In real estate, innovations in technology have ignored the consumer. Instead, agents get clever digital marketing tools and backend applications.
Artificial intelligence debates tend to fall into two camps: the optimists who believe AI will save us from disease, eliminate dangerous work and end climate change. On the other side: the doomsayers argue AI will wipe out jobs, control our minds and destroy the last vestige of our privacy.
In real estate, results from AI are already disappointing. I would like to imagine that this scientific breakthrough might someday make the task of buying or renting a home easier and more affordable. Nope.
Instead, AI’s only foreseeable contribution is enabling real estate agents to better snare leads and convert them to customers. It’s like Picasso painting masterpieces for Coca- Cola ads.
Here is a familiar press release these days: “First.io, a startup that uses artificial intelligence to predict when people are going to move, has raised $5 million in Series A funding.” It’s a good little company with a clear purpose: help agents generate business.
AI is not too different than most real estate technological innovations in the past 20 years, whether it be cloud-based computing, predictive analytics, CRMs, social platforms or database search.
Much of the innovation does not take aim at consumer benefits such as making the process faster and more certain. Instead, agents enjoy clever digital marketing tools, new ways of finding customers and robust backend applications to manage their clients. That is good, but what about the customer?
Show me the money
Agents pay for this stuff. So tech companies, franchises and broker owners all lean into that demand, creating apps, tools and platforms that make Realtors more successful. They spend far less, if anything, on consumer innovations.
Compass is running through its $775 million pile of cash, spending almost every dollar on agents. They offer them NBA-size compensation packages, tech tools and fancy offices that would inspire a Kardashian Instagram selfie spray. So far, except for the company’s new high-tech, for-sale sign, the consumer has not been the beneficiary of this gargantuan spend — at least not directly.
Zillow spends mightily on the consumer but it has divided loyalties when someone else is paying the bills. The company makes heady claims about being consumer centric but it earns almost all of its revenue, more than $1 billion annually, from independent contractors like agents. It centers much of its offer around keeping Realtors, lenders and apartment owners happy. Not surprisingly, that is where it invests much of its tech capital.
Never forget who is putting avocado on your toast when you are sorting out who your customer is.
This same dynamic is true of the Realogy brands, Keller Williams, RE/MAX, Realtor.com, indie broker owners and most of the real estate software companies. Their customer is the agent, not the consumer.
The one consumer-centric real estate company is the agent, who is not confused about who their customer is.
Without much help from consumer tech, the Realtor must work hard to deliver on the customer promise. They have been given an abundance of tools to capture the consumer, but very few to delight them.
Amazon gets it right
The largest company in the world Amazon takes a radically different approach, because it earns its keep from consumers. It’s technology investment is focused on making it easy for us to order products and get them delivered effortlessly.
Years ago, I was in the ebook business and we counted on Amazon to deliver us customers. Like a vendor for Walmart, we were treated a little like that weird relative at Thanksgiving who was invited but avoided at the festivities. We had to cope with clunky systems to upload our books, unattractive royalty splits and slow payment schedules.
That was because, we were not the customer, the book buyer was.
Have you shopped at Whole Foods lately, a recent Amazon acquisition? The stores are cleaner, the lines are shorter, the products are cheaper and grocery shopping is easier. You may miss the young burners and old hippies who used to work the registers, but otherwise you can already experience the benefits of the Amazon consumer-crazed strategy.
Similarly, companies like Uber and Lyft depend on riders to pay $5, $10 or $20 for a trip around town. So the old school dispatchers are history, payments systems are seamless, GPS tracking ties it all together and a consumer-driven company has created a better in-car and more certain driving experience.
Of course, exceptions exist in real estate. Redfin is a consumer-driven model, and a host of companies have tried and failed to create a better customer proposition for real estate. IBuyers make that promise but the jury is still out on who they work for.
In the end, divided loyalties have slowed the pace of technology that will benefit the consumer.