There is no question technology has dug us out of a very big hole in the last two years. Those of us who once might have struggled to master Dropbox are now fluent in several languages; Teams, Google Hangouts, Zoom, Skype or BlueJeans – all grist to the online meeting mill.
And nowhere was the reliance on technology more apparent than in the property sector. Millions of dollars in real estate were transacted virtually, with the buyer never stepping foot inside.
Stripped of typical emotional triggers and responses, vendor, buyer and agent expectations were suddenly more reliant on proptech algorithms to determine a property’s market value. Don’t get me wrong, proptech platforms are great at what they do and all agencies, including ours, subscribe to one or more of them. But they aren’t – and can never be – the whole story.
While I have grappled with the pervasive creep of AI in our industry for a little while, it was the collapse of US-based Zillow’s online home-buying division that crystallised my concerns about putting all your eggs in the metadata basket.
In November, Zillow announced it would close its iBuying Zillow Offers division, which relied on machine-learned data such as comparable house sales, land taxes and details provided online by the home owner to determine the sale price. Zillow then offered the owner cash to buy the home, to on-sell. But what seemed like a sound idea on a spreadsheet quickly fell apart when the company was left with massive debts and excess stock after buying houses for more than they were worth, forced to write off more than $300 million in inventory and lay off a quarter of its workforce.
A Zillow Offers spokesperson admitted its online iBuy model, which effectively bypasses real estate agents, failed to “accurately forecast the future price of inventory three to six months out, in a market where there were larger and more rapid changes in home values than ever before”.
As an industry, I think it is a stark and timely reminder that there really is no substitute for a good agent, someone who can bring years of lived experience and expertise to the negotiating table in something as fickle and fast-moving as the property market. Yes, innovation is important, but not to the point where AI systems and data-driven metrics risk sidelining the human element, leaving clients without an expert adviser and advocate in a high-stakes environment.
While we are yet to see the arrival of the iBuy model here, history dictates that the US-led trend will eventually make its way to our shores, promising clients cost savings through a more streamlined approach – i.e. doing away with us pesky agents who are only interested in lining our pockets.
While that should sound alarm bells, I don’t believe process-based businesses that prioritise technology ahead of human interaction can ever work in our market. And that’s not complacency: just look at Purple Bricks.
Artificial intelligence is just that – artificial. It isn’t going to factor in a development going up on the back fence or cracks in a wall. An agent can walk into a property and within minutes identify factors – both good and bad – that a computer just can’t see. A good agent understands property cycles and has a finger on the pulse of the market, with an eye to the next three to six months. A good agent understands the importance of establishing trust and rapport and that a mathematical value is very different from emotional value.
Technology has thrown us a huge lifeline, but it has also brought us to an important inflection point, one that requires us to find a delicate balance whereby the technology supports the agent, not the agent supporting the technology. Let’s face it, an algorithm can’t pull a rabbit out of a hat on auction day.
Charlotte Pascoe is the chief executive of Stockdale & Leggo.