Recently I had the chance to watch that famous monologue by the actor Jeff Daniels from The Newsroom (2012), where he reluctantly answered the question, ‘Why is America the greatest country in the world?’ The scene was played at a real estate conference I attended recently in Scottsdale. It opened the conference and was brilliantly designed to get us all thinking of our collective next frontier as an industry, and more importantly, how we can shape the next 12 to 14 year cycle. 

(Reference: Watch this clip from The Newsroom, "Why America is the best country in the world". The Newsroom "Why America is the best country in the world". )

This next cycle is known as the AI revolution which began in 2021 and is the most democratic of all of the cycles. It is where we can control the controllable and empower all of us as individuals. When you look back at other significant periods in real estate history like the late 60’s to the late 70’s, we saw franchising emerge with companies like C21 and RE/MAX. The next period was when real estate companies went public throughout the 80’s and 90’s. The Era of digital transformation dominated the late 90’s and early 2000’s. Coupled with technology, increased growth in the realtor® population, and signs of a shrinking market gave the rise to new real estate models like eXp and REAL (2011 to 2020). 

So I decided to re-write Jeff Daniels’ answer as if he was a realtor® on a panel, and a potential first-time buyer from the audience asked him, ‘Can you say why the real estate industry is the greatest industry in the world?’

Answer: 

The Montreal Canadians (Daniels answers The New York Jets).

And, yeah, you….first time buyer. 

Just in case you decide one day to plunge yourself into the real estate market there are some things you should know. We used to have the best real estate market, but we don’t. Anymore.

We’re 16th (US is 17th) country in the world home ownership, behind countries like Romania, China, Vietnam, and Russia. We used to be higher. We used to have the highest quality of life index (2023 Numbeo Quality of Life Index), but we don’t have that anymore. We’re 15th (US is 21st) in the world for quality of life. New Zealand is ahead of us. We lead the world in only three categories: number of people who believe Celine Dion is a national treasure; the number of adults who believe the Toronto Maple Leafs will win the Stanley Cup again, and per capita maple syrup and poutine consumption. That’s it.

We used to have the best infrastructure for real estate - the best transportation, utilities, internet. But we’re 8th in the world in infrastructure quality now, behind Estonia and Slovenia. Real estate investment was tried and true when it came to wealth creation for Canadians. Now we have uncertainty. We have a housing affordability crisis, a homelessness crisis, and a crisis of overregulation and overtaxation. And we sit back and tell ourselves it’s all going to be okay, because this is still the greatest real estate market that has ever existed.

How Do We Make The Real Estate Industry Great Again?

How do we turn this ship around? The first step in solving any problem is recognizing that there is one. The Canadian, and albeit the North American real estate industry, is not the greatest in the world anymore, and we, as industry leaders and practitioners, should all play a part in rebuilding, restructuring and redefining it. 

The fundamental solutions lie in a simple statement from motivational speaker Richard Montanez of Flaming Hot Cheetos fame, “Learn to use your past for your future”. The history of real estate can be drilled down into meaningful decades catalyzed by technology with the same 6 buckets: property search, transaction management, market statistics, property marketing, client acquisition, and recognition/brand advertising. We should be looking at each of these buckets through a lens of AI to enhance the customer experience, and to create the life/work/balance 

we want for ourselves.

We are probably in year 2 of a 14 year cycle in real estate, which will probably be dominated by AI, like the internet dominated the late 1990’s and well into the 2000’s. If you only believe half of what AI can do, it is already a milestone moment in how we in the real estate industry will shape our businesses, interact with buyers and sellers, and measure our success. This era will eventually run out of momentum, like the era of paper-based advertising did.

The question is, how are you going to tackle this new era in real estate. The concept of automation has been with us for over 300 years, and AI, simply put, automates many areas of our work, play and well being. AI will be as transformative as I dare say the industrial revolution was, or the dawn of the internet. There will always be Chicken Littles in our lives who constantly exclaim ‘the sky is falling….it just hit us on the head. It is up to us to approach this new era like Pollyanna, with unstoppable optimism. 

Are We F’d!!!!

The internet was going to put us all out of business, because our buyers and sellers could peruse listings and sales information on their desktop computers, not via their trusted realtor®. Bricks and mortar retail was going to be decimated due to the internet. It would surprise most that 80% of retail is still represented by bricks and mortar establishments, and Wayfair which was born of the internet is opening its first physical store (150,000 sq ft) in Wilmette, Illinois, just outside of Chicago. What? Well, Wayfair has discovered there are purchases which can’t be done without feeling, touching and seeing.. and remember that returning a couch is a costly and awkward endevour.

Like retail, other industries like ours are going ‘PHYGITAL’ (physical locations plus a strong digital platform). A partnership of the two with AI integration will future proof any company/industry which adopts it.

What is Walmart Doing With AI and How Does it Affect Our Industry?

I remember almost a decade ago when I attended a fintech conference, a presenter from the insurance industry described a navigation GPS platform developed by Walmart, and designed to primarily enable truck drivers to deliver goods to a destination by doing right turns only. What was discovered was that left turns made deliveries vulnerable due to the volume of accidents which were left turn related and the time lost due to them. They discovered that Walmart’s delivery partners could save a significant amount of money, time etc., if they used this navigation software. They provided it to for free, but in turn received a portion of the savings on their delivery charges.

Fast forward to today where Walmart set up a pilot for an AI negotiation platform. They asked around 100 of their suppliers to be a part of it too, of which 89 accepted? Why did they accept, well the platform was fed negotiation parameters by Walmart along with a promise to respond in real time to the supplier. The suppliers welcomed the change because many of them were dealing with long waits for a human buyer to respond. Walmart’s target was a 20% close rate. They achieved nearly 70%, which resulted in a 3% savings overall. 3% savings for a company of this size is significant and would probably be equal to a small country’s total GDP. A negotiation bot in real estate? 

Say it isn’t so!

Why Did Costar Buy Matterport?

Recently in an interview with Andy Florence, the interviewer asked…Why Matterport? Mr. Florence the CEO of Costar answered with a series of statistics. There are 7.4 million Matterport tours viewed every year, and viewing times can go as high as 17 minutes per tour. Leads on Costar’s site Apartments.com that include rental properties with a Matterport tour receive on average 74 leads per month compared to listing without a tour that capture only 7 leads a month. Florence’s strategy is to hire several photographers to add 3D tours to all of the apartment units on his site. Currently Matterport has created over 12 million properties/spaces worldwide.

Where Does AI Fit Into Matterport’s Future?

The Matterport system can observe other things like roof wear and tear. As outside 3D technology advances, a scan can reveal land contours and predict where water can collect, signalling to a home inspector to look for moisture in the respective internal area of the home. Matterport tours can identify granite countertops, Wolf appliances, electrical and plumbing systems. This data could be served up to the consumer giving estimates on replacement, or the value that a high end appliance can add to a property. A buyer can do a scan of their own home, strip all of the furniture and decor items, and move the items in a so-called virtual moving truck and place all of their stuff in a new property which they are considering purchasing. With the ability to manipulate for furniture placement etc. there is no need to measure for furniture at the final walk-thru.

So What Does This AI (BS) Mean to Me, and How Can I Take Advantage of It?

AI will supercharge solutions, fill gaps, or identify inconsistencies in your customer’s journey. Input your customer comments, emails, texts, complaints and inquires over the last 5 years, and create a bot to offer you a better system to improve your customer experience. This will enable you to predict negative experiences before they happen, and provide you a tailor-made information drip to current and past clients. This is your proprietary data, and will keep you relevant to your tribe at all times, paving a way to more referrals of look-alike clients. 

Build a bot to deal with meetings with your team/staff/partners, or better yet, your clients. Take notes at your listing and buyer presentations, at showings, at home owner feedback sessions, and feed them into a GPT, and the bot will dole out tasks to your partners (lawyers, mortgage specialists, photographers etc.) team members, your buyers and sellers, and it can start emails, texts, create graphs etc., to present to your clients in real time. Generative AI was built for customer support and is in the palm of your hand. On-boarding new prospects, marketing automation and post writing is here and now, and writing code isn’t that far off either.

To learn more, join our AI conference in September.

Visit www.realestateinfluencers.com

What Can We Learn About The National Association of Realtors Settlement?

September 16th, 2024 is D-Day for property listings on MLS® systems to DELETE any offers of compensation to the co-operating realtor®. Traditionally, MLS®’s have had the commission offered to the co-op agent or the agent that brought the buyer to the home owner. As US consumers and realtor®’s enter this fall market, there will be a fundamental change in how the buyer representative will be compensated. 1000 WATT, a survey company dedicated to the real estate industry, conducted a consumer survey around the buyer agent compensation settlement, while T3 Sixty, a real estate consultancy firm, conducted an industry leader survey asking the same questions. Of note was the fact that 63% of consumers surveyed were not aware of anything to do with this commission issue, which gives our American colleagues in the industry an opportunity to educate consumers on the two sides of the commission. Both sets of respondents answered that technology has made the process much easier. Consumers felt they were more likely to seek out alternative service platforms going forward, while industry leaders were more likely to offer more market responsive compensation plans, with asking for a retainer from buyers being the most popular. Both consumers and the industry were aligned concerning the buyer agent’s role going forward and their value, however more transparent communication is needed.

MREGA!

Will this compensation issue come to Canada? Maybe in some form, but our industry and its licensing bodies have made transparency a cornerstone of our service offering. 

A similar class action suit has been certified here in Canada, and a settlement could be a few years away. This is where our opportunity lies, and it is beholden upon us as practitioners and industry leaders to formalize our service offering. AI will and can be a part of that. The two worlds of consumer protection and transparency are colliding with AI technology, which will allow us to accommodate our clients’ needs more responsively when they need us the most. I have never been more excited about the future of our industry and how we all can shape it going forward. We can MAKE REAL ESTATE GREAT AGAIN! In the spirit of transparency, 

I must reference MAGA.