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Op/Ed

Artificial Intelligence (AI) in real estate: Negating or monetizing an agent’s experience?

There is a growing interest and concern regarding the role of artificial intelligence in real estate, but most arguments miss the core of what makes an agent appealing.

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Have you ever emailed or texted someone, and subsequently opened Facebook on your phone to immediately see that person in your news feed?

You read the entire terms of service when you downloaded that app, right? So you remember agreeing to every bit of your phone’s hardware and software recording and interpreting the signals that your everyday actions are creating (just nod your head yes—it’s watching you right now).

Artificial Intelligence is seeing tremendous growth in consumer-driven industries. It is the ability for software to learn and adapt to consumer behavior via live feedback. Cars, websites, wearables, and apps are becoming more intelligent and adaptable.

We’re seeing huge advances in the affordability of AI software that match the exponential growth of hardware’s computing power.

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Simultaneously, human labor in developed countries is increasing in cost. Minimum wage laws, increasing liability, and rising health care costs are pushing employers to replace labor with technology. McDonald’s employees become kiosks that order Big Macs. Chase Bank tellers are replaced by apps that scan and deposit checks. Companies like Circuit City and Borders Books shutter their stores as websites more efficiently serve their customers.

How AI intersects with RE

Intelligent software has massive potential for creating technology that changes labor markets. Real estate labor is a natural target, and a couple of recent pieces got the ball rolling this past week. Russ Cofano penned a broker outlook that viewed “cognitive computing” not as a threat to labor, but an asset to the baseline of real estate’s agent intelligence:

“So here’s the question. What if cognitive computing enables agents to be better professionals and make better recommendations to their clients? What if access to cognitive computing power, and the data necessary to power it, becomes the 21st century equivalent of the MLS utility?”

Further, Cofano states, “Cognitive computing has the potential to add massive value to the real estate brokerage value proposition and do for agent professionalism what no other initiative could touch.”

While the piece focused on the superior delivery mechanism (Upstream vs. the MLS), it provided support to the idea that brokers could adopt intelligent data systems to improve agent capabilities industry-wide.

Not surprisingly, a different take came from Rob Hahn, focused on the costs of repetitive labor and the likely evolution:

“The $6 billion question is where real estate brokerage services fit in the spectrum of services if we put McDonald’s order-taker on the one extreme and the Chief Engineer of Nuclear Fusion Reactors on the other extreme in terms of specialized skill and knowledge.

I think most of my readers know the answer. Real estate is far, far closer to McDonald’s than it is to McDonnell-Douglas.

…rote procedures and manual inputs are being displaced by technology. Why would it be any different for the rote procedures and manual inputs in the real estate business?

Answer: it won’t.

Those real estate agents who survive will have to be ‘upskilled’ and focus on niche areas or ‘be equipped to handle smart systems.'”

Comparing two views on AI

So we have two very different views of software intelligence’s effect on real estate agents. In one, brokers might adopt cognitive computing measures to improve agents’ core capabilities to serve consumers. They improve and survive as a unified group of forward-thinking adopters.

In another, AI wipes away the entire foundation of repetitive services performed in real estate. This debases the masses of agents and eliminates the need for their services. It leaves only the specialized practitioners above water when it’s done.

It would be remiss of me to gloss over the McDonald’s analogy. The skills that allow agents to survive in their occupation can’t be crammed into a single linear comparison. It seems prudent to point out that the comparison of rocket scientists, real estate agents, and Egg McMuffin order takers should be complex.

In recent real estate history, replacing a repetitive procedure in the sales process with software has simply changed the sales process. It hasn’t removed the sales person. There are graveyards full of real estate labor would-be disruptors who have a poignant understanding of that history.

artificial-intelligence-REAL-ESTATE

The intrinsic skills that keep real estate agents strongly entrenched in the industry seem to center on two things:

  • Personalized intelligence (unique local knowledge, negotiation, transactional experience)
  • Personal relationships (emotional IQ and sphere building)

The latter is almost invariably ignored in real estate labor disruption conversations, yet it’s probably the single greatest barrier to disruption. People list with people. Sellers’ top three requirements for a listing agent are reputation, honesty, and trustworthiness.

AI is the intrusive stalker in your phone. Thelma is the amazing woman who comes to book club and walks with you on weekends. H.A.L. 2000 can’t touch her in terms of trust. This should be the overriding theme of every disruption conversation.

On to bottling knowledge

In the future, personalized intelligence might be a different story. If part of the value of exceptional agents comes from what they know from experience, the way they negotiate, and how they interact with clients, how much of that could be learned by an exceptional AI platform?

Could exceptional agents allow themselves to be profiled by their devices and capture that intelligence to monetize it? Would brokers be able to conglomerate the practices and intelligence of their best agents to provide a unique set of processes for their agents and answers for their clients that aren’t available to the general public?

It might not be as crazy as it sounds. Think about the vast amount of information that could be gleaned from one agent over a single year with all of his/her devices in “AI learn mode.” Spoken word, tone, movement, visual cues, timing, location data, digital communication, social engagement, contract negotiation—all of these and more could be processed into a database describing when, where, and how top agents interact with their environments to close more sales transactions.

Who owns the AI?

While the aforementioned could be done on an industry-wide basis to inform brokers as a whole, it might also be led by savvy top producing agents or brokers who would profit from it as a differentiator. Melded with predictive analytics on consumer behavior and market statistics, the right set of personalized intelligence could tell an agent when and where to meet a consumer, and how to begin interacting with that person to provide a greater likelihood of a client and a sale.

Of course, until personality can be direct-ported into the agent’s brain, we still need a human with emotional IQ to show up and close the deal. The creation of a relationship might be initiated by data, but it’s going to be sealed with emotion.

ThelmaRealtor software version 2.5 could be an AI profile that’s sold to brokers or new agents as a foundational of intelligence for their careers. Whether these benefits and profits go to the real Thelma, her brokerage, or the industry depends on who adopts the technology first.

Back to the people

If that’s all a bit too much sci-fi, let’s get back to the basics. There are huge opportunities for the brokerage community to leverage greater technology and AI to improve how they do business. Those that do will have valuable differentiating tools and skills.

Still, Thelma v. 2.5 isn’t going to wipe out the physical agents on the ground. Technologists with armies of software agents will continue to stare at screens, while real life agents are cementing unbreakable relationships with real people. Consumers will work with agents they view as trustworthy, no matter what amazing intelligence is dangled in front of them by H.A.L. 2000 Realty.

It’s true that consumers want more intelligent real estate transactions. Before that, though, they want trust. AI has great prospects for helping brokers and agents improve their business intelligence, but it’s not going to take the human element out of the transaction any time soon. The real Thelma’s role may change, but she still owns the most valuable, subjective, and defensible portion of the real estate transaction: the relationship.

#AIinRE

Sam DeBord is managing broker of Seattle Homes Group with Coldwell Banker Danforth, and 2016 president-elect of Seattle King Country REALTORS®. You can find his team at SeattleHome.com and BellevueHomes.com.

Op/Ed

Should there be an age limit on the practice of real estate?

When a doctor’s hands get shaky, they can kill a patient. But when a Realtor’s mind gets shaky, a client can lose thousands of dollars. Should there be an age limit on the practice of real estate?

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cloris leachman

I was on the phone yesterday with a lawyer who has aged considerably since we last hired him. I spent nearly 30 minutes explaining how a school calendar works, and that children have three day weekends nearly every month. It took three of us 30 seconds to understand, but nearly 30 minutes for a seasoned lawyer to grasp.

In another instance, I watched an elderly doctor with hands so shaky, he could barely take my family member’s blood pressure, yet they would be performing open heart surgery in under an hour on this same patient under these same circumstances.

In both of these cases, these intelligent professionals should find an exit plan – write a book and go on tour, begin consulting or educating, or retire. What they’re handling is so life-altering, that one slip can change so many lives.

In both cases, their own livelihood is at stake, as is their pride, and stepping down can be crushing not only financially, but emotionally.

Also in both cases, neither party was aware that they’re slipping, and as we all age, it is difficult to tell that we aren’t as sharp as we once were. I’m only 32, but I sure as hell can’t sprint up three flights of stairs like I could at 22, just a decade ago, but that’s so obvious – what is slipping that I can’t even grasp because I’m experiencing it first hand?

This brings me to the practice of real estate

In considering the plight of the lawyer and the doctor, I got to thinking – can’t an aging real estate practitioner slip and cause their client thousands of dollars, just as easily as the doctor can slip and knick an artery? Can’t a loss of faculties cause damage to a transaction, sometimes without the client ever even knowing? Can’t a slowdown cause frustration when communications break down over basic concepts like how to use a fax machine?

I wondered to myself, should there be an age limit on the practice of real estate? Perhaps it should be like drivers’ licenses where at a certain age, basic testing is required. Sure, continuing education is required to keep a license active, but anyone can have their assistant take the internet-based test for them.

Shouldn’t consumers be protected?

There is no real success metric in real estate that can be measured – with lawyers, cases are won or lost, and with doctors, patients survive, or they don’t. In real estate, a transaction can be damaged in immeasurable and typically unseen ways.

Then I thought about Cloris Leachman

Cloris Leachman is 87. If you’ve ever watched Raising Hope, you know that she plays Maw Maw, the senile old bat who is always up to some crazy antic. The show pokes fun at a topic that is painful and not at all funny – aging and senility.

Her character affirms all of our fears of the aging process, that at a certain point, we lose it. All of it.

But then, you must remember that Cloris Leachman is 87. She isn’t actually Maw Maw. She is a wildly successful actor who goes on press junkets, films the show, does sketch shows when invited, answers email interviews and fan mail, and tweets, on top of managing her personal life.

She remembers every line flawlessly, she delivers them perfectly, and she brings Maw Maw to life.

What would Cloris think?

Leachman brings up the dichotomy of the aging process – the elderly person who can barely dress themselves (Maw Maw) versus the same aged person who performs brilliantly year after year.

What would she think of my lawyer and that doctor? I’m guessing that because she has full control of her 87-year old faculties, she’d tell them to retire because they suck, not because they’re aging. She’d tell them to not put people at risk because they’re scared to step down.

Ability has nothing to do with age. This 87 year old can act circles around an aspiring 20 year old actress. Ability has everything to do with ability. Period. There are plenty of 25 and 45 year old coke-head Realtors that put clients’ transactions at risk, and there are many more lazy agents who can’t negotiate, take crap deals, make a mess of paperwork, and expect a paycheck.

Ability has nothing to do with age

Lou Holtz said, “Ability is what you’re capable of doing. Motivation determines what you do. Attitude determines how well you do it.” Bingo.

So no, there should be no age limit on the practice of real estate, but there should be a stupidity limit. I’m pondering ways to impose such a limit, so stay tuned.

Originally published April 2014.

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Op/Ed

How to create an authentic and memorable brand

(EDITORIAL) Your marketing is only as strong as the brand you create. Make sure you’re creating something with gusto.

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memorable brand

Building a brand is one of the most important aspects of marketing. You’re creating an image or reputation for a product you will present to the public – that’s a pretty tall order.

One of the most significant things to keep in mind is that you are promoting something you believe in. This thought is echoed by author Cindee Bartholomew, who is an expert in self-publishing and branding.

“Be authentic. Be you. Be real. Be honest. Be bold!” Bartholomew says of creating a brand. “If you don’t believe in you, how can you expect anyone else to? Get the word out and keep your name where it is seen often. Contact bloggers. Develop a street team of loyal fans who will promote you. Advertise within your budget.”

According to Forbes, there are 13 key components to building a successful brand: leveraging the testimonial economy, creating emotive appeal, focusing on generating value for others, using the internal dialogue of your clients, being known for a specific niche, identifying and targeting your ideal client, consistency, understanding branding is not about positioning, finding the intersection, sharing your brand asset in a thought leadership campaign, authenticity, watching what makes your heart pound, and defining your brand’s DNA.

This sounds like a lot (and it is) but, by taking it one step at a time, you have the power to create a brand that sells itself. The best way to start this is by asking yourself questions: What is my brand all about? What do I want to convey to the public? What sets my brand apart from others that are similar?

Being able to determine the answers to these questions will help you find the voice of your brand and your target audience. This is where finding the intersection comes into play, as you want to develop a brand that is broad enough to appeal to a diverse number of people, while you don’t want it to be too broad that it gets lost in the shuffle.

While keeping all of this in mind, it is important to be communicative with your clientele should you make any changes to your brand that may affect their consumption. Mattone Restaurant and Bar, an Italian-American restaurant in Chicago, recently underwent some renovations and menu additions. Owner Franco Francese stated that communication with his customers was the most important part of executing these changes.

“The biggest challenges have to do with how you respond to customer questions about the changes,” said Francese. Being on the same page and communicating consistently across the organization can be difficult.”

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Op/Ed

Culling the lazy, bloodsucker real estate agents

Liar. Cheater. Loser. Choker. Incendiary rhetoric seems to be in vogue this year. If we’re going to talk about improving the reputation of real estate agents, let’s stay away from oversimplifications. The answer is more complex than volume or business model.

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home seller

Liar. Cheater. Loser. Choker. Incendiary rhetoric seems to be in vogue this year.

“The consultants are like bloodsuckers. They’re ten times worse than a real estate salesman or broker, ten times, which is saying pretty bad stuff.” This was the biting yet confusing commentary from Donald Trump, a real estate salesman himself, at a recent political rally.

Inside the industry

The shots at real estate agents are coming from within the industry as well. Keller Williams’ Chairman Gary Keller recently said that agents who buy leads from Zillow “are lazy and don’t want to do the work.” Surely many of his top agents and teams who effectively use the leads would disagree.

Zillow’s CEO Spencer Rascoff recently told CNBC that the company no longer wanted to work with agents who weren’t “great” (they don’t spend a lot of money on advertising). So they’ll be “culling” those agents who aren’t up to snuff. While a practical business move, avoiding a term associated with slaughtering inferior or surplus animals might be item #1 for the PR team’s next executive media coaching session.

Real estate classism

Before we get self-righteous about these leaders’ word choices, though, it’s worth noting that this kind of language pervades much of the industry’s conversations on the quality of real estate agents.

There’s no shortage of snobbery and classist speech among agents and brokers.

Just ask a high volume agent how we should raise the bar of professionalism in the industry:
“Raise Realtor dues by 1000% and we’ll lose 90% of the deadbeats who bring us down.”

Talk to boutique brokers about their counterparts:
“That head shop will hire anyone who can fog a mirror. Their agents are bottom feeders who don’t sell anything and make us all look bad.”

You hear it from speakers at industry conferences:
“Let’s use the 80/20 rule. We need to get rid of the 80% of crappy agents who are making us look bad, so that the good agents who do 80% of the volume are the only ones left.”

There are some really important conversations to be had about the quality of real estate agents in our industry. We want clear answers as to how we fix them problem. We want the answers to be simple.

Unfortunately, big answers are often necessarily complex. When we group real estate agents into simplistic silos to try to fix our issues, we do a disservice to ourselves.

Volume does not equal quality

We can all agree that there are real estate licensees without the experience, ethics, education, or conscience necessary to serve their clients well. There are bad apples in our midst. They’re a poison on our reputation and should not be allowed to sell real estate.

Let’s not overreach with our reaction, though. This rhetorical journey usually ends with lower producing agents or those with non-traditional business models being given the scarlet letter and pronounced as a scourge on the industry.

Volume does not equal professionalism or quality. We’ve seen sweatshop practitioners become real estate celebrities, only to later lose their businesses and licenses when their practices came under scrutiny.

On the other hand, some of the lowest-volume agents often have the most experience to with which to guide their clients. Agents who are nearing retirement will often shrink their active client base significantly. The buyers and sellers who work with them are afforded all of the benefits of an agent with decades of experience and insight, as well as a greater share of that agent’s attention.

The client who works with an agent who has only one client at the moment may be the client who is receiving the most comprehensive personal service possible.

Then there are those “lazy” agents who buy leads, or pay fees/splits to others who prospect for them.  Since when was specialization of skill and division of labor a sign of laziness?

Selling vs. lead generation

Admittedly, this comes from my position of personal bias. We’ve brought agents on to our team who were low volume producers before they joined. Most had experience, but didn’t want to prospect anymore. They just wanted to work with clients and sell.

Meet “Jane”. She sold for 30 years before joining us. She is one of the smartest, most dependable, respectful, and effective agents we’ve worked with.

By many counts, she should have been tossed from the industry the year before because she only sold two homes. She sold 15 homes last year, a healthy business in a market like Seattle. It still probably wasn’t enough for the sales police to label her volume sufficient. She’s “lazy” because she’s relying on others to generate leads and focusing on her core skills of selling. She might just be “culled” with the other low-rung agents who provide outstanding service and consistently receive raving reviews from their clients.

It’s more complex than that

To be fair, we’re in an industry that has an unhealthy obsession with sales numbers. I’ve stopped counting the number of times someone asked me, “What kind of volume do you do?” within the first two minutes of a conversation (It almost sounds like “How much do you bench, bro?”). So it’s not surprising that an agent’s volume is often the first metric many look to for a frame of reference. Volume makes a big difference in finding out whether or not an agent is good for your team, your office, and your business model.

Let’s just not let it creep so far into the conversation about who deserves to belong within the greater industry. There are a lot of different business models, and different roles that fit within them. Not everyone needs to be a solo, door-knocking, cold-calling top producer to provide great service to clients.

“Jane” isn’t. Her clients will scoff if you tell them that her volume and prospecting system make her a bad agent. If we’re going to talk about improving the reputation of real estate agents, let’s stay away from oversimplifications.

The answer is more complex than volume or business model.

It’s about education, experience, dedication, and professionalism. Those are difficult things to measure, but improving an industry isn’t supposed to be easy.

Let’s skip the simple labels. They’re part of the problem.

This editorial originally published on March 7, 2016.

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