Automation is fast becoming a reality across a broad range of industries, and it can really inspire a sense of awe and wonder. Secretly, we’d all love a glimpse inside Amazon’s mega warehouse to see futuristic robots sorting out the thousands of packages for distribution each day. It brings out our inner geeks.
But what happens when big corporations try to automate service industries to squeeze out more profit for their shareholders? Exactly what is the algorithm that can replace high-quality service levels and form relationships?
Can AI perform the myriad of “soft skills” required in the real estate sector – from the hand-holding and reassurance needed when making a first property purchase or sale through to problem-solving and understanding client’s needs?
Almost every role in our industry revolves around people and relationships – from mortgage brokers to real estate agents to property managers.
It’s been some weeks since CBA announced its $25 million investment into property management company :Different – and it is actually surprising the lack of commentary in the market about the ramifications for the future of the industry.
Investors may be lured in by the prospect of cheap fees and the opportunity to DIY-manage their portfolio – but in the long-term will find themselves short-changed without the skill of a professional management team.
While some administrative elements can be automated, they are greatly outnumbered by management techniques and processes that simply cannot.
Experienced property managers add significant value with regular reviews and providing advice to investors. They are usually shrewd and accurate judges of character and adept at choosing the right tenants. Usually, property professionals are qualified in real estate and finance, and their insight into the market helps to maximise the performance of the asset and ensure it delivers to the client’s objectives.
Moreover, they tap into a broader agency skillset and can be invaluable when it is time to sell the property or add to the portfolio. They are a person who jumps in with the advice and help needed when situations change, and strategy needs to roll with that.
It is hard to see *this* being automated!
Big business has a terrible history of over-promising and under-delivering, and once the lure of cheap fees passes, investors will be left wondering what service they really have.
The last 12 months have seen an exodus of bank branches in both suburban and regional markets – and these big guys don’t lose sleep over leaving their clients high and dry. They swim in the big pool, and if they lose a few clients here or there, it is inconsequential – they know there will always be others to replace them.
Real estate has always been about people and relationships – not just property. Property is a significant purchase for both owner-occupiers and investors – for most people, it represents the biggest amount they will spend on a purchase in their lifetime. It is hugely important and needs to be treated with care and experience.
My advice is to beware of the lure of cheap fees and DIY automated property management. Instead of looking at what the bargain basement reduced fee covers, be mindful of what you are actually missing out on.
James Nihill is the managing director at Patrick Leo.