. I will apply for jobs with real estate companies.
  3. I got hired, now I am selling houses.
AI might turn the entire real estate experience upside-down. using a real estate agent will help keep it up-right and on track.

That scenario only happens in the movies. Although that might be the path forward in a lot of other “sales” industries, real estate is more akin to financial services in how it is regulated and licensing requirements are mandated and instituted (as well as monitored closely). The real version, generally since each state is different (and don’t get me started on what Washington State did, eliminating licensed salespeople and calling everyone a broker... I worked my backside off to obtain my broker’s license in Delaware, and don’t get me started on getting a reciprocal one in Pennsylvania—impossible!).

  1. I'd like to get into real estate to help people buy and sell a house, it's the largest purchase most people make in their lives. I want to help people, it's a service industry.
  2. Interview with area brokers at various companies, brands, and boutiques, to see where you would like to work once you get your license.
  3. Sign up for the pre-licensing class.
  4. Take pre-licensing class and all the exams in that. For Delaware, it was an 11-week course, three nights a week for three hours a night covering real estate practice, math and, real estate law. 99 class hours in total.
  5. Pass the class, and take the National and State Exam.
  6. Pass the text test, or you have up to three attempts in Delaware before you have to take the pre-licensing class again.
  7. Apply for your real estate license with the State Department of Professional Regulation. In Delaware, the real estate commission meets once a month. So if you apply the day after, you’re waiting a month for your license to be reviewed and hopefully approved.
  8. Take new agent training at your company (if the company is good they offer training and mentoring at no charge), while you work toward your first transaction.
  9. Pay your REALTOR® dues (about $600 per year), your E&O insurance, as well as increased automobile insurance coverage as required by most brokers, marketing costs, sign costs, business card costs, and it goes on (and on, and on...).

will a robot help you when you buy a house someday? not quite but some form of AI might be involved but not how you might think

By the time an agent is qualified to list a house or represent a buyer, they've usually had the equivalent of the time spent to take four college courses. All that just to host their first open house and hope to get their first buyer (lead generation isn't easy, quick or simple, but there are some great options to help a new real estate professional from Happy Grasshopper) . Not exactly the same as the salesperson trying to sell you a sofa or a car.

I'm sure the iBuyer concept is appealing to some people, but I see the potential trouble coming along with it, or shortly behind it. There will be lawsuits, there will be audits for predatory practices, and it will not exist as it does now in a few years. So, if you’re an agent, keep working the systems, feed that database and keep in touch with your clients. There will always be a need for you, and those that don’t value your expertise aren’t worth trying to work with. 

So, what do you think about iBuyer and the future of real estate? Post your comments, and let's all discuss.

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