The near future of real estate
Technology is catching up with real estate in a big way this year. You hear the pundits and leaders of the industry talk about AI being the new electricity, powering insights and decision capabilities. This is pretty straight forward for data companies because the data they create and collect originates in a computer, smart phone, or server. So that data can be acted on, improved, and learned from as soon as it is created. This has accelerated the pace of growth in start ups to create the fabled unicorns we now live with every day.
One of the main reasons I got into real estate was that such data isn't in a computer system to be analyzed so the individual still has a fighting chance to add value and create a business because they don't have to out think a machine. A leaking roof, the mood of the owner toward selling, and the level of finish outs in a home do not have a meta value in a database that can be aggregated and machine learned... yet. Those types of variables are still pretty far from being in a database, except for maybe the mood of the seller which can likely be teased out via browsing habits.
However the data that is available is starting to get some attention from the tech community and real estate companies are investing heavily in technology to start creating their own systems such as Kelle which is a digital assistant being launched by Keller Williams. This app is the client end to mountains of transaction, mapping, and CRM data. The MLS has all of the listings which is read by companies like Zillow, Trulia, and Realtor.com which are essentially ad sales platforms. What they don't have is the actual closed transaction data and contracts. The brokerages do, and there is a ton of insight to be gained from them.
Real estate brokerages will become data brokers
Just like the big four tech companies, the battle for the future of real estate will come down to who has the best data. The top 10 according to Real Trends include an eclectic bunch that you are only likely to know based on where you live. There is no clear google of brokerages yet. However these companies will start leveraging their data to create real insights that can save thousands for their clients by knowing the probabilities for getting contracts signed based on fine tuning things like option periods, earnest money, and which repair requests have the biggest impact. Soon we will have a probability of offer acceptance based on real time conditions. Brokerages with more transaction data will have better insights which will make them more competitive.
Sites like Redfin and OpenDoor which aim to automate the home sales process will also gain traction due to price pressure, trading speed for price. Automated buying and selling will start to take market share and if they get enough data to become more accurate, and I suspect they will, then more and more transactions will start to be automated. I think this will be especially true for homes in large subdivisions where the building standards and volume are so consistent algorithms will excel and transaction complexity will be low.
Older homes, custom houses, and eclectic neighborhoods will likely remain the realm of traditional full service brokerages due to them being more of a unique marketing piece than a commodity home. It will certainly change the industry and I believe will push many sales people out of it. The ones that remain will be more knowledgeable, more bespoke, and more like consultants for building wealth via real estate than managing transactions.