REAL Trending Episode 65
Relationships in an era of technology, artificial intelligence moving front and center in the brokerage business, and some predictions for 2020..
From REAL Trends, the trusted source for real estate industry news, this is REAL Trending episode 65. We’re breaking down the trends of the week and showing how they impact brokers and agents. I’m Steve Murray, President of REAL Trends, today we’re going to discuss relationships in an era of technology, artificial intelligence moving front and center in the brokerage business, and some predictions for 2020. First, a quick message about an upcoming event.
Relationships In An Era of Technology
Relationships in an era of technology, there’s been a great amount written and certainly lots talked about, about the impact of technology on the residential real estate business. Everything from CRMs, and websites, and transaction management, and listing portals, and mobility, and wireless, and online forums, and we could go on and on, beat that horse to death, but you know something that’s not much commented on, and the impact of technology on the practice of residential brokers that few people comment on, is how has it impacted relationships among professionals in the business? We wrote many years ago that we felt that there was a profound impact of technology in the simplest interactions between agents. For those of us who’ve been around a while before fax, before email, before online forms and digital signatures, in the old, old days, agents who had an offer would drive and meet the listing agent to present an offer. Archaic, inefficient, time consuming, every bit of that, however, in those days of long, it also enabled agents to get to know each other.
And to negotiate face-to-face requires people to get along and to communicate clearly, and to give and take, and to read body language, and deal with emotions, and all those things and do it in person. And when the fundamentals of our industry are based on member cooperation and compensation, one wonders what’s been lost when agents don’t get together anymore at the simplest part of the business of presenting and negotiating offers and counter offers. I’m all for the efficiency. Having just gone through the purchase of a new home, the sale of an older home, the efficiency of the system is really terrific. Nobody can doubt that, but given the declining attendance at so many realtor, MLS, and industry companies attendance at their meetings, at the local state and national level, and the lack of personal interaction between agents outside of their own brokerage company, because we simply don’t need to get together. We don’t need to meet face-to-face. We don’t need to sit down in a private conference room and hash out a contract.
The impact of technology on relationships in our industry has had a profound impact that no one can really measure, but we do know it’s had a significant impact. What does that mean for brokers and agents today? I would just tell you, we know this industry operates on relationships. We know it between the broker and their agents, and the agents and their customers, we know it. How much time and effort, and energy are you spending as a broker, as a manager, as an agent, taking the time to interact with other professionals, whether they’re part of your firm or not? I think increasingly that will become the mark of the strongest brokerages where interaction is at the top of the list and relationships matter.
Artificial Intelligence
Artificial intelligence is clearly moving front and center in the brokerage business. The news about Remax’s investment in a leading artificial intelligence business is just a part of it. We know from prior writings, there are numerous companies that are deploying artificial intelligence of many kinds. What we’re seeing it move now is out of just the, how do we pinpoint buyers and sellers by their behaviors and their lifestyles and their social media interaction, and be able to pinpoint when they’re likely to be buyers and sellers due to changes in those things too?
We’re seeing artificial intelligence now being used to pinpoint which agents are most prone to be successful. I mean, believe it or not, there are AI tools now being deployed. It’s early stage yet, that help brokers and managers and others identify those parts, those attributes of a person’s character and background as to the likelihood they’ll be successful in real estate sales. I mean, clearly it won’t replace in-person interviews, but one could just imagine that it helps with the process of knowing who’s good and who’s not. Another tool that’s being deployed under artificial intelligence is, which agents are most prone to be enticed to move to a different brokerage company. For all broker owners, can you imagine if you’re using a tool and it’s not going to be perfect and we know that, but what if it increases the probability that you know ahead of time where, as a broker owner or a sales manager, you are most prone or most vulnerable to losing people, or on the other hand, to gaining them?
One could imagine artificial intelligence helping brokers understand what is it about their company where they need work to be more appealing to the kind of people that they’d like to have in their organization. Artificial intelligence is also going to be used now, another area we see it developing rapidly, is what are the chances these people will qualify to buy a home? And what kind of home they might want to buy, and look into seeing how much they can afford. One last area is a new organization that’s coming out of the ground now that uses artificial intelligence to match high net worth individuals with the properties they’re most interested in, in the areas they’re most interested in, based on their lifestyle. And matching them up with agents who understand and have experience in those lifestyles, those properties, and for those kinds of customers. Kind of like a match.com if you will, of the high and end luxury end of the residential brokerage market. We’re at the very front end of the use of artificial intelligence in our industry. It’s likely to add significantly to industry efficiency and intelligence. It’ll be a lot of fun to watch it roll out.
2020 Predictions
Lastly, some predictions for 2020. We did a quick study, a snapshot, about election years going back to 1980. Interesting enough, presidential election years seem to have had no impact on housing sales. If there was a recession underway during a presidential election year as it was in 1980 and 1988 then housing sales dipped, but in other years, ’84, ’92, ’96, 2000, 2004, housing sales were actually up as they were in 2012 and 2016, the only other year of course housing sales were down was 2008, but I think we all recognize that had nothing to do with the presidential election year and a lot to do with the crash of the housing market. So as far as housing sales, we have an abundant economy, incomes are growing fast by historical comparisons, unemployment’s at 50 year record lows, interest rates remain very low under 4%, generally all the factors that support housing are positive, flashing green as it were. The things we have to watch for are the same things that have plagued us in the last couple of years, a lack of inventory and affordability issues, those aren’t going to get cured in 2020.
The bright spot is that home builders have broken out of the 620,000 to 650,000 new single family home a year range, and recent reports indicate they’re now permitting and building closer to a 750,000 to 760,000 unit a year level. That extra 100,000 homes will come in handy no doubt, but what they need to do is figure out a way to get to 1.2 to 1.4 million single family homes, particularly building them in affordable locations at affordable price ranges. All things said, 2020 is going to be a good year, most people would say not a great year. Our broker sentiment surveys, which we run each quarter, are keeping us in touch with what brokers think about other factors, like competition for agents, commission splits, gross margins, and other factors that pertain to the health of the brokerage industry. All in all 2020 will be a very interesting year and likely a very solid year for those who are paying attention and those who continue to adapt.
Learn more about industry trends, marketing and technology strategies, as well as listen to past REAL Trending on Apple Podcasts, Spotify, Google Play, and more. Visit www.realtrends.com/blog. This has been Steve Murray, a Merry Christmas and a Happy New Year to all.