OK, that was an exaggeration but for those who plan on being in this business for the next 20 to 30 years the end is near may not be so far fetched. In my last two posts I gave opinions on the extreme surplus of REALTORS® we have as well as the war for data supremacy. What I want to do now is give what I think will eliminate at least 50% of the real estate agent population and it will be here before you know it and it starts with artificial intelligence.
Besides movies like 2001 A Space Odyssey with an AI computer gone amok, we have the earliest real example with IBM's Newton. Even in the infancy stage of machine learning, Newton could win at Chess and jeopardy against the best, and it is now composing music based on mood. This is not quite HAL 9000 but it starts to get a bit scary to me. Newton has also been transformed into Einstein for the SalesForce CRM and it can adjust how you are working with your target market and past clients faster that hiring a human. I have a lot of Facebook IT engineers as investors and they will caution to not get ahead of ourselves, humans still are involved with adjusting the algorithms but more is being doen by the silicone based life form and they will tell you this is moving quickly. In the next paragraph I want to revisit the 5 main parts of a transaction and to give an opinion of what we will see in the next five years.
Data, Prediction, Judgment, Action, and Result are the five and here is how the first three will be taken voer from agents and how even the last two could be handled by AI. AI takes the big data and it analyzes numbers, pictures, history, location, amenities, market forces, drive times, schools, amenities and well, maybve the kitchen sink. This is why the war for data is so important. It is kind of like the novel Dune, he who control the spice controls the universe. The big the data the more powerful the controller is, so size does matter. The agent who drilled down into the AVM prediction to produce a hyper-local judgment is far less accurate the AI which doesn't throw into the mix a stone age brain beset by non-rationality and subjective opinion. Hence the price of the house becomes very specific and AI could make even further judgments about why it is not selling and adjust from there.
Now we add in augmented and virtual reality and let's not get hung up on the Oculus Rift because this is not what will make the biggest difference. Google Earth going VR is where combining with AI will make the greatest disruption. Let's take my business model which is out of state investors and apply AI and VR. AI has analyzed the data and given a price on a home which means the investors need to have an 8% cap rate, 13% cash on cash, and in an area of appreciation. The Investor in Palo Alto wants to take it a step farther and say let's tour the neighborhood without me coming to Oklahoma City. We get on our Google Earth VR program and our avatars are shaking hands in front of the house and we decide to walk around the neighborhood to see what other homes look like and are people taking care of their yards. Satisfied the investor ask for a ride in our virtual car to see what Monday morning traffic is like in taking a child to school at 7:30 AM and along the way see some close by amenities. Now here is where my business gets a massive adjustment, AI can now write the contract, choose the best lender and insurance, and knows where to close. We have now gone from through all five steps. Yes I am someone in there but my role has now changed drastically.
I have one more post in this series where I want to try to define the REALTOR® of the future but I want to summarize where I think we are now. The modern agent has been able with what we have now to quadruple their production in less time and with lower expenses just in the last decade. Adding AI and VR this way will put an even greater strain on surplus and unneeded agents because now I am doing 8 times the production with AI and VR. How soon do I see this becoming more than a new trend? based on who I talk to five years and in ten years it can take over much of what we do. With this development you can see why Zillow is forcing brokers and MLS systems to give them more data. No they don't want to be a broker but could they ever be the funnel for everything, you bet. In the next post I will go into the importance of RPR in this data war and also what I think the REALTOR® of the future needs to be. Spoiler Alert! We will still need real human beings!
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