News about ChatGPT and AI developments dominated recent headlines. Amongst other data points, AI-driven applications published a peer-reviewed academic paper and passed the infamously challenging U.S. bar exam.
Technological advances of this magnitude have the potential to be generally disruptive at a societal level, and the real estate business is certainly not immune (as cogently described by Natalka Falcomer in a recent article in REM). Indeed, technological disruptions have always been part of the real estate business.
In the 1990s, many believed that the pervasive adoption of the internet would be the ultimate disruptor in real estate. Fueled by the widespread availability of listing data online, the internet would radically disintermediate the home transaction process: buyers and sellers would consummate deals directly via online platforms, therefore negating (or at least reducing) the need for real estate agents. It was the eBay model applied to real estate.
“For many consumers, the presence of immense technological ‘noise’ in the market, combined with abundant data, actually intensifies the need for a trusted advisor.”
More recently, the ‘iBuyer’ phenomenon emerged, offering vendors the option of quick, algorithm-driven and tech-enabled home sales (as an aside, the recent massive financial losses of iBuyer platforms speak to technology’s inherent limitations in reacting to fluid and complex market conditions). Yet in the American context, some 85 per cent to 90 per cent of transactions are agent-assisted, a rate similar to the 1980s (if not slightly higher). And while the Canadian data is a bit hard to pin down, it’s clear that realtors are still involved in the vast majority of home sales.
There’s an irony here: for many consumers, the presence of immense technological ‘noise’ in the market, combined with abundant data, actually intensifies the need for a trusted advisor.
“Real estate decisions—especially for residential property—are both intensely subjective and objective.”
Real estate decisions—especially for residential property—are both intensely subjective and objective. Zoning, land value, potential rental rates on the mortgage helper: these all matter. But so does the angle of the afternoon sun and the spatial relationship of the kitchen to the den.
Realtors help their clients balance these factors, providing crucial human guidance in the transaction process: what data is actually relevant? What technologies can add value to the home buying and selling process versus merely serving as a distraction? Weighing the most important factors (which differ from person to person), is this the best home for my family of those currently available? Humans inhabit and use real estate, and accordingly, humans are also crucial to real estate decisions.
The louder the noise, the greater the value of a quiet, trusted voice.
Jonathan Cooper is the President of Macdonald Real Estate Group (MREG). Based in Vancouver and with an annual sales volume of close to $10B in 2022, MREG has 1100 staff and agents and 24 offices, offering residential and commercial brokerage, project marketing, and property and asset management for $6B portfolio. His commentary and op-eds on the real estate business have appeared across various media platforms, including REM, Inman News, Bloomberg BNN, and The Vancouver Sun.