Brooklee Han: Right now in the real estate industry, we are seeing a tremendous amount of adoption of artificial intelligence at a time when we are also seeing many parties questioning the value of a real estate agent. How is RE/MAX working to meet this moment?
Dave Liniger: Our attitude about the relationship between the real estate agent and the consumer is that we are a trusted authority or a trusted adviser in a very complex transaction.
If you look at the last 50 years of the real estate industry, the rules around residential transactions have become very complex. Fifty-five years ago, when I was first licensed, we had a one-page VA loan, a one-page FHA loan, and a one-page listing agreement and two pages for a buying agreement. Today, they are dozens of pages long.
Back then, we never thought about the property inspection. We didn’t understand anything other than dual agency and we didn’t have inspections for things like radon gas or uranium in the soil. Now, agents are responsible for so much. If they are going to list a house, they need to know about the neighborhood — is there anyone in the area on the “do not approach a child” list and things like that.
In this role of being a trusted adviser, technology is helping us be more time efficient and be better at our jobs, but it isn’t replacing us. The technology companies came into the industry about 20 to 25 years ago, and they flat out told the Realtors that they were going to put them out of business like they did with travel agents and bookstores.
Unfortunately for them, the complexity of the real estate transaction and the fact that each property purchase is unique prevented them from succeeding. So, today we can use technology to our advantage — we can see all the listings in a town or a search area almost instantly with 30 photos and maybe even a video tour right there on your iPhone — and the tools have certainly made our job easier, but it hasn’t replaced us.
BH: Do you feel like the wave of AI technology hitting the real estate industry will have any different of an impact compared to previous waves of tech tools?
Liniger: I think it will be similar to what has happened in the past. I do know there are properties that are bought and sold over the internet, but it is very seldom done, and the problem is the uniqueness of real estate.
Most people want to walk through the property. They want to know what is going on in the neighborhood, if there are odors coming from the meat packing factory down the road, or the freeway nearby, or how the area changes from daytime to nighttime — that is all where real estate agents and their knowledge are invaluable. AI might eventually be able to figure some of that out, as the more questions you ask and the more information you give it, the better answers it provides, but we will see.
BH: In a real estate transaction, agents are obviously better suited than AI for the human parts of the transaction, such as offering emotional support to clients going through one of the largest financial transaction of their lives. How is RE/MAX utilizing technology to enable agents to better focus on these human parts of the transaction?
Liniger: First, RE/MAX has a very limited number of beginner agents under its umbrella. Our compensation model, where agents have to pay us in advance to work for us, but then they get to keep the vast majority of their fee, is not suited for many beginners because it might be months before they close their first transaction and receive their first commission check.
For our agents who have been in the business 10, 15 or even 20 years, they have already handled that many years’ worth of customers. And if they have given quality services and stayed in touch, they are able to have a business based off of referrals and repeat customers.
We recently purchased a company that uses AI to forecast, with about 80% accuracy, which clients in an agent’s CRM are probably going to be interested in selling their house in the next six months. It uses 160 data points from information you have input into the CRM about the client, as well as public social media profiles and public records, to identify the people agents should check in with. If you have a list of 200 clients, it will identify 10 to 14 who might be interested in moving based on these data points, and that helps agents figure out who they should contact.
BH: Throughout your career, you have witnessed so much change and evolution in the industry. Do you have any insights into where you think the industry is headed next?
Liniger: The job is becoming more and more difficult all the time. The problem, though, is the the barrier of entry is very low. If you want to be a beautician, you have to go to school and apprentice before hanging up your shingle, but in real estate, you take an exam that is pretty easy and then you can start.
I think a lot of people think it looks like an easy job, but about eight out of 10 people that get a real estate license don’t even renew one time because it is much harder to get your foot in the door than they think. So, with everything, I think we are going to see membership numbers in the National Association of Realtors go down.
The Consumer Federation of America did a study late last year that found that 50% of the members of NAR had not had a transaction over the past 12 months. Part of that is a tighter market, but it is becoming harder to be a part-time person in the business, so I think some of those folks will leave.
I also don’t think the Department of Justice is done tinkering around with our industry. I think they are going to force changes over and above what the court settlements have been, but I think a lot of that change is going to be in the title and mortgage industries. The Consumer Financial Protection Bureau has already come out and said that the cost of title insurance is too high for the benefit it provides, so I definitely think they are going to push for change there.
BH: Any final thoughts on technology trends that you expect to see?
Liniger: Overall, I don’t think we fully understand where artificial intelligence in the real estate industry is going just yet. I think it is going to have an impact. It will be important for AI to be intuitive, and the more information it has, the more information it will be able to provide users, but right now it isn’t there yet.
For a lot of buyers, being in a good school system is important, and you could ask AI, but any good Realtor already knows what school districts in your search area are the best. In the future, that information might come from AI, though.