A series on what the new business environment may tell us about residential brokerage.
Big data. Artificial intelligence. Predictive analytics. We hear these buzzwords a lot. In many ways, the real estate industry has been practicing in these three fields for years. What is the MLS? Who are Broker Metrics, Real Data, and TrendGraphix and what do they provide? What about your profit and loss statement? Isn’t that big data?
There are a growing number of tools that allow brokerage firms and agents to tighten the attention, so they can focus on data analysis that aids them in making decisions. But the tools are not going to help brokerage firms or agents unless and until they use them.
Google, Amazon, and scores of others use their big data and artificial intelligence to target consumers. They know what books I like, which authors I’ve purchased, and they send me ads that are related to those authors and topics. Agents use similar tools to send listings to consumers to match what they’ve indicated are their preferences.
What we haven’t seen is the adoption of these tools from the majority of brokerage firms—even though the tools exist. Which agents are likely to be a good fit for your firm? What can we see from market data that tells us the likelihood that Agent A will do better with us than Agent B? These are simple questions with full answers in the data.
The real challenge is that the industry has been that brokers have been shot-gunning for too many years. They are acting like professional sports before Moneyball. They say things like, “the agent looks good and act goods, so let’s pay him 90 percent splits.” The use of big data and artificial intelligence can end that approach. The question is: Will brokerage firms of all models, brands, and sizes realize that without the use of the adoption of these tools nothing will change for their business?
Additionally, there is an enormous amount of big data that can be retrieved and analyzed from your website. What are consumers most interested in? Which of your services do they look at the most? What listings are the most viewed? Which listings get the most extended consumer viewing? Are their differences in photography, features, etc. that cause someone to stay longer?
Big data is all around. The challenge is who is paying attention? Is there a constant review of what works best within your firm, or are these areas just areas of some minor interest? If you assume that brokerage firms and agents are the purveyors of both information and personal service, why is there so little attention being paid to the information side, given that brokers have so little ability to influence an agent’s delivery of personal service?
Amazon, Redfin, Zillow and other companies study the data continuously. They are making decisions based on the information they see, the patterns that appear and what it tells them about redirecting resources. Brokerage firms and agents already have access to enormous amounts of data and some simple tools to analyze the data. It’s time to act. Firms that don’t begin to develop these capabilities will be left behind in the age of Amazon.
Lesson 6: By now we understand that information about housing by itself has value. Amazon (and others) amass vast amounts of data about their customers. What can realty firms learn from this given the similarly vast quantities of data we have access to about consumers?
This is the final part of a six-part series on brokerages in the age of Amazon.