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Op/Ed

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

There is a growing interest and concern regarding the role of artificial intelligence in real estate, but most arguments miss the core of what makes an agent appealing.

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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.

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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.

#AIinRE

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.

Op/Ed

Dropping everything to unlock a door for a buyer damages the profession

The real estate profession is unique in that everyone is on call, but until better practices are put into place, the profession will suffer.

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Consider the following scenario:

“Welcome to Burger House may I take your order?”
“I’d like a Big House Burger, a large sweet tea and I’d like to buy 1915 Main St.”
“Great would you like a home warranty with that?”
“No. Just the house.”
“Will you be paying cash or getting a mortgage?”
“Cash.”
“Your total is $196,521 please pull forward to window 1 to pay. Your food and keys are at window 2.”

Well now that’s a silly scenario. Who buys a house at a fast food drive through? That’s ridiculous, isn’t it?

Not really, if you consider how buyers call in on properties and expect real estate agents to “serve them up” a house sometimes with no notice, no appointment, and very little exchange of basic information. Here’s what a typical phone call is like to a real estate agent:

“Hello this is Jane. How may I help you?”
“I’d like to see 123 Main Street.”
“Okay great. The list price for that is $125,000. What is your name?”
“John. When can I see it?”
“Okay John and in case we are disconnected what is the best phone number for you?”
“I am in front of the house now I’d like to see it as soon as possible.”
“Well that house is occupied and we are supposed to give the owner 24 hours notice. Can you tell me a little about what you’re looking for?”
“It doesn’t look occupied. I walked around the outside and I don’t think anyone lives here now.”
“Actually it is occupied. The owner still lives there. I need to call and request an appointment. Even if it’s vacant we still do need an appointment. Have you been looking a long time or did you just start looking?”
“I have been looking a few months. When can you get here?”
“Okay I need to call to set it up. Are you working with another agent?”
“No I just call the listing agent when I see something. I’d really like to get in now. I only have an hour so can you get here quickly?”
“Let me call the seller John and get approval. I need to clear it with him first. What’s your last name?”
“Are you coming now to show it to me or not? I don’t have time to answer all these questions.”

I hear the buyer’s frustration – he wants an appointment right now

He’s not willing to give up personal information in exchange for an appointment. But the agent has a stranger on the phone who wants to meet right now, we don’t know if the person is qualified to buy – or even his last name.

The agent taking the call is trained to screen buyers to make sure (1) they are qualified to buy and (2) they are not working with another agent. This is standard practice in the real estate business. But the caller is having none of the vetting process – he just wants to see the house and see it immediately. See the disconnect here?

The next step the caller typically takes is to ask the agent, “Do you want to sell the house or not? Because I want to buy this house.” He hasn’t seen it yet, we don’t know if he can financially afford it, yet he wants the agent to jump in the car and rush over to open the door.

It’s a scare tactic. The buyer thinks agents are so desperate to make a sale they will risk their own personal safety – and waste of time – versus not sell a house.

Pulling the “safety” card

Whoa – yes I just pulled the “safety” card. To those who are not in this industry who may be reading this, answer this question: “If it was your wife or mother or little brother who was being asked to hop in the car, to meet a stranger at an empty house, perhaps at 10 am or 8 pm, would you be so quick to judge?”

Because that is exactly what real estate agents are asked to do every single day.

Get a call, meet a stranger, maybe sell the house. Maybe we lose more than a few hours of our time. Maybe we lose our lives. I know it’s a sobering thought – but in what other industry does the phone ring, and the person on the other end run to meet a stranger outside the office without screening them for the ability and motivation to buy? It happens every day in real estate.

Just meet them at the office, right?

You may be thinking, so meet them at the office and then take them out. Spend a week in this business and you will realize just how hard that is to implement. The house may be on the east side of town and your office is on the west side. The buyer doesn’t want to drive to the office when he’s already in front of the house.

You’re already in the car when he calls and it’s just a few minutes to run over to the property anyway. Who wants to inconvenience the buyer and the agent who are both on the other side of town from the office?

Those are not even the best arguments for not going back to the office to meet the buyer. The best arguments come from the buyers themselves, who are trained or conditioned NOT to treat real estate agents as true professionals. We’re just door openers, people who get buyers access to the house.

Try quizzing a buyer about his wants or needs or motivations and you’ll find that many buyers don’t think they have to answer questions at all. They are so used to agents just making the appointment that when an agent tries to ask questions so he or she can advise and counsel that person, they resist.

“Just get me in. I just want to see the house,” is the mantra.

How practitioners can change this game

Things won’t change until agents stop playing the game and won’t make the appointment until meeting in person at the office, or at least answering a few basic questions. I would love to see every agent stop dropping everything to show a house to a buyer “just in town a few hours” on the chance the buyer is “the one” who buys the property.

Yes it’s a gamble, but in 15 years of doing this, I find it’s rarely the buyer who throws a tantrum and insists in instant access who is “the one.”

Buyers who are serious will answer our screening questions. They understand that we are professionals who need appointments to show them houses. And they respect our time and brains in the counseling/advising process. Those are the buyers we want to work with. Those are the buyers who deserve our time and attention. Not the buyers who pitch a fit when they call an agent’s cell phone late Friday night and get no answer. Not the buyers who are sitting in front of a home and demand an agent show up within five minutes.

I wish every agent working with buyers would read this and agree to stop caving in to buyer demands to instant access to houses and agents.

But if agents deny access, unfortunately the consumer will just pick up the phone and call the next agent on the list. And chances are that one agent on the list will be hungry enough, desperate enough, or just naive enough, to hop in the car and show the house.

Until we train our agents and enforce an office policy that discourages “Pop Tart” agents, consumer behavior won’t change.

This editorial was originally published in March of 2015.

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Op/Ed

Is the cloud on the verge of death?

(EDITORIAL) There is a theory floating around that the cloud is on the verge of death. Turns out, there’s merit for this line of thought…

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The sky is falling.

At least according to technologist, Viktor Charypar, who proclaimed “the cloud,” as a large-scale approach to computing, is about to nosedive.

To say the least, that’s a surprise.

At this point, it’s safe to call cloud-based computing the dominant paradigm. Those who make their living through that paradigm can be forgiven for dropping their collective monocle, spitting out their collective tea, and having a good old scoff at such scandalous tomfoolery as “the end of the cloud is coming.” I know I did.

But I kept reading, because it is literally my job to do the reading. And you know something?

Charypar is right.

The reason “end of the cloud” has so many metaphorical monocles floating in cups of tea is that tech in general is running full tilt at cloud-based solutions. More and more companies are moving more and more functionality out of consumer hardware and into corporate owned resources, which those corporations then make available as a service.

It’s easy to see why. The previous generation of tech had what they figured was an insoluble problem: you can only stuff so much processing power in a plastic rectangle before it keels over or bursts into flames.

The fix was literally out of the box. Take it out, went the wisdom. Move your computing into remote services, big networks of big iron optimized to meet your needs. That moves processing power and economic power in the same direction: away from the user and toward the service provider. In a sense, it was a return to the very, very old days of personal computing, when “computer” meant the vast and heaving beast in the basement and users just got terminals, access points where they could play with data owned and operated by someone else. Trust me. I’m writing this on a Chromebook.

As Charypar points out, like any tech solution, the cloud paradigm comes with advantages and disadvantages. The advantages are obvious: thanks to the Chromebook, this article has gone through three formats on two machines, and I never even had to plug anything in.

Disadvantages? The cloud isn’t infinitely scalable. As tech standards rise – SD to HD, 1080 to 4K – we’re forcing bigger data through tighter tubes. That means everything gets slower, dumber, and uglier. Especially with net neutrality under threat, that’s a serious possibility in the immediate future.

It’s also insecure.

Old one-liner: freedom of the press is limited to those who own one. The Internet fixed that – then promptly no-backsied us with the streaming paradigm. Now, access to data is limited to those who can store and stream it. How much of your entertainment comes from, say, Netflix, or Spotify, or Steam? Because if those services stop working tomorrow, and they could, whatever you’ve invested in them goes too. If their security fails – not unprecedented – you’re the one exposed. They’ve got the data. You’re just paying to play with it.

So, you quite rightly ask, what’s the fix?

BitTorrent.

The soft, splashy clink you just heard was the few remaining metaphorical monocles splashing into caffeinated beverages all over this great country. Someone fetch smelling salts; the entirety of Silicon Valley just got the vapors.

We aren’t advocating that we all grab the digital equivalent of a cutlass and a parrot and return to the scandalous days of piracy. But, as Charypar points out, whatever else you might say about peer-to-peer data transfer, and there’s plenty to say, it worked. It’s proven tech. Back in the day, you could grab a whole season of Deadwood in an hour. I mean, so I heard. In Bible study.

More recently, blockchain has repeatedly demonstrated that peer-to-peer tech solutions are widely applicable and solve many of the problems associated with a cloud-based middleman.

Peer-to-peer solutions like BitTorrent and blockchain are as close to infinitely scalable as technology allows. The processing power grows organically with the network, because the computers on the network are doing the work. Peer-to-peer is secure, too. I’d tell you to ask a cryptocurrency miner, but that’s the point: there’s no way to find one.

Charypar’s argument is that cloud-based computing is approaching its end because it never was an end in itself. It was the first half of the real goal: distributed computing.

Apps built peer-to-peer, sharing data and processing power between users directly, backed with blockchain or other encryption solutions, could represent what the cloud keeps demonstrating it can’t: a safe, stable digital world.

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Op/Ed

16 networking tips in under 2 minutes

(EDITORIAL) Networking is easy for some people, but difficult for most – here are 16 tips that you can digest in under two minutes.

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networking

These days, we like everything in bite-sized, easy-to-digest pieces of information. We’re so oversaturated with news, that it’s only possible to (kind of) keep up with it through a medium such as Twitter where we can get a brief news capture and see what’s trending.

But even then it’s overwhelming, so @Ethos3 cast a net asking for networking tips – in 140 characters or less. Here are 16 of the most useful pieces of networking information the search yielded:

“When networking, inquire about passions, hobbies and interests, instead of asking “Where do you work?” – @DaveKerpen

“When you first meet someone, use his or her name a few times to create a feeling of familiarity,” – @CIOonline

“Don’t immediately send a LinkedIn invite to a new contact. Follow up that night or the next day,” – @RealBusiness

“Adam Rifkin a respected networker in Silicon Valley suggests: Don’t rush relationships; trust takes time,” – @Bakadesuyo

“Don’t attend networking events with a list of things you want. Arrive with a list of things you can offer,” – @LearnVest

“Need a reason to network? “Succeeding in business is all about making connections” – Richard Branson,” – @EntMagazine

“Once you’ve made a new contact, ask what method of follow up they prefer: email, phone, LinkedIn, or other,” – @USnews

“During conversations, focus on the other person. Learn what makes them tick. Ask, listen, observe,” – @ChrisBrogan

“Interesting people easily make meaningful connections. Be able to talk about topics other than work,” – @HuffPost

“The business-building “gold” is not in collecting business cards but in the solid relationships you build,” – @Forbes

“Offer to help people. “The currency of real networking is not greed but generosity” – Keith Ferrazzi,” – @Ferrazzi

“If you want to go somewhere, it is best to find someone who has already been there,” – @TheRealKiyosaki

“Most people at events are in the same situation: they don’t know many people; they welcome icebreakers,” – @Steamfeedcom

“When in doubt, discuss the setting or the event. How? Do your homework about the event, and be observant,” – @RealSimple

“Take a friend with refined social skills to networking events to ease the awkwardness of breaking the ice,” – @Dailymuse

“Apply to be a speaker at conferences. Networking at the event is easier if everyone knows your name,” – @Ethos3

Now get out there and network your hearts out!

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