From Pocket Listings to MLS to Artificial Intelligence. The Future of Real Estate
Oh, my have things changed. The simple process of buying a house 50 years ago is nothing like it is today and I can say with 100% certainty, that in 20 years it will be unrecognizable from today’s process. Right now hundreds, if not thousands of technology companies are vying to be the Uber of real estate. But is eliminating the Realtor the right decision or is the answer going to be a combination of providing better search functionality to potential home buyers with specific Realtor insights? As they say, nothing is as constant as change and today change is happening faster than we could have ever imagined. Consider the widely held model of exponential growth. It goes something like this. If I took a hundred steps from my bedside table (each step being about 3 feet), I might end up in the middle of the street, but if I took a hundred steps, where each one was twice as big as the previous step, I might end up on the moon. You get my drift.
The business of real estate sales essentially got its start the moment someone discovered that they could make money brokering a deal between a willing buyer and seller. Back in those early days there was no centralized listing service. A brokerage was entrusted to sell a home and a very basic listing agreement was drawn up together with a rudimentary information sheet containing the basic facts of the house. Brokerages put advertisements in local newspapers and carried these sheets around with them. This is the origin of the term ‘pocket listing’. Buyers found homes the old-fashioned way; they would search the want ads or drive around town looking for a for sale sign. The system worked. It wasn’t efficient but it was all we had and I am always reminded of old school real estate when I watch the holiday classic “its a Wonderful Life”.
Move the needle ahead 50 years and the search is a lot different. We have the Multiple Listing Service now and sharing of listings is much easier. Agents have access to homes not just across any city but around the world. It really wasn’t that long ago when a buyer would call an agent and tell them they wanted to buy a house. The Realtor would type in a few parameters and would have access to several homes that met a client’s needs. Then the internet altered the face of real estate sales for ever. Search was opened up to the consumers in ways we never imagined. Today’s buyer can look at a home on the other side of the world and take a 3D tour. They can walk the neighbourhood from the comfort of their sofa and conduct the transaction from a smart phone. Today the Realtor’s role has also shifted from house finder to deal negotiator, marketer, stager and advisor. Where is it likely to go next?
Now that Tesla cars don’t need drivers anymore could the Realtor be removed from the real estate transaction altogether? It’s not that far-fetched. Consider this example; You are a young man preparing to go out for the evening. Your phone can already tell you which bars have the most girls because an eye scanner at the door has already calculated places to go to meet single women. At the bar a chemistry app has alerted you to a perfect match for you based on habits, education, social status and hobbies. You hit it off. After a few months of dating, the internet realizes that you two are a perfect match. You are buying two of everything…movie tickets, trips and dinners. Based on geo tracking, bots already know that you sleep over at her place 4 nights a week and based on the TV shows that you watch and the things you shop for algorithms have determined the style of home or apartment you are likely to gravitate toward. The internet knows how much your combined income can afford and in no time Artie, the artificial intelligence realtor bot emails you about the perfect home or condo. It’s an easy commute to work and you are pre approved for the loan. All you have to do is hit accept and the movers will show up in 30 days, pack your stuff and move you into your new home. Unlikely? Frankly we are already there. The tools and technology are already in place. Predictive marketing is widely practiced around the world. So what is stopping the internet from making this a reality? The answer is simple… Humans. Humans won’t take advice from a computer. Sure, maybe if you are on the space shuttle jetting around in space, you might take the advice of a computer, but here on earth, searching for a home? Nope. At least not yet.
So, what are Realtors likely to expect over the next 20 years? I can’t think that far away but it might be easier to look forward 5 years. I think it is fair to say that for the next 5 years, relationships and service will still rule the real estate transaction. People will gravitate towards the Realtor who knows the market and has experience and understanding. We will start to see some shifts in the way people live, smaller homes, co-owning, live/work, and perhaps people will live further away and take the autonomous bus, complete with work stations, into the city every couple of days. The public will continue to have more and more access to housing information, such as school districts and other neighbourhood statistics but few will have the ability or time to process it all. All the bugs of artificial intelligence and predictive marketing will be ironed out, but people will still need a lot of consulting around the home purchase or sale. Lastly, buying or selling a home will remain the single largest and most complicated transaction of most people’s lives and a skilled intervener will be paramount to the equation. The Realtor who can unlock the most helpful information will excel and those not willing to push the boundaries will wilt away. I love to think about this stuff.
Mark McLean is the Broker/Manager at the Bosley Real Estate Queen St W office, the Immediate Past President the Toronto Real Estate Board and a director at the Ontario Real estate Association . The opinions expressed here do not reflect the opinions of TREB, OREA or Bosley RE