Survival Of The (Digitally) Fittest!
The Calm Before The Storm
Things are going great, right? The answer is yes…for now. The housing market and economy is strong, but rests on shaky ground. We’re overdue for a recession and many experts believe the next economic collapse could permanently change the real estate industry.
Artificial Intelligence and disruptive real estate technologies are developing rapidly. Not only do the new technologies provide solutions to buyers and sellers in real time, they also eliminate tasks commonly performed by real estate agents and brokers.
When the next recession hits, buyers, sellers, and brokerages will all be looking to save money. Emerging technologies threaten to replace agents. Hundreds of thousands of real estate agents will be in search of new work and only a few will remain. What will separate the survivors from the the victims? Adaptation.
The Biggest Threats To Modern Real Estate Agents
Federal Interest Rates
The United States’ economy has been roaring for over 10 years strong. As a result, the FOMC is raising interest rates to combat inflation and protect against economic bubbles. Many economists believe raising interest rates protect against horrific economic collapses like The Great Recession of 2007.
When interest rates rise, it costs more to borrow money. As a result, mortgages commonly become more expensive and less attractive to potential buyers- making it difficult for real estate agents to help clients buy or sell houses.
AI-based technologies already provide buyers and sellers more information in less time than real estate agents. However, people still crave the assistance of a human expert. As Artificial Intelligence continues to integrate with modern society, buyers and sellers will become increasingly comfortable using AI to research and complete major real estate transactions. Doing so will likely save them time and money at the expense of human connection.
Here’s a situation to consider. Five years from now, Artificial Intelligence will undoubtedly advance. As the technologically adapted Millennials and Generation Z’s replace baby boomers as the primary buyers and sellers of real estate, people will be more accustomed to communicating with Artificial Intelligence.
Inevitably, the housing market will slip into recession- it’s a fact of life. When it does, people will need to sell their homes quickly and save as much money as possible in the process. Considering nearly all fact-seeking questions can be answered by Artificial Intelligence, and sellers can likely save 2% of their home purchase price by not hiring a real estate agent, the traditional real estate agent is in big trouble. Why? Human connection holds less influence than financial survival.
Blockchain is revolutionizing real estate transactions by reducing fraud and expediting the closing process. Smart contracts threaten to eliminate the “middlemen” in real estate transactions. Real estate agents, and the traditional brokerages for which they work, become endangered by the elimination of intermediaries.
Highly paid lawyers, real estate agents, and lenders are heavily involved in real estate transactions. Because they’re human, mistakes are made. Why would our future selves continue to pay more money for a less safe, slower-moving, error-prone process? We won’t.
Brokerages are well aware of this trend. Keller Williams, and other major real estate brokerages, are slowly transitioning from the traditional real estate model to AI-based solutions. However, they can only move as fast as people become accustomed to using AI over humans.
Because the economy is doing well, large brokerages have yet to be forced to choose technology over real estate agents. That day is coming. When it does, the majority of real estate agents will be looking for new careers while a select few adapt and soar to new heights. Why? Real estate agents will still be necessary, but in far less numbers. To decrease real estate transaction costs, buyers, sellers, and brokers will invest more heavily in technological instead of human resources.
How To Future-Proof Against Technology and Recessions
Go With The Trend
Unless you’re retiring within the next five years, ignoring emerging technological and industrial trends will lead to financial devastation. Instead of hoping things stay the same, embrace the new technologies. Place more emphasis on creating your own lead generation system, right now, while the market is still performing well. By the time the majority of real estate transactions are completed via blockchain and artificial intelligence, you’ll financially capitalize instead of perish.
Build Your Own Digital Real Estate
Create a self-sustaining, digital lead generation system. If you don’t own valuable digital real estate right now, create it. Meaning if you don’t have a website and social media accounts that generate traffic and provides value, find a solution. If your website looks the same or worse than your colleagues, it’s time to invest in creating an online presence that separates you from your competition.
Just like brokerages may not need you in the future, you may not need your brokerage! As long as your website and social media accounts generate enough buyers and sellers to keep you busy right now, you have a client-base you can monetize with or without your brokerage in the future. While it may not be wise to leave your brokerage, it’s unquestionably valuable to decrease your dependence as much as possible. Doing so will make you and your broker more money.
Diversify Your Marketing Efforts
So much goes into being a great real estate agent: hustle, personality, market knowledge, and strategy. The human connection real estate agents provide their clients is the biggest protection against Artificial Intelligence and technology. Buyers and sellers still prefer humans to guide them through the biggest financial transactions of their lives. However, when the economy inevitably goes into recession, AI and blockchain will become increasingly popular as cost becomes more imperative than human connection.
There is monetary value in helping people understand complex technologies and processes. There are always different ways to generate income as long as you can generate leads and provide valuable knowledge.
Real estate agents that fail to create valuable digital real estate will grow extinct. The savvy, trend-spotting agents that leverage disruptive technologies instead of ignore them will flourish. Real estate power players will leverage AI and blockchain to reduce costs and scale faster. When they do, It’s likely real estate agents will earn less commission per transaction, but complete more transactions while spending less time and energy throughout the process. It’s not good, and it’s certainly not bad. It’s evolution.
Ready To Future Proof Your Business?Yes, I Want To Generate Seller & Buyer Leads!
We Never Share Your Information...Period