{"id":2634,"date":"2021-11-10T21:38:12","date_gmt":"2021-11-10T21:38:12","guid":{"rendered":"https:\/\/preprod.realtrends.com\/blog\/2021\/11\/10\/opinion-no-algorithm-will-replace-human-touch-in-real-estate\/"},"modified":"2025-03-13T02:39:33","modified_gmt":"2025-03-13T02:39:33","slug":"opinion-no-algorithm-will-replace-human-touch-in-real-estate","status":"publish","type":"post","link":"https:\/\/preprod.realtrends.com\/blog\/2021\/11\/10\/opinion-no-algorithm-will-replace-human-touch-in-real-estate\/","title":{"rendered":"Opinion: No algorithm will replace human touch in real estate"},"content":{"rendered":"\n

Zillow<\/strong> made headlines last week when it announced it was exiting the iBuyer business, closing its tech-powered, home-flipping operation, Zillow Offers<\/a>. Chief Executive Rich Barton said in a statement, \u201cWe\u2019ve determined the unpredictability in forecasting home prices far exceeds what we anticipated.\u201d What could the move say about the future of real estate technology and disruptors? What should we anticipate from the PropTech industry in the future?<\/p>\n\n\n\n

For too long, the PropTech industry and traditional real estate brokerages have been on opposite sides of the table, competing for buyers, sellers and agents. What if both are failing the market? <\/p>\n\n\n\n

By coming together, they could forge a new way forward for the $1.9 trillion residential real estate industry. If we\u2019ve seen anything in the last decade of real estate, it\u2019s that traditional residential brokerages can\u2019t afford not to act. They must learn to leverage the right PropTech platforms to better serve buyers, sellers and agents. By partnering with the agent, rather than eliminating the agent from the deal, PropTech platforms can be leveraged to help solve problems and create ease in the transaction process for all.  <\/p>\n\n\n\n

Over the past 10 years, start-ups, discount brokers and iBuyer programs have worked to cut out the professional real estate advisor, attempting to discount commissions and automate the buying and selling process. In most cases, the cost for sellers and buyers didn\u2019t change much. At the same time, traditional brokerages didn\u2019t invest in tech or attempted to save on operating costs by slicing and dicing their agent service offerings. This made it more difficult to advise and serve the client. As the British saying goes, \u201cPenny wise and pound foolish.\u201d<\/p>\n\n\n\n

Real estate is not a commodity industry<\/h4>\n\n\n\n

No two homes are created equal and the market changes quickly, which makes using an algorithm to predict pricing difficult. There are nuances to each property, such as views, finishes, design pedigree and neighborhood, that need to be considered, particularly in the luxury sector. Only a local expert with deep market knowledge can properly advise on these nuances. <\/p>\n\n\n\n

Additionally, the emotional aspect of the process cannot be overstated. The decision to buy or sell isn\u2019t always about the bottom line. It affects the individual and the entire family \u2014 it\u2019s where they\u2019ll make memories, enjoy moments together, plan for the future. <\/p>\n\n\n\n

In our experience, every time we\u2019ve had a buyer represented by a discount broker, the process goes the same way \u2014 the other broker is there to push paperwork and not advise or service the client. In a hot market, the agent should help a buyer best prepare to compete strategically by leveraging their real-time experience, data and expertise.<\/p>\n\n\n\n

Disruptors aren’t really disrupting<\/h4>\n\n\n\n

There is a lot of investment entering the real estate industry focused too much on displacing the real estate agent<\/a>. There is an unproven hypothesis that disruptors, by removing the broker or agent from the transaction, can streamline the process and reduce costs. This experiment has played out in other industries with the decline of the travel agent or replacement of the stockbroker with a mobile app. These services still exist but have been dramatically reduced and regulated to consumers who are willing to pay more for service and not just convenience. <\/p>\n\n\n\n

The difference between these examples of disruptors and real estate is the combination of value and variety. Buying a home is likely the most expensive purchase a person will make, and the nuances that go into the decision-making process are varied and complex. As we\u2019ve noted, they are emotional, not purely logical or analytical, and that is why it is difficult to build an effective algorithm to replace the human touch needed to navigate the variety of options and the complexities of the deal.<\/p>\n\n\n\n

Listing data is only a small portion of the agent value prop<\/h4>\n\n\n\n

Digitizing the real estate industry by getting listing data online and the rise of search sites like Zillow created a more convenient experience for consumers. This was a good move for everyone. It means consumers no longer need to go through their agent as a gatekeeper of exclusive information.<\/p>\n\n\n\n

However, listing data was only a small portion of the real estate agent value proposition. While many consumers like the idea of buying or selling a home from the convenience of their laptop or smartphone, the focus needs to be on creating technology that simplifies the transaction process while fostering the human connection.<\/p>\n\n\n\n

What is the way forward? <\/h4>\n\n\n\n

What we are invested in is technology that solves problems and creates ease in the antiquated transaction process without sacrificing the human touch. Big data, predictive analytics, AI and machine learning all have value. We need to leverage them to drive strategy and provide data-driven inputs, rather than being fearful of how that data will be used. <\/p>\n\n\n\n

Regardless of standards, data inside the real estate industry is still very inconsistent. If we want to improve the experience for the consumer, we can start by improving our data input to better anticipate the needs of our clients through predictive analytics and other data science. An example would be improving evaluation tools that would allow us to better advise our sellers on how to accurately price their homes and buyers on how to better negotiate and submit offers.<\/p>\n\n\n\n

In short, real estate technology should be leveraged by the brokerage to service the agent, who can then spend more time \u201ckicking the tires,\u201d so to speak, and advising their clients. <\/p>\n\n\n\n

Backed by PropTech data science, the agent\u2019s focus can be on how best to price a property for sale and negotiate on behalf of buyers to drive the most value in their purchase, both financially and emotionally.<\/p>\n\n\n\n

Rather than being a disruptor, brokerages and PropTech should come together to enable agents to provide a higher level of service and customized experience for the client. We\u2019d call that a win-win on all sides of the table.<\/p>\n","protected":false},"excerpt":{"rendered":"

What could Zillow’s iBuying decision say about the future of real estate technology? What should we anticipate from the PropTech industry in the months and years ahead?<\/p>\n","protected":false},"author":15802,"featured_media":4822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3255],"tags":[],"coauthors":[2176,2177],"class_list":["post-2634","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive"],"acf":[],"yoast_head":"\nOpinion: No algorithm will replace human touch in real estate - RealTrends - Blog<\/title>\n<meta name=\"description\" content=\"What could Zillow's iBuying decision say about the future of real estate technology? 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