Property Talk

The Rise of the Robot Real Estate Agent

Will technology eventually change the relationship consumers have with real estate professionals This has been a hotly debated topic across the real estate industry globally in recent years.

In the US, the hotbed of innovation and investment in new ideas and technologies within the real estate industry, there has been hundreds of millions of dollars poured into alternative technologies.

A recent article on the US industry news and information portal, Inman, entitled, "The Rise of the Robot Real Estate Agent", explores this interesting question.

Opendoor recently raised US$300m in funding for its rapid expansion. This is a very interesting business model where they aim to simplify the selling process for sellers by actually buying the properties themselves, provide a professional valuation and assessment service and then present an offer to purchase with a flexible time frame for the seller to complete the transaction.

If remedial work is required they arrange for this and deduct the cost or have the seller do the work themselves. In addition they promise payment within a short period. Opendoor then find the buyer for the property by using their Opendoor App.

They promise a 30-day satisfaction guarantee. This entire process is achieved without a traditional estate agent and aims to use technology to match buyers with available homes in the way an Uber driver finds a client. There is however a charge for Opendoor's service and they advertise this as an average 6,5% service fee to the seller for selling to them.

Relatively high when compared to the average cost to a seller using traditional real estate channels. Zillow Instant Offers is another similar offering through Zillow - a huge US Real Estate Portal.

The opportunity for large successful real estate platforms to market homes directly to sellers is an area where estate agents will more than likely see increased disintermediation pressure.

What I have realized is that certain product classes and price points sell relatively easily in a direct way between the product manufacturer (developer) and the end-user.

A developer bringing a new large-scale residential project to the market with many of the same or similar units available is the ideal type of opportunity to use technology to sell directly to the market.

However the higher end individual homes that require a more significant and bespoke marketing effort and a tailored presentation in order to achieve a sale are less suited to an automated process.

Technology has enabled the consumers in general to become owners of market information. This has forced real estate agents to become more service-orientated, strategically minded and professional.

It is reasonable to assume that your traditional show days will change as technology enables live video tours and augmented realty immerse buyers in properties from afar.

The consumer-agent relationship can be expected to evolve and change over time. Currently the agent's role as a valued and trusted resource to their clients remains in place.