9.20.2005

 

Robots and realtors

Realtors are being replaced by robots. In this case, the robots take the form of software and databases on the Internet. This article discusses the trend:

The 6 Percent Solution: Skip Real Estate Agents

From the article:$100 billion is a huge number. With approximately 100 million households in America, it means that every household paid about $1,000 to realtors last year. (!) As we eliminate realtors, each household will save $1,000 per year on average. And that is very good.

The question is this. There are about 1 million realtors in the U.S. Not all of them are "active", but let's say half are. If we eliminate 500,000 good, high-paying jobs, what are those people going to end up doing? See Robots taking jobs and Robotic Nation.

Comments:
Realtors are usually pretty enterprising individuals who know a lot about real estate. Many I know also own properties. I'm not sure about the constant rhetorical question "what will they do?" What am I going to do next year? But you aren't worried about me?! Right, because I can take care of myself. They should get creative.

And to address the realtors issue directly, often they add value by eliminating those that are not serious candidates for purchasing the unit. You can read more about it here.

Personally, I plan to sell my house myself in a few years. Who needs a teller when an ATM will do?
 
If everyone has access to the same real-estate bots then everyone will get the same level of service -- except the person who hires a human with more experience than the bot programmers and who has specialied in a local geographic region for 20 years.

All this talk about robots replacing everyone seems to reveals an incredible lack of respect for other people's work. Could you really do anyone's job if you had simple step by step instructions whispered in your ear? Perhaps as an employer you really believe that. Or maybe it just helps you sleep better at night since you can believe that any of your employees can be replaced tomorrow.
 
Selling realtors add almost exactly Zero value. Well other than being present to show the house and collect their fee. The Realtors disclaim away everything, say nothing important and expose themselves to no liability. So who needs them? (answer:nobody). Their experience adds zero, nobody listens or cares what a selling agent has to say. Buying agents are a different issue, they are "free" to the buyer so they use them. However, I had a couple of interested people state they wished to represent themselves and wanted a 3% discount, which worked out fine! I've sold the last three of my houses myself--taking advantage of the Los Angeles insane market--and saved $150K in about 9 months. The seller (me) kept more of the money and the buyer paid less for the house than if a [useless] Realtor got involved. The current exception is the very high end areas where rich people do nothing for themselves except make phone calls and need a therapist (aka: somebody to listen to them pitch a fit)...but that too is going away where the savings on a multimillion dollar house equals a Ferrari in the garage (of course the extremely high end >$20M will always realtors because people that rich don't care and don't want to spend the time, and I don't blame them---what is the point of being rich if you have to stuff you don't want to??? It just means only a few realtors will have a job and it will be a "Winner Take All Job"...like this guy http://chriscortazzo.com/currentListing.cfm). Regardless, the days of the SELLING AGENT for 99.9% of sales is near over.
 
This is very bad. Realtors may be enterprising, but what do you do when the customers stop coming in?

Get creative? Please. "Creating" business is easier said than done.

I used to do real estate photography. I'd go around and shoot properties on 35mm & video for clients. The Internet wiped out my business. The customers like my photos better, but they can do it cheaper without me.

Robots might not be able to replace "quality", but they get the job done. My old customers ring me when they have an extremely high end property, but how often does that happen?

While a person can't do another's job simply by whispering instructions in someones ear, they could give some of the work to the bots, and the simple (but still to hard for the bots) work to an unskilled minimum wage worker.

It happens
 
The real estate photography example is interesting. Will robots in the workforce result in extremely cheap mediocre products and services?
 
Anonymous, you asked...
"Will robots in the workforce result in extremely cheap mediocre products and services?"

That is a very good question. In my statement about the real estate photography, I should have elaborated to be clear. The service that replaced me is not totally at fault for the bad photography. The realtors shoot on digital and send it in via e-mail to the website. I can't blame the website for the realtor's inability to properly frame a shot.

I guess the big thing is the "McDonaldization" of the thing. For the most part, the photography and videography the computer displays are not technically bad. They are functional. The shots just aren't up to what a pro would do. If I shot that poorly, I would have been kicked out of film school.

Computers and robots do a "functional" job, but with no personality.

So the products won't be mediocre, just adequate.

I guess it's the difference between going to Domino's Pizza and your neighbourhood pizzeria. Domino's is edible (this is open to debate), but Luigi on the corner may be a little slow getting the pie to you, but you know he might give a little extra care in making your pie. It can't help but taste better.
 
Don't you all know that "mediocre" will always win? Some recent examples: Windows and the PC, George Bush, Britney Spears, Dave Chapelle, Lotto, Intelligent Design, MP3, Wal-Mart ... and the list slogs onward and downward, faster and faster... Of course, in societies that are on the way up, things are probably looking up. Examples: Cheap cell phones, cloning, individualized "fab" manufacturing... and THAT list goes on...
 
As a title insurance and escrow sales rep, it may interest you and your readers to be aware of the 80/20 rule here. In Southern CA, though, it is more like 90/10. You'd be surprised how many people get in to sell their parent's home, which, in 20 years, has quintupled in value, with a great chunk of that appreciation in the last five years. The brokers don't care if they stay with it and do more deals. The producers - the ones who DO make successful careers of it, those are the ones the brokers care about.
 
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