After spending the last 2+ decades of my life as an intelligence analyst, data scientist, software engineer and cybersecurity specialist for the U.S. Intelligence Community, Department of Defense and the private sector, I made the move to real estate.
About two years ago, my wife (and business partner) and I moved on from our 3rd technology firm. We fully intended to take some time off after a string of startups and a major acquisition of one of our firms. A string of bad real estate experiences buying and selling residential homes and investment properties would change all that.
Frustrated with the issues, we started itemizing all the things we saw as problematic in our home buying and selling experiences. Very quickly, a list began to take shape of problems we’d seen and overcome before in our intelligence community work and in our eCommerce efforts.
In 2014, we crafted the idea of HomePocket (www.homepocket.com) to start helping over time with some of the problems we found in our own real estate experiences. So, that same year, we started a real estate brokerage in Florida to gather data, learn and experience actually being real estate professionals.
To say the least, we’ve put together lots of interesting data and observations about what’s right and what’s going wrong with real estate today. Here are a few of the major issues.
1 – A generation of Realtors isn’t changing hands
According to the National Association of Realtors, their average member is a white female in her mid-50s. From my own experience, this number is actually a bit low – and, oddly, it’s trending higher. Most successful, professional (i.e. full-time) real estate agents are Baby Boomers and upper-end Generation X.
As our world globalizes (and hyper-localizes) via things like social media, mobile technology, and instant access to data just to name a few, time and technology advances march the newer generations faster and faster out in front of the older ones.
For real estate, that means the older generations who preside over the vast majority of the career field and consumer-facing services are increasingly out of date and out of touch with the needs of their fastest-growing customer base – and their own market.
This is not only an issue for the consumer, but for leading companies and real estate franchises trying to evolve and keep pace. They struggle not only to keep up with their buyers but to maintain “backwards compatibility” with their own employee base.
How big of a problem is all this on a business scale? Just think about the entire publishing and newspaper industry. Or Polaroid, Xerox or Blockbuster.
And I won’t even bring up the “M” word here. With $41 Trillion set to change hands to the Millennials by 2052, there’s a looming communication gap between real estate buyers and their agents the size of the Grand Canyon.
2 – Adoption and application of technology is very inconsistent
As a consumer. everywhere you turn in real estate there’s a website, an app, a drone video or a 360º virtual walk-thru. Technology is having a big impact on the real estate market, but not necessarily in the ways, you may think.
As consumers, we’ve all become accustomed to using Amazon to get stuff at our doorstep overnight or apps like Letgo to sell the Bowflex you never use in less than an hour to someone down the road from you. We now prefer communicating via Snapchat or GroupMe to phone calls and even text. I can buy a car (and have many times) completely online.
This all works because technology development, design, and usage are very focused and consistent. It’s also based on standards in and between businesses, as well as between businesses and consumers. Most importantly, good products are easy to use by all maker-buyer-seller sides. Thus, the best offerings rise to the top based on the value they add while poorer products fall away.
In real estate, the technology landscape is a confusing, inconsistent mess for Realtors and buyers. And what technology is there can’t even effectively be used.
From my own personal experience in real estate over the last two years, the majority of professional realtors are not technically savvy. And that’s putting it nicely.
In fact, with most being in the older Generation X range and Baby Boomer generation, reluctance to keep pace with new tools and apps and services has not only impacted their own advancement, but the ability of the market to develop and offer new tools for them to use (or not, in this case).
On the consumer side, well, the market is mostly noise. Lots and lots of noise.
The landscape is filled with user unfriendly websites, limited apps that are not well-maintained, massive data inconsistencies and not a single “killer app” that all consumers can make a part of their lives. Even the big sites like Zillow and its Trulia brand are not monolithic in the market with big numbers of lovers and haters – especially on the Realtor side.
3 – You can’t really buy a house online yet?!?!
The last three car purchases I’ve made have transacted without me ever meeting the salesperson until I picked up the car. I have not contacted a travel or an insurance agent since the late 90s. I file my taxes electronically. I renew my tags online. The last house I financed? I never met or actually spoke to anyone. You can even complete most all the bits of an adoption online.
Everyone always says, “But real estate is different. Buying a home is different.” I say, for a consumer that’s increasingly behaving the way I do nowadays, is it? Not anymore.
Yet buying and selling real estate remains an overly (or improperly) regulated, decentralized and inconsistent activity governed at all levels from local, to state, to federal and the private sector. Until all this changes, real estate will remain a slow-developing “civilization” that really should be further along.
It’s kinda like, say, Brazil.
4 – Low barrier of entry for the career field
There are many, many real estate pros I respect. Hell, my wife and son are licensed agents. But they’re a perfect example of exactly how low the barrier to entry actually is for this career field.
When we started our brokerage to really learn the ropes of real estate so we could develop www.homepocket.com, they both went from unlicensed and inexperienced to full-blown agents in less than 3 weeks. For many states, it takes even less time.
How is this a bad thing, you may ask?
For starters, the ranks of real estate sales is growing. In some states, it’s even doubling over the last decade. But the majority of these new agents never work in real estate full-time as what’s called a “professional” real estate agent. They’re referred to by the pros as “weekend warriors.”
That means your odds of getting a part-time, inexperienced and low-tech Realtor are pretty good.
Imagine the majority of financial planners, EMTs, lawyers or those hazardous materials truck drivers next to you on the highway saying “Trust me. I just started doing this 3 weeks ago.” Yet, from a risk perspective, buying and selling real estate is one of the top activities you can engage in most likely to land you in serious trouble and/or out a whole lot of money.
5 – The real estate data epidemic
There are so many issues with real estate data it’s hard to know where to start. The heart of the issue lies with what’s called the Multiple Listing Service, or “MLS.” The MLS is a decentralized, locally-run set of over 1400 data registries created back in the 1800s where real estate professionals enter the listings for homes they’re selling.
If you don’t see potential issues from just this info alone, keep reading.
Each MLS charges the Realtors anywhere from a few hundred to a few thousand dollars a year to take their listings and then make them available to services, sites, and apps that want to display them. They also charge each service, site or app to use or display the listings.
The MLS offices in a given city or state are independently run, so policies and fees vary widely from office to office. Many times, there’s more than one MLS covering listings a single area too.
As well, there’s no single, authoritative data standard for home listings and no single aggregation of all the data in one place. I’ll repeat the first part as it bears, well, repeating:
there’s no single, authoritative data standard.
That means listings vary from city to city, state to state. Sometimes in very big and important ways.
It’s hard to access and consume listing data in a reliable, consistent way and you must go MLS by MLS. You know those little bar codes on products that let you check out at the store? Imagine if all of those were different in each city. Think about that for a moment and where we’d all be right now as consumers.
This is all both a contributor to – and one of the reasons for – the technology problems pervasive in real estate. It hampers tool and app development, creates and increases consumer confusion, makes governance and legal controls tougher and at least a dozen other major impacts. On the whole, it acts like a drag chute on a race car for real estate as a whole.
For a wide variety of reasons, the real estate game simply isn’t changing with the times quickly enough. Perhaps it’s been the overarching “real estate is different” mindset that’s persisted for so long with governments, buyers, sellers and real estate pros. Maybe it’s been the stranglehold held by a few major associations and the many state-by-state laws that technology, litigation, and antitrust legislation is only beginning to wear down. Whatever the many causes, these are interesting times. In fact, the next few years will likely be a period of big changes in how you and I buy and sell real estate.
For now, it’s still too soon to see it really starting to take place.