I’ve been talking with some of the people who work in the technology sector that is trying to take a big bite out our real estate sales. The money being raised to fund these start-ups in astronomical because the investors believe that real estate can trade without agents and that the companies that get an early market share will be incredibly profitable. In many ways they are right but some smart people in the tech world are seeing that the agent factor could be more of a problem, and opportunity, than first imagined.
People in this sector have asked me some important questions about the future of online property searches and the best practices of a tech-enabled agent.
At the foundation of this research is, “what do REALTORS® do that is valuable to the buyers and sellers and that cannot be done better by a computer”? The obvious ones are that we negotiate, we problem solve, we care, we connect, we manage emotions, and we have a network of valuable suppliers. But none of these matters nearly as much as Strategy. The real estate market is one of scarcity – and the only way to win in a market of scarcity is to outsmart the competition.
I’ve been in real estate for 34 years. 95% of that time the real estate market has either had a scarcity of homes for sale or a scarcity of buyers. It is almost never balanced and when it is, it is for extremely short periods of time as the market transitions from one market to the next.
An online search of properties for sale is nice, but it’s not particularly valuable outside of making the information available to a wide range of people simultaneously. Its main benefit falls to the party who doesn’t have the power advantage in any given market and the party with the power gets to choose the process.
In a Seller’s market where there is a scarcity of properties (likely to be the prevailing market over the next several decades as populations in North America increase) the existing online search engines cannot: enhance the perception of value, encourage buyers to act, overcome reluctance or disparage the competition. In short, it can’t manage human nature (aka, selling). This may be good for the buyer but in a sellers’ market where properties are in short supply, the seller can get a much better outcome with a smart strategy to maximize what the buyers pay and in a seller’s market, the seller gets to choose the process.
In a buyer’s market, the online search engine cannot: manage the tension between desire and need in the seller, lower the perception of value, assess the psychological factors in the quality of lifestyle, deliver information on the subtleties of micro-cultures, or encourage the sellers to accept a less than optimal offer. Good for the seller but in a buyers market, the buyer gets to control the process and benefits from a smart strategy that a smart agent can derive.
So, strategy matters. A lot. And smart agents can develop smart strategies that will deliver better outcomes to the clients. The problem is, most don’t.
So, if you want to be a part of the exciting new real estate world that is coming our way, ramp up your skills in negotiation, macro and micro economics, real estate law, ethics, strategic thinking, emotional intelligence, communication, human connection and trust building.
There will be an important and valuable role for smart skilled agents in the emerging real estate models and we will get to do more of the work that matters. The mundane work will be taken off our hands by computers and lower paid administrative people, we will be involved in a much higher number of transactions, our compensation per transaction will diminish and we will be rewarded equitably for the value that we bring to the buyers and sellers that we serve.