Category Archives: The Real Daily

Post by Sam DeBord on The Real Daily news site

Artificial Intelligence (AI) in real estate: Negating or monetizing an agent’s experience?

This article was originally published on The Real Daily:
by Sam DeBord

Have you ever emailed or texted someone, and subsequently opened Facebook on your phone to immediately see that person in your news feed?

You read the entire terms of service when you downloaded that app, right? So you remember agreeing to every bit of your phone’s hardware and software recording and interpreting the signals that your everyday actions are creating (just nod your head yes—it’s watching you right now).

Artificial Intelligence is seeing tremendous growth in consumer-driven industries. It is the ability for software to learn and adapt to consumer behavior via live feedback. Cars, websites, wearables, and apps are becoming more intelligent and adaptable.

We’re seeing huge advances in the affordability of AI software that match the exponential growth of hardware’s computing power.

bar
Simultaneously, human labor in developed countries is increasing in cost. Minimum wage laws, increasing liability, and rising health care costs are pushing employers to replace labor with technology. McDonald’s employees become kiosks that order Big Macs. Chase Bank tellers are replaced by apps that scan and deposit checks. Companies like Circuit City and Borders Books shutter their stores as websites more efficiently serve their customers.

How AI intersects with RE

Intelligent software has massive potential for creating technology that changes labor markets. Real estate labor is a natural target, and a couple of recent pieces got the ball rolling this past week.Russ Cofano penned a broker outlook that viewed “cognitive computing” not as a threat to labor, but an asset to the baseline of real estate’s agent intelligence:

“So here’s the question. What if cognitive computing enables agents to be better professionals and make better recommendations to their clients? What if access to cognitive computing power, and the data necessary to power it, becomes the 21st century equivalent of the MLS utility?”

Further, Cofano states, “Cognitive computing has the potential to add massive value to the real estate brokerage value proposition and do for agent professionalism what no other initiative could touch.”

While the piece focused on the superior delivery mechanism (Upstream vs. the MLS), it provided support to the idea that brokers could adopt intelligent data systems to improve agent capabilities industry-wide.

Not surprisingly, a different take came from Rob Hahn, focused on the costs of repetitive labor and the likely evolution:

“The $6 billion question is where real estate brokerage services fit in the spectrum of services if we put McDonald’s order-taker on the one extreme and the Chief Engineer of Nuclear Fusion Reactors on the other extreme in terms of specialized skill and knowledge.

I think most of my readers know the answer. Real estate is far, far closer to McDonald’s than it is to McDonnell-Douglas.

…rote procedures and manual inputs are being displaced by technology. Why would it be any different for the rote procedures and manual inputs in the real estate business?

Answer: it won’t.

Those real estate agents who survive will have to be ‘upskilled’ and focus on niche areas or ‘be equipped to handle smart systems.’”

Comparing two views on AI

So we have two very different views of software intelligence’s effect on real estate agents. In one, brokers might adopt cognitive computing measures to improve agents’ core capabilities to serve consumers. They improve and survive as a unified group of forward-thinking adopters.

In another, AI wipes away the entire foundation of repetitive services performed in real estate. This debases the masses of agents and eliminates the need for their services. It leaves only the specialized practitioners above water when it’s done.

It would be remiss of me to gloss over the McDonald’s analogy. The skills that allow agents to survive in their occupation can’t be crammed into a single linear comparison. It seems prudent to point out that the comparison of rocket scientists, real estate agents, and Egg McMuffin order takers should be complex.

In recent real estate history, replacing a repetitive procedure in the sales process with software has simply changed the sales process. It hasn’t removed the sales person. There are graveyards full of real estate labor would-be disruptors who have a poignant understanding of that history.

artificial-intelligence-REAL-ESTATE

The intrinsic skills that keep real estate agents strongly entrenched in the industry seem to center on two things:

  • Personalized intelligence (unique local knowledge, negotiation, transactional experience)
  • Personal relationships (emotional IQ and sphere building)

The latter is almost invariably ignored in real estate labor disruption conversations, yet it’s probably the single greatest barrier to disruption. People list with people. Sellers’ top three requirements for a listing agent are reputation, honesty, and trustworthiness.

AI is the intrusive stalker in your phone. Thelma is the amazing woman who comes to book club and walks with you on weekends. H.A.L. 2000 can’t touch her in terms of trust. This should be the overriding theme of every disruption conversation.

On to bottling knowledge

In the future, personalized intelligence might be a different story. If part of the value of exceptional agents comes from what they know from experience, the way they negotiate, and how they interact with clients, how much of that could be learned by an exceptional AI platform?

Could exceptional agents allow themselves to be profiled by their devices and capture that intelligence to monetize it? Would brokers be able to conglomerate the practices and intelligence of their best agents to provide a unique set of processes for their agents and answers for their clients that aren’t available to the general public?

It might not be as crazy as it sounds. Think about the vast amount of information that could be gleaned from one agent over a single year with all of his/her devices in “AI learn mode.” Spoken word, tone, movement, visual cues, timing, location data, digital communication, social engagement, contract negotiation—all of these and more could be processed into a database describing when, where, and how top agents interact with their environments to close more sales transactions.

Who owns the AI?

While the aforementioned could be done on an industry-wide basis to inform brokers as a whole, it might also be led by savvy top producing agents or brokers who would profit from it as a differentiator. Melded with predictive analytics on consumer behavior and market statistics, the right set of personalized intelligence could tell an agent when and where to meet a consumer, and how to begin interacting with that person to provide a greater likelihood of a client and a sale.

Of course, until personality can be direct-ported into the agent’s brain, we still need a human with emotional IQ to show up and close the deal. The creation of a relationship might be initiated by data, but it’s going to be sealed with emotion.

ThelmaRealtor software version 2.5 could be an AI profile that’s sold to brokers or new agents as a foundational of intelligence for their careers. Whether these benefits and profits go to the real Thelma, her brokerage, or the industry depends on who adopts the technology first.

Back to the people

If that’s all a bit too much sci-fi, let’s get back to the basics. There are huge opportunities for the brokerage community to leverage greater technology and AI to improve how they do business. Those that do will have valuable differentiating tools and skills.

Still, Thelma v. 2.5 isn’t going to wipe out the physical agents on the ground. Technologists with armies of software agents will continue to stare at screens, while real life agents are cementing unbreakable relationships with real people. Consumers will work with agents they view as trustworthy, no matter what amazing intelligence is dangled in front of them by H.A.L. 2000 Realty.

It’s true that consumers want more intelligent real estate transactions. Before that, though, they want trust. AI has great prospects for helping brokers and agents improve their business intelligence, but it’s not going to take the human element out of the transaction any time soon. The real Thelma’s role may change, but she still owns the most valuable, subjective, and defensible portion of the real estate transaction: the relationship.

Culling the lazy, bloodsucker real estate agents

This article was originally posted on The Real Daily:
by Sam DeBord

Liar. Cheater. Loser. Choker. Incendiary rhetoric seems to be in vogue this year.

“The consultants are like bloodsuckers. They’re ten times worse than a real estate salesman or broker, ten times, which is saying pretty bad stuff.” This was the biting yet confusing commentary from Donald Trump, a real estate salesman himself, at a recent political rally.

Inside the industry

The shots at real estate agents are coming from within the industry as well. Keller Williams’ Chairman Gary Keller recently said that agents who buy leads from Zillow “are lazy and don’t want to do the work.” Surely many of his top agents and teams who effectively use the leads would disagree.

Zillow’s CEO Spencer Rascoff recently told CNBC that the company no longer wanted to work with agents who weren’t “great” (they don’t spend a lot of money on advertising). So they’ll be “culling” those agents who aren’t up to snuff. While a practical business move, avoiding a term associated with slaughtering inferior or surplus animals might be item #1 for the PR team’s next executive media coaching session.

Real estate classism

Before we get self-righteous about these leaders’ word choices, though, it’s worth noting that this kind of language pervades much of the industry’s conversations on the quality of real estate agents.

There’s no shortage of snobbery and classist speech among agents and brokers.

Just ask a high volume agent how we should raise the bar of professionalism in the industry:
“Raise Realtor dues by 1000% and we’ll lose 90% of the deadbeats who bring us down.”

Talk to boutique brokers about their counterparts:
“That head shop will hire anyone who can fog a mirror. Their agents are bottom feeders who don’t sell anything and make us all look bad.”

You hear it from speakers at industry conferences:
“Let’s use the 80/20 rule. We need to get rid of the 80% of crappy agents who are making us look bad, so that the good agents who do 80% of the volume are the only ones left.”

There are some really important conversations to be had about the quality of real estate agents in our industry. We want clear answers as to how we fix them problem. We want the answers to be simple.

Unfortunately, big answers are often necessarily complex. When we group real estate agents into simplistic silos to try to fix our issues, we do a disservice to ourselves.

Volume does not equal quality

We can all agree that there are real estate licensees without the experience, ethics, education, or conscience necessary to serve their clients well. There are bad apples in our midst. They’re a poison on our reputation and should not be allowed to sell real estate.

Let’s not overreach with our reaction, though. This rhetorical journey usually ends with lower producing agents or those with non-traditional business models being given the scarlet letter and pronounced as a scourge on the industry.

Volume does not equal professionalism or quality. We’ve seen sweatshop practitioners become real estate celebrities, only to later lose their businesses and licenses when their practices came under scrutiny.

On the other hand, some of the lowest-volume agents often have the most experience to with which to guide their clients. Agents who are nearing retirement will often shrink their active client base significantly. The buyers and sellers who work with them are afforded all of the benefits of an agent with decades of experience and insight, as well as a greater share of that agent’s attention.

The client who works with an agent who has only one client at the moment may be the client who is receiving the most comprehensive personal service possible.

Then there are those “lazy” agents who buy leads, or pay fees/splits to others who prospect for them.  Since when was specialization of skill and division of labor a sign of laziness?

Selling vs. lead generation

Admittedly, this comes from my position of personal bias. We’ve brought agents on to our team who were low volume producers before they joined. Most had experience, but didn’t want to prospect anymore. They just wanted to work with clients and sell.

Meet “Jane”. She sold for 30 years before joining us. She is one of the smartest, most dependable, respectful, and effective agents we’ve worked with.

By many counts, she should have been tossed from the industry the year before because she only sold two homes. She sold 15 homes last year, a healthy business in a market like Seattle. It still probably wasn’t enough for the sales police to label her volume sufficient. She’s “lazy” because she’s relying on others to generate leads and focusing on her core skills of selling. She might just be “culled” with the other low-rung agents who provide outstanding service and consistently receive raving reviews from their clients.

It’s more complex than that

To be fair, we’re in an industry that has an unhealthy obsession with sales numbers. I’ve stopped counting the number of times someone asked me, “What kind of volume do you do?” within the first two minutes of a conversation (It almost sounds like “How much do you bench, bro?”). So it’s not surprising that an agent’s volume is often the first metric many look to for a frame of reference. Volume makes a big difference in finding out whether or not an agent is good for your team, your office, and your business model.

Let’s just not let it creep so far into the conversation about who deserves to belong within the greater industry. There are a lot of different business models, and different roles that fit within them. Not everyone needs to be a solo, door-knocking, cold-calling top producer to provide great service to clients.

“Jane” isn’t. Her clients will scoff if you tell them that her volume and prospecting system make her a bad agent. If we’re going to talk about improving the reputation of real estate agents, let’s stay away from oversimplifications.

The answer is more complex than volume or business model.

It’s about education, experience, dedication, and professionalism. Those are difficult things to measure, but improving an industry isn’t supposed to be easy.

Let’s skip the simple labels. They’re part of the problem.

Raising the NAR: Sink ships or float boats?

Lack of real estate agent professional competence: it’s a perpetual topic of industry conversation. Marginal agents have been called the #1 threat to the agent sphere in the recently-released D.A.N.G.E.R. Report. “Raising the bar” in real estate is the prime focus of one of the largest agent-led groups online.

bar

Missing the mark on raising the bar

While the industry professes to want improvements in agent competency, tangible progress is inconsistent. Franchisers, brokers, associations, MLS’s, and licensing boards control the barriers to entry and sustaining licensure in real estate. These organizations are primarily driven by the inertia of their need to sustain revenue.

Raising the bar for the industry is widely accepted as a necessary goal, but few have the motivation to fund it.

This paradox was particularly evident at NAR Annual this year, with the debate over making ZipLogix a nationwide member benefit. NAR would spend $12 million per year to provide the transaction management platform to all of its members. The funds would come from NAR reserves.

ZipLogix for all agents?

Proponents of the deal spoke of the long-term benefits to Realtors:

  • Keeping the real estate agent at the center of the transaction
  • Protecting the data of Realtors from outside vendors
  • Recruiting the almost 1 million non-Realtor licensees into NAR

These were all important points in guiding the financial and technological strategy for the organization. There was also a significant undercurrent in the discussion, though, about raising the level of membership professionalism. Financial and competitive issues aside, it was implied that this service could improve the competence of the members who currently don’t use transaction management software.


 

Efficiency and professionalism increase

There’s an argument in favor of the deal, simply for this cause. By getting the vast majority of real estate agents on board with a platform that will increase their efficiency, it could improve the professionalism of their interactions with clients. Theoretically, better tools could boost the image of a Realtor in the eyes of consumers, one transaction at a time. Each time a client closed an efficiently-managed transaction with a tech-savvy agent, NAR’s broader image would be enhanced to the buying and selling public.

That’s a lofty goal, but one that shouldn’t be dismissed simply because of its difficulty.

Spending money on the lower rung

The flipside is that most successful agents are already using software that improves their transaction management, document management, and e-signature processing. There are a plethora of tools that competent agents already pay for on a monthly basis and use consistently in their businesses.

This is a clear duplication of costs for this group. The implication for them, and their brokers, is that money is being spent on those members who aren’t willing to step up and commit themselves to better tools and service. They see NAR spending money to raise the level of competence of its lowest-performing members. The top performers will continue to use the tools they currently have, while carrying the water for the rest of membership.

We often hear in these circles that this strategy doesn’t actually improve the image of the organization, but preserves its lowest rungs. It focuses on those who can’t, instead of embracing those who can and do, to the tune of tens of millions of dollars.

There are strong arguments for both sides. Does a rising tide really lift all ships? Can we raise the bar in real estate by bringing up the baseline of all agents?

Taking out the weakest links

Or, should NAR be torpedoing everything that’s a drag on the top line of our industry? Does the industry, and NAR, ultimately only improve when focusing resources on those who can lead a smaller successful core of agents toward a higher level? There is plenty of rhetoric about significantly increasing the costs associated with membership and shrinking the population to put more business in the hands of the purportedly more capable bigger producers.

A board divided

With the stated goal of recruiting many of the 1 million non-Realtor licensees into the fold with the ZipLogix deal, it seems that the current leadership is leaning toward the rising tide. NAR’s directors voted two-to-one for the proposal. But that is a highly divided board, compared to the nearly unanimous approval that most proposals receive by the time they get to the directors.

This is a discussion that has to be central in the search for NAR’s ideological future. Is it in our best interests to focus our resources on increasing the population of members from its current slate of 1.2 million? Will that increased membership have the resources to improve the level of real estate agency services nationwide, or will it dilute the organization’s focus and lend less resources to its best and brightest?

Getting off the fence

We certainly have the ability to provide different services to distinct groups within our membership. But choosing to bifurcate our mission to both a bottom-up and top-down approach means we’ll be less successful at both.

Float more boats or sink more ships? Let’s decide, let’s say it out loud, and let’s put it on our flag, so everyone on board knows where we’re headed.

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth, and 2016 president-elect of Seattle King Country REALTORS®. You can find his team at SeattleHome.com and BellevueHomes.com.

Trulia-Zillow fiasco reveals disjoint, opportunities in real estate agent reviews

This article was originally published on The Real Daily:

Remember when there was no MLS? Neither do I, but legends of those real estate dark ages paint a grim picture. Brokerages each held their listings closely, and consumers had to go meet with each of them individually at their offices to try to cobble together a mental picture of the total market.

It was disjointed, full of misinformation, and detrimental to not only the consumers’ needs but also the efficiency of the market.

That’s where we are today with agent reviews

There are no standards, no structured cooperation, and little overlap or sharing. Plenty of companies are building their own review platforms, but they’re almost all proprietary boutiques. The platform builder wants the consumer to use its review tools, but doesn’t want its competitors to have access to those reviews.

Home buyers and sellers are asked by their agents to write reviews for them—on Yelp, Realtor.com, Zillow, (formerly) Trulia, and any agent matching service where the agent would like to appear relevant. Our clients don’t want to jump through these hoops, and they shouldn’t have to. It’s inefficient.

A clumsy attempt to clean up reviews

Zillow is flexing its muscle in the review space because it currently has the best single-location, quick, verified review platform. When it merged Trulia’s reviews into its own platform, it decided that a large portion of Trulia’s reviews had not been verified, and likely could have been gamed by the agents. They were tossed out without notice to the agents.

The act was clumsy, and the backlash from agents who’d lost their reviews was swift. The mea culpa came almost as quickly as Zillow offered to retrieve the purged reviews for any agent who requested them directly. They would not, however, be appearing on the newly merged Zillow/Trulia review platform.

All sites should verify legitimacy of reviews

While the company tripped over its industry relations in the conversion, the strategy of the purge is still a step in the right direction for real estate agent review standards going forward.

Every review platform should be following guidelines that, at a minimum, verify that the client and agent actually worked together. A company that intends to inform the public on the quality of real estate agents’ services should be intently focused on making sure those reviews are real, via mutual admission, property identification, and other means.

Zillow should be praised

Zillow should be commended for pursuing that verification. While real estate listings are gaining nationwide structural standards with RETS, reviews are just beginning the process of setting standards. Just as big of an issue, though, is that portal reviews are just that—single location reviews. Realtor.com reviews can’t be exported or integrated into Zillow’s review platform. Reviews on Homes.com can’t be integrated into the Yelp profile. It’s the same situation on almost every other portal or agent rating website. They don’t speak to each other.

Ironically, the technology companies who built portals to egalitarianize the consumer listing space are now building walled gardens of reviews to bring back the disjoint of the pre-MLS era.

Each proprietary system hopes to force more consumers into its own custom sandbox. They’re funneling buyers and sellers back into the “meet me at my office to see our exclusive listings” mode.

Good for competition, bad for the consumer

While that may be a good business decision in terms of competition, it blunts the progress toward true consumer visibility of broad agent reviews. Buyers and sellers see a small, skewed version of an agent’s reviews on portal websites, with each one portraying a different picture than the last.

Consumers won’t review us on all of the sites necessary, so we get a sprinkling of reviews here, and a dash of reviews there.

All hope is not lost

There is hope, though. As portals up the bar in terms of review verification, companies likeRealSatisfied and Quality Service Certification continue to deepen our view of the kinds of quality standards that are possible on a brand-agnostic level. If standardized requirements for legitimate reviews become common practice, we may be able to cross-reference reviews on different platforms.

Each website could combine reviews as a whole, or at least reference the agent’s reviews from multiple platforms, side-by-side. The ability for a consumer to see our reviews on Yelp, Realtor.com, Zillow, RealSatisifed, etc, in one place, would be a huge boon to consumers’ ability to see who’s really keeping their clients happy.

I hope NAR will lead the charge

I’ve written before than NAR should be the driving force to make this allegiance happen. Even if it doesn’t take shape that way, tech companies in the review space should continue to develop products with these standards in mind for the good of consumers as a whole.

Agents may have experienced some hassle with the Trulia review losses, but that’s nothing compared to many more years of asking clients to do us a favor in a disjointed, time-intensive manner.

If we can improve the verification requirements for reviews, and agree to communicate cross-platform with those who adhere to those standards, we’ll be doing a great favor for ourselves and our clients.

#AgentReviews

It’s REALTOR® Safety Year, and there are no more excuses

This article was originally posted on The Real Daily.

September is Realtor Safety Month. It’s traditionally a time for us to reflect on the physical dangers of our occupation, and then get too busy to make any changes in our businesses. We forget about the issue until the next year, when we’ll reflect again on our associates who were robbed, assaulted, and murdered.

2015 has been different, though. There are a number of brand new causes making real headway for Realtor safety that have the potential to logistically transform how we do real estate sales.

This year, we’re going to remember

So let’s get to the point with what you can do, and why you can’t ignore it any longer:

Remember when Vivian Martin was murdered in Ohio showing her listing?

If you have broker friends like Vivian, they’d benefit from everyone signing on to a policy like that of Iowa Realtors. The Realtor safety pledge, to always meet new clients at an office or verify ID, could alter consumers’ view of how we do business. If it becomes standard practice, it could keep many of our associates out of harm’s way.

Remember when Mike Emert was murdered showing a vacant home in WA?

If you had a friend like Mike, you would’ve wanted your Realtor board to join a cause like Realtor Safe Harbor. State boards across the country are starting to endorse this idea of sharing our office spaces for the mutual safety benefit of our members. It’s putting safety before competition.

Remember when Ashley Oakland was murdered in a model home in Iowa?

You probably have agents in your office who could benefit from safety awareness training. Create a supervised environment for agents like Ashley to work in, and give them the training necessary to avoid dangerous situations.

Remember when Sarah Anne Walker was murdered at a home in Texas?

Agents like Sarah Anne who work with buyers would benefit from a number of smartphone safety apps. She could have gotten a scan of her murderer’s ID and known if he was a long-time criminal before going to that home. Better yet, she could have scared him off by just asking him to text over a picture of his ID before going to the appointment.

Remember when Ann Nelson was murdered in Wisconsin showing a home?

If you have co-workers like Ann, they could use any of NAR’s recommended safety timers, devices, and even jewelry that alert others when they are in distress. At the first signs of trouble, these devices save valuable minutes in getting help to our friends.

Of course, we all remember Beverly Carter’s murder in Arkansas.

You can do something as an individual business to prevent that kind of crime from happening to an agent you know. Sign up your team for Open Door Partners and let agents use your lobby, instead of an empty home, to meet unknown clients.

Realtor safety is a difficult topic to sustain. It’s not glamorous, and it’s not driving dollars into our businesses. It is, though, at the heart of what we do. Real estate is a people business, and if we don’t make our agents’ and brokers’ safety our top priority, we’re just burying our heads in the sand.

The danger is real, and when it hits home, no amount of sales volume can make up for what we’ve lost.

2015 is Realtor Safety Year. Let’s remember this year. Let’s take action.

#RealtorSafety