Some 18,000 people gathered in New Orleans this month to look at the future of real estate brokerage. Inside the massive Ernest N. Morial Convention Center booth after booth at the 2014 Realtors Conference & Expo extolled the joys and efficiencies of the new electronic economy and the technologies which can make brokers and lenders more efficient and profitable.
For at least the past two decades ads and conventions have consistently presented brokers with alluring views of a streamlined, productive and highly-profitable business model, one with the ability to do more transactions in less time and with less work. For those with the skills and savvy to master these new technologies the message of “better days ahead” has largely come true: A small brokerage with good technologies and an MLS membership can be every bit as competitive as the largest firm in the state. It doesn’t need a massive capital infusion, fancy offices or an army of licensees to succeed.
An easy way to see the impact of new technologies is to look at buyer preferences. Instead of the broker-as-chauffeur, driving for hours on end with prospects in tow looking for just the right home, we now have the broker as data recipient, finding out from the buyers that they’ve spotted three specific homes online they’d like to see.
Indeed, according to National Association of Realtors, in 2013 “nine in 10 buyers used the Internet at some point while looking for a home. Over half of buyers started their home search online and 43 percent of recent buyers first found the home they purchased online. Forty-five percent of home buyers used a mobile or tablet website or application to search for a home. Twenty-two percent of mobile searchers reported they found the home they ultimately purchased with a mobile application.”
Todd Carpenter, NAR’s Managing Director of Data Analytics, noted that big data and mobile computing can be leveraged by brokers, agents and real estate portals to more effectively market homes to consumers. At the same time, he also explained how evolving mobile technologies will allow consumers to assemble personal, intuitive real estate searches without the guidance of a web marketing portal.
So far real estate brokers have done very well in the Internet era. They have not faced the disruption and chaos which has impacted professionals in such fields as travel, tax preparation, or map making.
At the same time, the technology revolution isn’t over and there’s also an argument to be made that technology produces both winners and losers. If some brokers are more productive, then with a finite number of sale opportunities there will be less business for those who fail to adjust.
Keeping Brokers At The Center Of The Transaction
For instance, consider those evolving mobile technologies which will allow consumers to assemble personal, intuitive real estate searches without the guidance of web marketing portals. Wouldn’t brokers be better off with real estate searches which DO require the help of web marketing portals?
Futurist Thomas Frey says 101 major jobs will be endangered by 2030 — that’s barely 15 years from now. On the Frey list are varmint exterminators, meter maids, shepherds and — at #46 — real estate agents.
“If you’ve not heard the phrase ‘technological unemployment,’ brace yourself; you’ll be hearing it a lot over the coming years,” said Frey. “Technology is automating jobs out of existence at a record clip, and it’s only getting started.”
Frey is not the only one with such thoughts. With commercial property, according to a new study by CBRE, a real estate consulting firm, and Genesis, a China-based property developer, “by 2030 the majority of real estate transactions may be made online.”
“Real estate,” adds the report, “traditionally changes slowly but these new emerging aggregators could revolutionize the market, allowing tenants and many types of building owners in cities to contribute wasted and unused space back into an eco-system of available space.”
If we can see technological change with commercial real estate then why not with homes?
What we see in the news today reflects the CBRE/Genesis report: For instance, Zillow and Trulia are seeking to merge; the two largest real estate portals had an estimated 86.4 visitors in May according to Clareity Consulting.
The third-largest portal, Move Inc., the operator of Realtor.com, had 23.7 million visitors during the same month. News Corp. has just announced its intention to acquire Move for roughly $950 million. The New York Post — which is owned by News Corp. — has reported that NAR wants to block the Zillow-Trulia merger.
Work But Not Jobs
How will the growth of major portals impact real estate brokers?
“It is simply not possible to run out of work to do in the world,” said Frey, the futurist. “But whether or not there will be a job tied to the work that needs to be done is another matter entirely.”
Brokers can take comfort with the thought that while big data is hugely important and technology is changing home sale strategies, in the real estate field home purchases are not driven by facts and numbers alone. The purchase of a home is enormously complex because in large measure it’s driven by factors which are impossible to quantify such as status, ego and personal preferences. Moreover, real estate is a localized commodity. This is why when two largely-identical homes are for sale on the same block one will often sell faster and for a much better price than the other.
It turns out that technology has limits. As Mahatma Gandhi explained, “there’s more to life than increasing its speed.”
According to the CBRE/Genesis report “there is a significant and global trend amongst all people, but particularly the youth, towards happiness, purpose and meaning being as or more important than financial success.”
Brokers should welcome the technologies and systems which boost productivity and profits while not forgetting that buying and selling homes is a deeply personal decision. It’s the observations, experience and counseling that only local professionals can provide which keeps them at the center of the transaction, not the latest mobile phone.