The Role of AI After the NAR Settlement
Considerations around how this emerging technology will benefit real estate agents and brokerages in a changing environment.
The anticipation leading up to August 17, 2024 reminded me of the collective anxiety leading up to January 1, 2000. The many potential negative outcomes that the “Y2K bug” would have on society became something of a cultural moment. As we all know, the day came and went, and the disruption it had on everyday life was insignificant.
Did the real estate industry just have its Y2K moment?
Yes and no. And perhaps it’s just too early to tell, since the NAR settlement and the downstream effects it may have are not the same as a glitch in a line of code.
So far, it seems to be more or less business as usual when it comes to the way agents and their clients are going about transactions. There is, however, an added level of uncertainty around how commissions will be advertised, negotiated, and ultimately paid.
A few things are clear:
Agents remain essential to the real estate market (agents are in 90% of resale transactions today vs. 75% in 2006 when Zillow/Trulia were in their infancy).
Consumers have a higher threshold for what they expect out of an agent given the public’s access to data and information.
Generative AI (e.g. ChatGPT) has taken the industry by storm, with close to 85% industry-wide adoption.
So how do we make sense of these three converging pieces of information?
Welcome to the Sidekick community newsletter, where we will address all the various angles of how AI and real estate are colliding. Ultimately, we maintain an optimistic view that AI will unlock tremendous value for agents and brokerages, and that embracing this technology will benefit those that are navigating an industry undergoing rapid cultural, economic, and regulatory changes.
So, let’s get into it.
A Brave New World
The rise of AI within the real estate industry is actually not that surprising. It’s an industry that has been mired with clunky, desktop-oriented CRM solutions for decades. Agents and brokerages become very familiar with platform-specific workflows, so much so that hunting and pecking through various drop down menus, filters, tabs, and buttons becomes a core part of muscle memory. As such, when new tools are introduced, there is resistance to adoption because the learning curves associated with new technologies usually aren’t worth the marginal benefits that the tools provide.
AI has changed that mindset entirely. The conversational interaction, the serendipity of discovery, and the surprise and delight of how large language models interpret and return information has been a breath of fresh air. As mentioned above, it’s therefore no surprise that nearly 85% of the industry has used/is actively using tools like ChatGPT as part of everyday life.
In future editions of this newsletter, we’ll get very granular around where these technologies are today and where they’re going. There is a lot of ground to cover when discussing the myriad affects AI will have on the industry, and it would be a painfully long word count to cover all of that here. That being said, here are a few key considerations of how AI will impact agents and brokerages in a post-August 17th world:
Compressing time to value. As consumer expectations for agents become higher, agents should leverage AI tools to reduce the amount of time it takes for them to begin adding value. From the moment the very first client interaction happens to the moment that client begins to understand the value an agent brings, AI can be an incredible companion in bridging that gap given how much information it can access and process.
Finding opportunities. Whether it’s identifying potential opportunities within an existing CRM database, or prospecting for new clients leveraging third-party datasets, AI has the ability to fundamentally transform the business development process that so many agents either don’t have time for, or are simply stuck because they don’t know where to start.
Up-skilling and filling gaps. Agents who are good at many things, great at a few things, and exceptional at one or two things can use AI to up-skill themselves and also fill competency gaps like never before. And, they can do so without the typical investments needed in taking classes or hiring employees/assistants.
The above is a short, high-level overview of what you can expect to read in this newsletter. There is a lot more to come, with real world examples, success stories, and notes from the field of a team of builders creating AI technology for the real estate industry.
Thanks for taking a look - and feel free to send to your friends and colleagues!
Best,
Michael Martin
Co-Founder/Co-CEO, Sidekick
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