Brooklyn Han: The real estate industry is currently seeing rapid adoption of artificial intelligence, but at the same time, voices questioning the value of real estate agents are growing. How is RE/MAX responding to this situation?
Dave Liniger: Our stance on the real estate agent-consumer relationship is that we are a trusted authority or a trusted advisor in a highly complex transaction.
If you look back over the last 50 years in real estate, the rules for residential transactions have become incredibly complicated. When I first got my license 55 years ago, a VA loan was one page, an FHA loan was one page, a sales contract was one page, and a purchase contract was two pages. Today, they are dozens of pages.
Back then, we never even thought about property inspections. We didn’t understand anything except dual agency, and we didn’t have tests for radon gas or uranium in the soil, etc. Now, real estate agents have a lot of responsibility. If a real estate agent is listing a house for sale, they need to know about the neighborhood, whether there are people in the area who are on a “keep away from children” list, etc.
In our roles as trusted advisors, technology can help us be more time-efficient and improve the quality of our work, but it won’t replace us. When technology companies entered the industry about 20-25 years ago, they vowed to put real estate agents out of business, just as they put travel agencies and bookstores out of business.
Unfortunately, the complexity of real estate transactions and the fact that each property purchase is different hindered their success. That’s where technology comes in. Every property in your town or search area can be viewed almost instantly from your iPhone with 30 photos and sometimes a video tour. Tools have certainly made our jobs easier, but they haven’t replaced us.
BH: Do you think the wave of AI technology washing over the real estate industry will have any different impact than previous waves of tech tools?
Liniger: I think it will be similar to what has happened in the past. I know there are properties that are bought and sold over the internet, but it is done very rarely and the issue is the uniqueness of the properties.
Most people want to be able to tour properties in person. They want to know what’s going on in the neighborhood, whether there are smells coming from the meatpacking plant across the street or the nearby highway, how the area changes from day to night. That’s where real estate agents and their knowledge are valuable. AI may eventually be able to figure some of that out. The more questions you ask, and the more information you provide, the better the AI will be able to answer them, but that’s yet to come.
BH: In real estate transactions, agents are clearly better suited than AI for the human parts of the transaction, such as providing emotional support to clients going through the biggest financial transaction of their lives. How is RE/MAX leveraging technology to help its agents focus more on these human parts of the transaction?
Liniger: First, the number of new agents under the RE/MAX umbrella is extremely limited. Our compensation model, which requires agents to pay up front to work for us and then keeps the majority of the compensation, doesn’t work for new agents, as it can take months to close their first deal and receive their first commission.
Our agents have been in the business for 10, 15, even 20 years and already have their share of clients, and by providing quality service and staying connected with those clients, you can build a business based on referrals and repeat business.
We recently acquired a company that uses AI to predict, with about 80% accuracy, which customers in an agent’s CRM are likely to be interested in selling a home in the next six months. The company uses 160 data points from the information they enter into the CRM about their customers, as well as their public social media profiles and public records, to identify people for agents to contact. If you have a list of 200 customers, the company can use these data points to identify 10-14 people who may be interested in moving, helping the agent determine who they should contact.
BH: You’ve seen a lot of change and evolution in the industry throughout your career – do you have any thoughts on where the industry is headed in the future?
Liniger: The work is getting harder and harder. But the problem is that the barrier to entry is so low. If you want to be a hairdresser, you have to go to school and do an apprenticeship before you can open your own business, but in real estate, you can start after taking a fairly easy exam.
I think a lot of people think real estate is an easy job, but 8 out of 10 people who get a real estate license never renew it because it’s a lot harder to get into real estate than they think. So all things considered, I think the membership numbers are going to continue to grow. National Association of Realtors get off.
of Consumer Federation of America A survey late last year found that 50% of NAR members hadn’t traded in the past 12 months, and part of that is because of the tough market, but I think some of those people are leaving because it’s becoming harder to work in the industry part-time.
I also Department of Justice Enough with the tinkering with the industry. I think they’re going to force change beyond court settlements, but I think a lot of that change is going to come in the real estate and mortgage industry. Consumer Financial Protection Bureau They have already said that the cost of title insurance is too high for the benefits it provides, so I think they will definitely be pushing for changes in that regard.
BH: Any final thoughts on future technology trends you foresee?
Liniger: Overall, I don’t think we fully understand where artificial intelligence in real estate is going yet, but I think it’s going to have an impact. It’s important that the AI is intuitive, and the more information it has, the more it can give to the user, but we’re not there yet right now.
Being in a good school system is important to many buyers, and while you could ask an AI, any good real estate agent will already know which school districts are the best in their search area, though in the future, that information could come from an AI.
