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One of the biggest myths I’ve found in the real estate tech world is that of the imminent “Uberization of real estate.” Simply put, this theory claims that technology will disrupt the real estate industry by directly matching buyers and sellers (like Uber does with drivers and riders), thus eliminating the need for the real estate agent.
This theory not only ignores the fundamental needs of real estate buyers and sellers, it actually misses the whole point of what Uber did to the transportation industry in the first place!
When people think about Uber, the first thing that comes to mind is the app. You can do your entire transaction without having to speak to someone, and it is mentally soothing to see in real time where your ride is at any given point — except when it is going in the wrong direction!
This new experience certainly gave Uber a great entryway into the transportation industry, but Uber’s disruption was much deeper than a convenient way of ordering and paying for your ride. In fact, that part has already been copied by the taxi cab companies with similar apps. But the dominance of ride-sharing services seems to be irreversible, and for good reason.
The real reason behind Uber’s success
Uber’s true disruption was taking an industry of salary workers and replacing them with business owners.
Business owners take pride in their work and tools, with clean cars and great service reinforced by a well-known brand and an efficient rating system. The difference in service is so extreme that most of us now dread ever having to take a cab, even at the airport where it is actually more convenient than Uber.
The concept of individual business owners providing a service under the umbrella of a company that supplies the standards, technology and branding will continue to transform whole industries. But that is exactly how the real estate industry has been operating for decades!
Uber has actually transformed the transportation industry into something that operates more like the real estate industry.
For most people, buying and selling a house is a discrete occurrence that will happen a handful of times in their lives. Furthermore, it is highly complex and it puts a huge part of most people’s net worth at risk. The idea that people will choose to navigate this transaction on their own is akin to thinking that the future of childbirth is to “do it yourself” at home.
There will always be people who choose that, and technology may help them, but most people will choose to be guided in that process by a trusted professional with the right tools.
The true role of the agent
The critical mistake proponents of this theory (mostly venture capitalist investors from outside of real estate) make is believing that the agent’s main role is “matching” a buyer and a seller, when it is actually to provide professional and personal guidance to buyers and sellers through one of the scariest moments of their lives.
Agents are the quarterback of the transaction for their clients’ teams, ensuring transparency and providing advice and even emotional support.
This advisory role is hard to pin down but extremely critical. It requires a ton of personal investment from the agent and the establishment of a trusting relationship between agent and client that can never be provided by a robot or by someone punching a clock.
This is why companies that claim they can replace the independent agent with technology and a group of salaried workers will always have to serve a niche part of the industry — the part looking for a discount. They are going in reverse of the cross-industry trend that Uber so effectively imposed on transportation.
The tech effect
We do see technology having a huge effect on the market. The introduction of social media and rating systems is widening the gap between professional agents/teams and amateurs. Gone are the days of, “My aunt is a great Realtor. Why don’t you just list with her?” Consumers are increasingly utilizing reviews and technology to vet their agents.
Furthermore, technology is allowing professional agents to reach consumers earlier in their search and effectively serve a larger number of clients per agent. Allowing professional tech-savvy agents to increase their volume and capture market share.
Agents should not be worried about technology replacing them. They should be worried about better agents and teams using technology to make them obsolete.
Alvaro J Erize is the co-CEO of CINC in Atlanta. Follow him on social media @alvaroerize or @commissionsinc.
The views and opinions of authors expressed in this publication do not necessarily state or reflect those of WFG National Title, its affiliated companies, or their respective management or personnel.