Technology—you’ve gotta love it. With it I can gather every bit of data I need – from viewing a home on my phone (photos included), and sending it wirelessly to my office computer. It’s impressive. It’s amazing the changes we have seen in the past few years, let alone in the last 15 that I’ve been doing this. But will it mean the end of us? (“Us” includes you, too, agents.)
There is no denying that technology is making a place for itself in the real estate industry. Appraisers have been hearing news of alternative appraisal services offered by Fannie Mae and Freddie Mac for a while now. Big data has allowed them to create sophisticated automated valuation models (AVMs) that have been “checking” appraisers’ work for a couple years, and now they even estimate value for loan purposes. (I have another blog on this topic coming soon.) When my grandfather began appraising nearly 50 years ago, the only way he could find sales was to develop a relationship with a local banker making loans. This was usually done with a box of donuts in hand, and his gift of gab didn’t hurt.
Now we have computers, the internet, email, cell phones, and tablets. The list could go on and on. Oh, and don’t forget Zillow. I’m not bothered by Zillow. I think it’s a joke, honestly. The price it estimates for a property may or may not be close. (Notice I say “price”, and not “value”.) You’ll never really know with confidence (without some sort of professional assistance) what a property is worth. It won’t replace me, but I do wonder if real estate agents are worried.
Picture this: You’re standing on a busy street corner and need a ride. You wait 10 minutes for a cab, finally hail one, hop in the back seat, and realize you forgot your wallet. Bad day. Now, think of this: You’re sitting in your living room. You find a nearby Uber, walk out the door and see it pulling up as you near the sidewalk. You hop in, realize you forgot your wallet back upstairs, and don’t care because you can take care of EVERYTHING from your phone. It’s technology at work. It’s the new, faster, and more streamlined way.
Ok, back to picturing things. Imagine you are new to town and looking for a house. You don’t have an agent yet and are not sure how to find a reputable one. You see a house sitting at the corner of blah and blah, and it interests you. There is a sign in the yard with the agent’s name, so you call them up and arrange a time to see it. The agent happens to be busy at this moment, but he can show you the home in a few hours. You come back, go through the house and like it. Being new to town, you haven’t had a chance to make an application yet and so you are not pre-approved. The agent recommends a lender, you get pre-approved, and make an offer on the house, only to find out the sellers have already accepted a different offer. Now, let’s do this with technology.
Same scenario. You’re new to a town and find a house. The property has a Zillow sign in the front yard, so you pull out your phone with the Zillow app. You request a showing, and your request goes out to 10 agents that have agreed to show the house on-request for a set fee. The closest and quickest one accepts the offer and is there within 10 minutes. You like the house, and since you’ve already been pre-approved by an online lending service, tied to the Zillow app, you make an offer. YOU make the offer, through the app on your phone. It’s accepted within minutes because the acceptable price is already in the system; the sellers don’t even have to ok it because they already noted their bottom-line price when they listed it. And just like that, you’re buying a house.
I know, there are a lot of “what-abouts” in this scenario. What about the proper disclosures? What about the home inspection? Appraisal? Title!? Parts of this scenario are totally made up, but not all of them. Some of it is happening already. Use your imagination. Technology has taken us this far. Is it really a stretch to think the rest of this stuff could be done by the power of the internet, too? Do you think that when my grandpa was sitting at that banker’s desk with a box of donuts, he ever could have imagined I would have the ability to do my field inspection with a cell phone and a laser? Have you seen what Amazon has done to retail? Oh, speaking of Amazon, they’re just the latest of tech companies to announce interest in the real estate market. They quietly announced this back in July, but they seem to have gone quiet on it. A little research into the topic found a lot of articles that were no longer available, and their “Hire a Real Estate Agent” button was no longer found on their page.
But still the question: Will technology replace us? My answer to this is no. It will change us though. But like most things in life, change is inevitable. Those who are adaptable will be the ones to prevail. I do not believe that AVMs will ever be a viable alternative to the types of properties I appraise. Likewise, I don’t believe Zillow will replace agents in our market. But they might become competition.
I am interested to hear thoughts and feedback on this. Please post your comments below. Once again, thank you for allowing the Moore Appraisal Firm to be your residential and commercial appraisal experts.