In 2008, Smithsonian Magazine introduced us to the story of Apollo Diamond, a company using science and technology to create diamonds of such quality that “experts cannot differentiate them” from diamonds taking billions of years to form deep in the planet.
“Nice stone, excellent color. I don’t see any imperfections.”
“Where did it come from?”
“It was grown in a lab about 20 miles from here.”
“There’s no way to tell that it’s lab created.”
Diamonds are rocks; they have no inherent value. Only because of demand, perhaps mostly flamed through advertising, and their rarity and difficulty to obtain, are diamonds deemed valuable by mankind.
Similarly, houses have no inherent value. The cost of the materials and labor are meaningless.
It’s the buyer’s dream, that vision of a perfect life in a perfect home and all of the anticipated events unfolding over a lifetime that has value. The buyer’s vision creates the value, not the structural components or the number of bedrooms contained in the home.
How much more valuable is one Cottage/Tudor style home than the other?
The dreams and means of homebuyers in San Francisco are apparently much greater than those of Detroit.
But 70 years ago this was not true. Then, Detroit was the epicenter of U.S. industry. Dreams and means flip over time.
Will the value of diamonds go down now that technology can replicate flawless gems indiscernible from those taking two-billion years and costing many human lives to obtain?
Will the value of real estate agents go down now that technology can suggest homes and connect clients directly, perhaps without them ever knowing that a robot is behind the scenes?
From the real estate professional’s perspective, the answer to the second question depends on who applies the technology and for what purpose.
What homebuyers most want from real estate agents
What is the no. 1 service homebuyers most want from real estate agents?
Year after year the National Association of Realtors (NAR) survey states that the top demand from buyers is help finding the right home to purchase.
This is four times more important to homebuyers than the second most important demand they make of agents: Helping to negotiate the terms of sale.
(NAR’s 2016 survey says that 53 percent of buyers believe that help finding the right home is the most important service their agent can provide for them, while 12 percent cite negotiating the terms of sale.)
If real estate agents use cutting-edge technology to better meet the needs of the marketplace, thereby allowing the agents more time for expert consulting and research for each sale, the value of agents may well go up on an hourly basis.
However, if it is a market disruptor using technology to cut costs by automating homebuyer services, the perceived value of a real estate agent may well decline.
You’ll want robots to replace Realtors
As a real estate agent fighting daily for business, all-the-while supporting every structure in the industry through your efforts and fees (NAR, your franchise, your brokerage, title companies, lenders, inspectors — everybody else in the industry) here are three reasons you’ll want robots to replace Realtors.
1. On average there are 5 million real estate transactions in the U.S. per year.
That’s 2 million agents trying to make a living off of those 5 million sales. The only way you are going to increase your market share is to take it from other agents.
NAR does not want to lose members. Your franchise does not want to lose members. Your brokerage does not want to lose members. But you have to take down your competition so you can thrive. It’s mathematically that simple.
Using robots (automation of your workload via computer algorithms) allows you to better serve your clients, which means more word-of-mouth about you, which translates into taking business some other agent was about to get.
According to the same NAR survey, homebuyers 50 years old and younger find the home they actually purchase through the internet 51 percent of the time. Homebuyers also use an agent 88 percent of the time.
By giving buyers automated internet-based tools, you’ve increased your probability of being the agent they call.
2. Technology in your world is changing at exponential rates.
Every newcomer to the industry intends to take your market share by charging less money and by vastly increasing efficiency via technological innovations.
To fend off newcomers, you need to offer the latest technologies as quickly as or more quickly than the technology-driven competition that appears with a group of investors’ $100 million and the sole purpose of removing you from the industry.
3. Your clients want shiny new technologies streaming across their computers and phones to find the home they love.
Those who better meet the desires of the marketplace will thrive.
So even if you take the pacifist, conscientious objector position in your real estate career, stating that you love all agents equally and are only here to help your clients, not for the money, then you still have to step up and give your clients tools they need to find their perfect home.