Will Silicon Valley put real estate brokers out of business?
By Jason S. Weissman 3 minutes Read
Silicon Valley is catching up with the real estate sector. Over the past decade, over $30 billion has been invested in PropTech, a new generation of startups at the intersection of real estate and technology.
As the owner of the largest independent real estate brokerage and consulting firm in Massachusetts, I have studied the brokerage industry for 25 years. I’ve seen budding troublemakers come and go. This time it’s different.
It’s no secret that real estate, the world’s largest asset class, has also been one of the slowest industries to embrace 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 open to innovation… and to disruption.
Startups like Hemlane and Eden are streamlining property management services. Landis acquires homes as investment properties and then allows tenants to “rent to buy” when the company’s underwriting algorithms deem tenants qualified to buy. Bowery automates the traditional manual commercial property appraisal process 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 is to stay in business and stay competitive.
For brokers and agents to make the technological leap, they must recognize that every real estate transaction will begin and end online. Today, unicorns like Zillow and Redfin are redefining and leading the consumer search experience by creating new platforms for buying, selling, and renting homes. These tech companies are a wake-up call for real estate agents to reinvent themselves or die.
For example, StreetEasy and Matterport have reduced the friction costs of finding an apartment rental. A savvy tenant can avoid upfront costs and easily find the apartment of their dreams. This experience is just one example of many where we see real estate consumers embracing technology and the benefits it offers.
The question, of course, is where will technology take us? And is there still a role for people in this digital revolution?
The real estate agents who will survive and thrive in the coming crisis will be those who embrace technology, not fight it. »
The answer is not catastrophic for the two million American real estate agents. While PropTech will eventually put all listings online, estate agents are still essential for the most important part of the buying process: the advice service. If all politics is local, this is doubly true for real estate. Even the most tech-savvy buyer or seller can benefit from advice from someone who knows the market for individual neighborhoods.
The value of expertise, after all, is timeless. Davy Greenberg said it best in a viral Tweeter“If I do a job in 30 minutes it’s because I spent 10 years learning to do it in 30 minutes. You owe me years, not minutes. For now, there is no suitable substitute for the proven information of brokers with access to hyperlocal data.
Either way, technological progress is relentless. Real estate brokers and agents should heed this red flag or become obsolete.
The shift from conventional practice to digital efficiency has created new business opportunities for real estate agents with sharp analytical skills who know how to translate data into actionable insights. While technology is closing the gap, PropTech is still in its infancy, with much to learn. As Tech Editor Chris Nuttall wrote in the FinancialTimes“Despite all our fears that artificial intelligence is getting way too smart – as it uses machine learning on huge data sets to give it superhuman powers – people are thankfully still good enough to pass AI for a fool.”
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 lists, we live in a digital world. Therefore, it is imperative for real estate agents to combine their heightened market acumen with new technologies in order to be a trusted resource and an effective advisor.
We are at a pivotal moment in the history of the brokerage industry that will test the survival of every Realtor. The rise of automation and artificial intelligence will continue to propel the growing dominance of tech players. As a result, PropTech will likely reduce transaction costs and cut jobs. The realtors and brokerages that will survive and thrive in the coming crisis will be those who embrace technology, not fight it.
Jason S. Weissman is the CEO of Boston Realty Advisors, New England’s largest independent real estate services firm.