The world of AI and technology, especially in the housing industry, is altering how many view real estate agents and the role they play.
A Harris Poll from April 2019 found that 72% of Americans believe the real estate commission of 6% is too high, and 74% of Americans would like to have an alternative to traditional real estate agents.
This alternative might be something we use every day—technology.
Glenn Orgin, CEO of the real estate tech platform Richr, recently spoke with The MReport about the ever-expanding role of technology, how real estate agents can maintain value in the current market, and what’s next on the horizon.
Orgin originally bought and sold homes in the UK, where agents receive about 1% for selling a home instead of the nearly 6% U.S. real estate agents claim. After moving to Miami, Florida, in 2009 and joining The Faith Group, one of the most well-known, family-run real estate companies in south Florida, Orgin saw a way for homeowners to leverage modern technology to eliminate seller fees and capitalize on 100% of their hard-earned home equity. In 2018, he founded Richr Inc. to help homeowners keep more equity when they sell or purchase property by eliminating real estate commissions.
How has technology evolved in the industry over the past decade or so?
Glenn Orgin: “Over the last seven years, the advent of IT devices and software has made it easy to manage the selling-buying process. With software and an IoT connected door lock, you can use one time codes to give potential buyers access to homes. Some agencies even use robots to show homes, so they don't physically have to be there. The introduction of virtual services allows sellers to stage homes in virtual reality, so buyers can easily view homes from any location.
There are other companies as well that use pictures that overlay an algorithm to determine the value of goods in the home for appraisal reports. So, technology has made it easy for information to be shared and become more accessible, but the adoption of such services have been lacking. I guess that's probably down to the lack of early VC funding a decade ago, but now it's really coming in hot.”
Why are so many people searching for an alternative to the traditional real estate agent?
Glenn Orgin: “People identify that agent commissions are disproportionately high when compared to the value in agent services. Sellers are now ready to take control of their own homes in order to keep more of their equity. There's no reason why the real estate market cannot follow the travel industry.”
What role has millennials played in the rise of technology in the housing industry?
Glenn Orgin: “The fact that some of the largest companies in the US have started enabling home deliveries without the homeowner being present is a testament to the massive shift in people's comfort levels in allowing strangers access to their homes.
You have better cameras and locks that are connected to internet devices. You have fast identification verification systems that conduct background checks in minutes. All of these technologies provides an element of security. Having grown up with technology, Millennials are more eager to try new technology based products such as these to allow potential home buyers access to their homes in their absence.
As agents are no longer needed in the traditional sense, they will offer on-demand services including hosting open houses, managing offers, conducting document reviews, and in-person consultations. Buyers and sellers will determine agent value on an as-needed basis.”
Do you ever foresee a day where technology/AI could completely replace the traditional real estate agent?
Glenn Orgin: “The answer to that is “almost” because I think that real estate agents will still handle the last mile. There's a form of hand-holding that takes place with transactions.
I have no doubt that AI and machine learning will reduce the time it takes to close on a particular home. A few companies that prevail will assemble the right algorithms for a seller to meet a buyer without searching and for the transaction to take place in a faster manner. There is likely going to be a platform that integrates with real estate agents on a democratized basis. What you'll see is the uberization of the agent within the transaction process.”
How can real estate agents better use technology to remain relevant, and add value to the home buyer?
Glenn Orgin: “The cost of entry is very high to be relevant in the real estate industry. Zillow created a market where the highest bidder wins. iBuying companies are increasingly a threat to agents as they look to cut out the agent and replace commission fees with finance fees. Agents are and will be more reliant on tech platforms to complete the last mile in the transaction process. The way real estate agents will generate relevancy is to focus on their brands and producing content, leveraging tech platforms to distribute it. In a sense, they need to generate authority through self-promotion. Real estate agents need to use tech to day-trade attention.”
What's been the reaction in the industry as AI/technology continues to evolve?
Glenn Orgin: “People are starting to see the writing on the wall, where the convergence of finance and real estate services will provide the ultimate value in the transaction process. This is why so many brokerages are adopting their own iBuying programs; they're aware that commission fees are tight and more people are becoming direct sellers or for-sale-by-owners and that less profit can be made when sellers gain independence. However if you control the finance and can make enough margin flipping the home, then you can generate enough revenue to stabilize a company's profits to the level where real estate brokerage fees once were.”
Does it surprise you how fast technology has evolved in the industry over your almost twenty years of experience?
Glenn Orgin: “Yes, technology is changing every industry, but you will see that the organizations that currently have a monopoly on the data, will have less control if it in the future. While you can have technology disrupt industries very quickly, like the travel industry, it has taken longer with the real estate industry due to the way information is controlled and shared. The real estate industry is undergoing a liberation of data and we are starting to see how the control of data is making the real estate landscape less competitive. When you look at why the Department of Justice has served CoreLogic with a civil investigative demand, it seems clear that they are looking at ways that data brokers are making it less competitive by analyzing how buyers compensation is determined, set, and shared across the industry.
In addition, they are looking at ways for the National Association of Realtors to release its grip, so to speak, so that companies use that data to provide real value to the end consumer, be it the seller or the buyer, instead of creating more friction in the process. You will start to see these companies allowing agents to potentially bid to win a seller’s or buyer's services.
I believe we will see the rise of a handful of companies looking to be THE company that provides a one-stop-shop, where a software company will be responsible for buying, marketing, financing, and transacting the whole process. The integration of Co-investments will rise, and homeownership as a service will allow homeowners to monetize their home in ways that are not typical today. I think we will see the uberization of every part of the process. For example, if you want premium lending options, then a lender can be made available with approval instantly depending on the premium one is willing to pay. AI will be the holy grail for matching buyers and sellers without the buyer having to search for a seller, lender, closing company or attorney.”