How Technology Will Affect Real Estate Brokers

by senior futurist, Richard Worzel, C.F.A.

A few months ago, I was asked to speak to REBNY – the Real Estate Brokers of New York – about how technology might affect their industry. What follows is an adaptation of my remarks.

When dealing with the future. I’ve found that describing the future in technical terms usually doesn’t give people much of a sense of what the future will be like. Such an approach has no flavor, and doesn’t convey the power or importance of some of the changes to come.

What often works better is to describe a scenario of what the future might look like, and how we might, see, hear and experience it. That’s what I’d like to do here in order to point towards some of the changes ahead of us. Once I’ve finished describing the scenario, I’ll circle back and talk about some of the technologies included in it, and how they might bring about changes.

It’s important to note that this is not a prediction. One of the fundamental truths about dealing with the future is that it is inherently unpredictable. Instead, what I try to do is help people to prepare for uncertainty. This is better and more useful than trying to come up with a perfect prediction.

Before I start, though, let me explain one technology portrayed in the scenario so that I can talk about it without stopping to describe it. Twenty years ago, I talked about how computers would become wearable, and disappear from sight. That may not sound remarkable now, but at the time people wondered about my sanity. Part of such a wearable computer is the monitor, which is worn over the eyes like a pair of glasses, which I called “Looking Glasses.” Fortunately, today this technology now exists, albeit in a still somewhat primitive state, and the best known example is called Google Glass.

So, with that in mind, here is:

A day in the life of a New York real estate broker in 2024.

Jan Robson is a 40-something real estate broker who has virtual appointments with two potential clients today: one a seller, the other a buyer. She adjusts her Looking Glasses, and knocks on the door of the seller’s condo. Jeeves, the piece of smart computer software that acts as her butler in cyberspace, reminds her that her first client is Marcus, a retiring professional looking to cash in on the equity on condo he owns with his wife, and use the money towards a home on the water, perhaps near Bay Head, New Jersey. Although many brokers & brokers believe that doing things completely in cyberspace is more efficient, Jan strongly believes that you make a better impression, and are more likely to cinch the engagement, by visiting in person – hence her visit here today.

Assessing the condo. Jan makes use of a swarm of small, flying, grasshopper-sized robots to inspect and survey the condo, while Jeeves accesses public records about the building and the building the condo in part of. This gives her precise measurements, along with the location of plumbing, indicates walkways, and coordinates with information on file about the building.

Within a couple of minutes, she is able to create a 3D display of the apartment, including all the permanent fixtures, such as support walls and plumbing and electrical connections. As she talks with Marcus, she unrolls and starts typing on her keyboard and drawing controls, while asking Jeeves to run through a range of possible color schemes and designs for the condo. Together, she and Jeeves come up with 3-4 different decorating schemes which show the apartment to best advantage. Colors can be changed, furniture moved, replaced, or eliminated, and personal items added or subtracted virtually.

From this, they first select the two best decorating schemes and create the basis of the promotional video that will be used to show the condo online. Jan’s careful when she shows them to Marcus that she doesn’t to allow him or his computer butler to record her displays, always keeping a thumb or finger in the display, as well as her © copyright symbol watermarked on the 3D image.

Studying the client

Meanwhile, Jeeves is capturing information about Marcus, both from the public record, while simultaneously helping Jan assess his interest. He does this by reading Marcus’s body language, body temperature, pupil dilation, breathing rate and other indicators, and draws conclusions about what Marcus is feeling, which Jeeves reports to Jan by whispering into her ear. Between them, Jeeves and Jan can pretty well tell that he’s being candid with them, being reserved only on a couple of points, including one answer about what the neighbors are like, where he seems to have been cautious in his answer, as if he were hiding something. Jeeves makes a note to investigate the neighbors further.

Next, Jan assesses the market position and pricing of the condo, based on the data accumulated by REBNY and RETS. She has Jeeves make use of IBM’s Watson software to perform a Big Data analysis of sales data from the past 30 years, which contains steadily increasing detail from the past to the present, up to current trends. This data includes what the market has been like, where it seems to be trending, what its cycles are, who is likely the most interested kind of buyer, how real estate prices relate to stock market and fashion trends, and what leverage points the client has going for and against him. As part of this process, she can see similar properties, in terms of location, features, size, and many other characteristics.

As a result, she can analyze the market value of Marcus’s property in detail, and on a point-by-point basis. This provides a break-down of how much each factor increases or decreases the potential selling price. It assesses each facet of the condo, based on importance and how easy various factors are to change or affect, and highlights those things that are under the seller’s control, and shows the maximum possible price for each category, along with the probable range for each category. This allows the client to see what he can do to affect the final price, plus what each significant renovation or repair would cost and what it would likely return. Jan offers to recommend three possible contractors to polish the condo for in-person showing, but the selling video they decide on together already reflects how the condo could look when finished.

Studying the market for this property

Next, Jan identifies potential (global) buyers from the REBNY, national, and international databases, estimates their potential bids from publicly-available data, plus whatever details of what they’re seeking that they’ve provided to their broker (if they have one). Much of this is conjecture, but it’s based on 20 years of previous experience. They do this by once again drawing on IBM’s Watson to assess the information contained in the various databases.

Meanwhile, Watson and Jeeves monitor social media for any information and trends that might affect sales in this area, or of this kind of condo. They also start a low-level buzz campaign designed to enhance the condo’s desirability, focusing it on the kinds of buyers it is most likely to appeal to, based on demographic and pyschographic data.

Marcus is impressed with the thoroughness of Jan’s approach, but also with her grasp of his needs, and the potential of the condo. Even as Jeeves has been feeding Jan information about him, his computer butler has also been feeding him information about Jan, her reputation, reviews from previous clients, and helping him read her body language. Everything points towards a mutually beneficial relationship, so Marcus signs the engagement agreement.

Jan and Marcus confer on selling strategy, based on suggestions from Watson, and agree on a range of selling prices, based on the possible closing dates and how conditional the offers are. Advance notices are sent to Jan’s inner network of cooperating brokers, her “professional friends”, from around the world via social media, most of whom she’s never met but with whom she has a strong working relationship.

After that, notices are sent to a more general real estate audience, using broader forms of social media, such as facebook and LinkedIn. Finally, public information is posted on real estate websites. The purpose is to give first crack at the property to brokers with whom Jan has worked well in the past. Jan gets nibbles immediately from Hong Kong and Vancouver, plus an expression of interest from an broker in Manhattan. Based on her assessment of the property, and the initial reactions to it, she’s confident they may never have to actually refurbish the condo before they sell it.

Working with a property buyer

Jan’s now running slightly late for her appointment with the buyer, Roberta, who’s looking for a house in Queens. Jan asks Jeeves to contact the buyer, and coordinate a time and place for their meeting. Jan doesn’t really have an office per se, but works out of her home when she needs a place to be. The rest of the time she works through Jeeves, who combines massive computing power, her personal databank, access to industry and international databases, and several different kinds of communications. Jan doesn’t worry about any of that. She just uses it, and it just works.

She hails a driverless cab, and Jeeves instructs it to take her to the financial district coffee shop where Jan is to meet the buyer. Meanwhile, as the cab maneuvers through traffic, Jan starts the meeting with the buyer, speaking to her through her Looking Glasses, which allow Jan to see the buyer and vice-versa, and to throw the images and videos she wants to show her to her glasses.

Jan could, in theory, do everything in this virtual way, but again believes that in-person meetings are important. She says it’s important to understand the client, not just speak with them. She also believes it’s important to get a sense of who she’s dealing with.

Meanwhile, Jeeves checks the purchaser’s credibility rating online beforehand and finds that she’s well thought of among service providers. This is kind of a reverse tripadvisor-rating system that has sprung up among merchants and service people to rate customers and clients in different kinds of transactions. It’s proving extremely helpful for avoiding bad clients and working hard for good ones, especially as facial recognition software has become widespread, and people use it through their Looking Glasses.

Information overload in action

Roberta had tried to find what she wanted on her own first, but got frustrated with information overload. She found several listings online, reviewed lots of information websites, but got more progressively more confused than enlightened. The explosion of information has made it harder, not easier, for an uninformed buyer to work alone. There were lots of 3D videos, including multiple videos with different decorating schemes for the same property, and often from different people claiming to have exclusive control of the property.

She can’t tell what any property actually looks like, or whom she can trust and should deal with. This process scared, irritated, and frustrated her. She tried comparing the asking prices with a publicly available database of recent sold and presently available properties to identify comparable prices on comparable properties. However, it was difficult matching up what she is looking for with what’s available, and figuring how much things were actually worth.

Roberta finally decided that she needed insight rather than just information, so contacted Jan through a friend of a friend. Roberta’s computer butler tells her that Jan has a 5-star rating among clients, plus her friend really likes Jan.

By the time they start to talk about specific neighborhoods, Jan’s cab draws up in front of the buyer’s apartment. She leaves the cab, with Jeeves transferring funds directly from her bank account to the cab company’s account. Jan doesn’t have to fumble with cards or money, or even concern herself with paying. The cab door just opens for her once payment is secured, and she leaves.

Helping the buyer identify what’s most important

When they finally meet face-to-face, Jan spends quite a lot of time talking with Roberta, trying to help her identify what’s truly important to her, and giving Jeeves a chance to assemble a list of critical features. She shows Roberta illustrations of different kinds of home features and street layouts so she can see what Jan’s talking about. Once she’s finished discussing Roberta’s needs and wishes with her, Jan throws her implicit priority list to her Looking Glasses, and they point and move the items up and down the list as if they were re-arranging words floating in mid-air, much as the 2002 movie Minority Report illustrated.

When they have a finished list, Jan consults with Jeeves, then pulls up a virtual map with various streets in Queens that are highlighted according to probability that they’ll find what Roberta’s looking for on each street. They then virtually walk down several streets on a summer’s day, and again in the dead of winter, to give her client a feel for each neighborhood. As they do this, Roberta talks about the things she sees that she likes and dislikes, which helps Jan re-organize the neighborhoods in a new priority.

Next Jan turns to properties within those neighborhoods. Jeeves, again consulting with Watson, offers a list of properties, organized according to the priorities Jan suggested. It provides a breakdown of what’s available, what different features cost, and what are likely to be the best choices from revealed listings.

Jeeves also offers a tentative rating of how these homes are likely to please Roberta on an emotional level.

Virtual viewing of properties & neighborhoods

Together Jan and Roberta co-view the videos of a number of the properties while Jeeves looks on and monitors their conversation. Jan encourages Roberta to point out or discuss the things she likes, and give some indication of how important they are to her. This allows Jan to further refine the priorities of the things Roberta wants. Gradually, as Jeeves hears and sees the things Roberta likes, she finds that the videos are getting closer and closer to her ideal as Jeeves starts selecting properties that have qualities similar to the things Roberta has indicated she appreciates. Together, Jan, Roberta, and Jeeves narrow the search down to three properties.

At this point, Jan grabs her briefcase, while Jeeves calls a cab, and Jan and Roberta head out to look at the properties in person. Jeeves makes arrangements with the brokers representing two of the properties. The owner of the third is not available to let them in, so they’ll have to content themselves with looking at it from the outside.

After they’ve visited and examined the first two properties, they go to the third, and are walking around the neighborhood when Jeeves speaks to Jan privately through her earpiece, telling her that a buyer has appeared for the second property. This information comes from her social network of friendly brokers with whom Jan has a comfortable working relationship. None of these brokers is involved with this property, but one has just learned through another broker that the property Jan’s just shown may have another buyer interested. That broker’s butler relays this information to her social network, and since Jeeves has registered Jan’s interest, that information has just been sent to Jeeves, who has whispered it in Jan’s ear.

A competing buyer appears…

Jan relays this to her buyer, and they talk about whether Roberta likes that property enough to jump into making an offer. She’s not emotionally ready to make the leap, so they talk through what she’s seen, and what she has liked and not liked about this property. She asks if there’s any more information about it. Jan is able to verify that there are no outstanding work orders, and that there are no outstanding construction or repair issues in the neighborhood, and that the owners are well thought of within the neighborhood.

Jan also says that there have been five sales within a three block radius in the past 2 weeks, and that the properties all went very quickly. This is clearly a hot area right now. Roberta asks Jan if there are likely to be similar properties come on the market again soon as she hates to be rushed into making such an important decision.

Jan and Jeeves assesses Roberta’s state of mind: She’s clearly interested, concerned, and worried, all at the same time. Jan points out that of course there will be other properties in the future, but that each property is unique, and that this one is likely to be off the market very soon. She also points out that although they’ve only visited two properties, that afternoon they’ve actually screened a great number of neighborhoods and properties, and that these three seem to fit Roberta’s criteria best.

Asking the right question

Jan then asks: Based on what you’ve seen of the three, which do you like best? Roberta thinks for a minute, then decides she actually likes the first property best. Jan nods, because that was her impression as well, and says, “Then let’s not chase second-best. Do you want to get serious on the first property?”

Roberta thinks for a minute, calls up images of the first property on her Looking Glasses again, and virtually walks through it once more. Jan virtually walks Roberta through the neighborhood, pointing out the good and bad things about it, but leaving it to Roberta to draw her own conclusions.

She finally looks Jan directly in the eyes. Jan can see Roberta’s pupils are dilated. She says, “I think that’s the one. What should we bid?”

They walk to a park bench and sit down, and Jan walks Roberta through a bidding strategy, finally proposing a bid that is within her range, but warning her that there’s at least a 67% chance that the final price will wind up slightly above that range. Jan knows, from Roberta’s earlier body language, that she has more room than she’s let on. This is confirmed when Roberta nods her acceptance.

Jan reviews all the information she has about the first property with Roberta, then has Jeeves draw up a formal offer for their bid. Roberta formally agrees to the offer, and her acceptance, certified by Jan as a registered real estate broker, is legally binding without the need to execute and deliver physical documents. They file the offer with the seller, and wait to see what happens.

Jeeves summons a cab to take them back to Roberta’s apartment, where they’ll wait to hear back from the seller. Jeeves has exchanged communications information with the seller’s broker, so response will come immediately when it does come. Roberta is no longer confused about which property she wants. Now she’s excited and hopeful.

So what are the technologies behind this vignette?

OK, that’s a day in the life of a real estate broker in year 2024 – or at least one possibility. Now let me go over the technological underpinnings of this vignette and identify the technologies involved.

First, there are the Looking Glasses. These are a heads-up display that act like the monitor of your computer, but are transparent when there’s no information to display. They can be used for augmented reality, which overlays your live view of the real world with information for directions, to highlight specific features, or any other relevant purpose. Google Glass is a precursor.

Next, Jeeves is a lineal descendent of your smartphone, using software like Siri, Watson, or similar computer intelligence. It will act as your butler, mentor, news scanner, communications center, paymaster, guard against cyberspace attacks, and anything else a smart computer can do for a human from cyberspace. It will be, in effect, your cyberspace representative.

Everyday robots in many forms will become a regular part of our lives, including flying swarms of small, even tiny, robots. But don’t expect Rosie the Robot to clean your house any time soon. Even if the technology reaches that surprisingly difficult level of sophistication within 10 years, a high-end humanoid robot will cost as much as a high end luxury car. And price is always one of the things that’s left out of science fiction.

Next is data visualization. We can do lots of the visualization things I described in this vignette today. The 3D images will be easy to see through Looking Glasses because they can provide right-eye, left-eye images that lead to 3D imaging. Once the dimensions and fixtures of a condo are known, then tricking it out in different colors and with different kinds of stock furniture is simple, and well within our existing technology.

Creating a photo-realistic video from such images is within our grasp right now, although it would still be somewhat pricey today. Walking through the neighborhoods in summer and winter is a combination of the 3D images possible through Looking Glasses, and today’s Google Earth images, slightly extended.

For Big Data analyses of properties, I’ve extrapolated this slightly beyond what I know exists today. The computing power is already there, but the databases of real estate and a data base of people’s reactions to it is not yet available. IBM’s Watson is being made available for additional commercial applications, and could be applied to this kind of real estate assessment process with the right data. The parts I’m extrapolating are that when there’s a demand for this kind of Big Data information set, I expect some enterprising group will assemble the data and sell access to it.

Today’s social networks, like facebook and Twitter, are clunky things with very little intelligence, and operating exclusively through keyboards. But if you have an intelligent interface, like Jeeves, and an intelligent network, you can develop tremendous flexibility and create connections in real time in response to specific needs, such as the connection through a friend-of-a-friend broker who knew that the second property Jan and her buyer were looking at was about to attract a bid. And Jeeves, using its discretion, can be authorized to interrupt with time-sensitive information, and will get progressively better at judging whether to do so based on Jan’s reactions to its actions.

All told, then, this scenario could almost be done right now. It would be expensive, but almost all of it could be done. But let me focus in on one specific aspect of this whole transaction that is, I think, critical to your future in real estate.

Many of us grew up in a world where information came through a garden hose, and we could sip and drink at out own pace. I grew up outside New York City, and when I was a kid we had 5 TV channels: CBS (channel 2), NBC (channel 5), ABC (channel 7), and two independents on channel 9 and channel 11. Today there are hundreds of channels to choose from.

Now we are trying to drink from a fire hose, and the volume and speed of information flow continues to accelerate. In my example, Jan’s buyer tried to use online information to go it alone, but wound up confused and frustrated.

More information isn’t better information

More information is not necessarily better information. One of the counter-intuitive aspects of the future of technology is that the more powerful technology becomes, the more important the soft skills, the things that make us essentially human, become. Routine things will be automated, so it will be the human things that will become more important. And in particular, real estate is an information-rich industry – but it’s not data that makes the difference to buyer or seller. It’s understanding that data, the ability to turn data into understanding, that’s important. And that’s what Roberta was missing when she tried to buy without a real estate broker: the fundamental understanding of the market. Technology won’t change that, it will emphasize that.

There is no question that technology is going to change the real estate profession, and change it radically. It’s going to be important for brokers to assess the changes as they occur, to embrace those advances that are critical, like email and texting, and avoid the pet rocks, perhaps like Twitter is in real estate.

Some years ago, I was part of a roundtable discussion about the future of education, and one of the other members was from IBM. He made what I thought was a very astute observation (and I don’t know if it was original with him or not). He said that young people speak digital like natives, whereas older people speak it like a learned language.

It would be easy for real estate professionals to dismiss technology as a fad, and stick to the traditional ways of doing things. It would be easy – but it would be a huge mistake, because it would deprive their clients of the advantages that technology can bring, and deprive them of a competitive edge going forward. And make no mistake: technological advances are not going to level off. Instead, they are accelerating, and not only are they accelerating, but the rate of acceleration is increasing.

Arie de Geus, a futurist formerly with Royal Dutch Shell, once said, “Learning faster than your competitors is the only sustainable competitive advantage in an environment of rapid change and innovation.” The world is changing, whether we like it or not. The choice we will have to make is whether we get left behind or not.

© Copyright, IF Research, October 2014.

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