A real estate CEO explains why traditional brokerages must “reinvent or die.”
Silicon Valley is catching up to the real estate industry. Over the past decade, more than $30 billion has poured into PropTech, a new generation of startups at the intersection of property and technology.
As the owner of the largest independent real estate brokerage and advisory firm in Massachusetts, I have been studying the brokerage industry for 25 years. I’ve seen aspiring disruptors come and go. This time is different.
It’s an open secret that real estate, the world’s largest asset class, has also been one of the slowest industries to adopt new technologies. In fact, a recent KPMG survey found that only 58% of real estate companies have a digital strategy in place. The current situation leaves the field wide open to innovation—and disruption.
Startups like Hemlane and Eden are streamlining property management services. Landis acquires homes as investment properties, then allows tenants to “rent to buy” when the company’s underwriting algorithms deem renters are qualified to purchase. Bowery automates the traditional manual process of appraising commercial properties with a data-driven platform and mobile app. As PropTech continues to infiltrate the real estate industry, the conventional brokerage community will need to embrace innovation if it wants to stay in business and remain competitive.
In order for brokers and agents to take the technological leap, they need to recognize that every real estate transaction will ultimately begin and end online. Today, unicorns such as Zillow and Redfin are redefining and leading the consumer experience of search by creating new platforms for buying, selling, and renting homes. These tech companies are a wake-up call for real estate agents to reinvent or die.
For example, StreetEasy and Matterport have reduced the friction costs of finding an apartment rental. A sophisticated renter can avoid an upfront fee and still find her dream apartment with ease. This experience is one example of many where we see real estate consumers embrace technology and the benefits that it offers.
The question, of course, is how far will tech get us? And is there still a role for people in this digital revolution?
The answer isn’t all doom and gloom for America’s two million real estate agents. While PropTech will ultimately bring all listings online, real estate agents are still critical for the most important part of the purchasing process: advisory service. If all politics is local, that is doubly true for real estate. Even the most tech savvy buyer or seller can benefit from the counsel of someone with market knowledge about individual neighborhoods.
The value of expertise, after all, is timeless. Davy Greenberg said it best in a viral tweet: “If I do a job in 30 minutes it’s because I spent 10 years learning how to do that in 30 minutes. You owe me for the years, not the minutes.” For now, there is no suitable replacement for the time-tested insights of brokers with access to hyperlocal data.
Be that as it may, technological progress is relentless. Real estate brokerages and agents should pay attention to this wakeup call or become obsolete.
The pivot from conventional practice to digital efficiency has created new business opportunities for real estate agents with sharp analytical skills who understand how to translate data into palatable information. While technology narrows the gap, PropTech is still in its infancy, with a lot yet to learn. As the tech editor Chris Nuttall wrote in the Financial Times, “For all our fears about artificial intelligence becoming far too clever—as it uses machine learning on huge data sets to give it superhuman powers—people are thankfully still pretty good at making AI look like an idiot.”
Despite the need for human dexterity, it is undeniable that the future of the real estate brokerage business will revolve around the instantaneous application of data. From leads to listings, we live in a digital world. Consequently, it’s imperative for real estate agents to combine their accrued market acumen with new technology in order to be a trusted resource and effective advisor.
We are at a crucial juncture within the history of the brokerage industry that will test the survival of every real estate agent. The rise of automation and artificial intelligence will continue to propel the growing dominance of tech-powered players. As a result, PropTech will likely drive down transaction costs and eliminate jobs. The real estate agents and brokerages who survive and thrive in the coming crunch will be those who embrace technology, not fight it.
Jason S. Weissman is the CEO of Boston Realty Advisors, the largest independent real estate services firm in New England.