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Technology, from chat apps to blockchain to augmented reality, is reshuffling a horde of industries, including residential real estate. Startups are upending—or, at least, attempting to change—almost any aspect of housing. Big data-powered artificial intelligence (AI) often rests at the core of the emerging methods to finance, rent, advertise, sell and purchase a home.
Yet, despite their proliferation, real estate tech companies appear focused on the middle of the market, where comparable, median-priced homes offer ample data points to feed algorithms that underline new tools and churn novel market insights in real time.
The upscale tier of residential real estate, though, seems less susceptible to such innovations. Luxury, after all, denotes customization and exclusivity, which do not necessarily blend well with technology intended to simplify and streamline the larger industry.
This is not to say, however, that AI is charting no incursions in high-end housing. When it comes to connecting with potential high-net-worth home shoppers, there are some ways in which nascent technologies are aiding agents. Think of the capability to create custom ads that target sole neighborhoods or client preferences, or to automate messages in a manner that makes them instant yet personal. Still, there are other ways in which tech is unable to replace traditional interactions.
Perhaps more than their peers selling lower-to-mid-priced abode, luxury real estate agents depend on their connections that they painstakingly build and nurture for years. But AI might be able to substantially expand agents’ networks.
“AI is very objective,” Andy Barkett, chief technology officer of Austin, Texas-based, AI-powered brokerage REX told me several months ago. “There’s a lot of actual differences in the breadth of the search, a lot more buyers from further away.”
While a luxury agent may have a network of buyers and sellers in Beverly Hills, for example, REX’s AI tools can reach to individuals across countries and cultures, placing luxury homes for sale in front of diverse shoppers, says Barkett. That can be beneficial given that there are not very many people in the world that can afford multi-million-dollar homes, which often spend years searching for a new owner.
To Mauricio Umansky, founder and CEO of The Agency real estate brokerage, such a capacity sounds like “a good idea,” but still mostly an aspiration.
“In reality, it is not working yet,” Umansky says. “I think it could start working but it’s not there yet.”
At least not on a large scale. Compared to traditional, well-established brokerages, REX, which has been around for about 5 years now and operates in such prime cities as New York, Los Angeles and Boston, is selling a minuscule number of properties priced above $1 million and even much fewer in the eight-figure range.
Three years before REX’s launch in 2015, Compass entered the real estate industry as a tech-enabled brokerage. Since its inception, Compass has introduced a host of services to help its agents offer online support and guidance to buyers.
“By building software and AI that eliminates much of the heavy-lifting that agents have to do, Compass allows agents to provide tailored, personalized service at scale to their clients and prospects,” says chief technology officer Joseph Sirosh.
“For example, agents can organize properties of interest into Collections for online collaboration, create tour sheets that help make it easy for clients to visit properties, and use AI-powered search and recommendations. Soon, Compass [customer relationship management system], powered by AI, will help agents reach out to the right contact, with the right content, at the right time, making it easy to keep in touch with their sphere of influence.”
These capabilities appeal to Michael K. Davis, one half of Compass’ The Mike & Marta Team in New York City. Technology not only helps him curate custom online experiences for shoppers, it promptly supplies the market insights that wealthy customers seek, he says.
“Luxury clientele has higher expectations, which is largely data-driven, in my experience, and that means that they want to understand trends,” Davis says. “They want to understand analytics.”
Beyond insights for high-end buyers, technology can help agents get to know their customers—perhaps before they even meet in person.
“There are a lot of new technologies that allow you get [something similar to a] dossier about [clients],” says Umansky. “Understand what boards they serve on, what charitable foundations they run, understand their hobbies, skiing, surfing, horses, art, cars. That allows us, agents, to become a little bit better in terms of communicating and networking with our clients.”
While Compass is developing what Sirosh calls “artificial intelligence to empower agent intelligence,” the power of old-school, person-to-person connections persists.
Davis says that although he leans on AI and other tech tools when he engages a new client, in his 20 years in real estate, it has been his personal and professional relationships that have grown his business.
Across the country, in San Francisco, Joel Goodrich, real estate agent with Coldwell Banker Global Luxury, echoed Davis’ sentiment on the sustained importance of personal connections.
“I’ve met some of my biggest clients and sold some big houses just by attending important business or social or philanthropic events,” Goodrich says. “Especially in this online world, I think personal networking is extremely important.”
In the realm of upscale real estate, new technologies may be bringing in new avenues of reaching and assisting buyers, but relationships established in the offline world remain as crucial as ever.
“If you look at who is selling luxury real estate, whether it’s Los Angeles, Aspen, New York, Miami, it continues to be the same high-end brokers who have great relationships, not [new brokerages] who are using technology to try to get into the market,” says Umansky.