Monthly Archives: August 2016
In the first part of my “Disrupt or Be Disrupted” series here at REALTOR® Magazine, I introduced innovations such as robotics, sensors, synthetic biology, and 3-D printing and how real estate pros can profit from them. Most often these technologies are quite abstract for people outside of scientific fields. The resulting unawareness, ignorance, or half-knowledge creates grave headlines, sometimes depicting a “Blade Runner”–style dystopia.
But as the founder of the Future Real Estate Institute, I take a different approach. I choose constructivism over fear and research over ignorance. That’s why in this second part of the series, I’ll show you both sides of artificial intelligence and how you might profit from it.
Artificial intelligence is commonly defined as a programmatic system mimicking or transcending human intelligence. While artificial intelligence could also be developed by means of genetic engineering, I want to focus on the programmatic approach. I see a huge vacuum of applications of artificial intelligence in real estate, which creates an opportunity for disruptive business cases.
Artificial Intelligence: Not The End
There’s a lot of trepidation when it comes to this topic, and not just in real estate. In the United Kingdom alone, more than 30,000 jobs in the legal sector have been made redundant by artificial intelligence applications in the last few years, which is a great example of the magnitude of the disruptive force this technology could have upon future job markets. This is one reason for the negative perception of artificial intelligence. Another is simply the fear of the unknown. We cannot really forecast what will happen when we develop more powerful applications that might not be controllable by humans.
Since artificial intelligence can optimize many business processes, assist in research, and automate repetitive tasks, it is economically attractive for governments, institutions, and corporate entities to develop such technology. That’s why it’s vital for brokerages to get in on the game and to develop their own artificial intelligence tools, so they can adapt and create new jobs in order to continue to profit.
Business Opportunities Thanks to the Status Quo Vacuum
There are dominant players in most business sectors, including real estate. Yet, with emerging technologies like artificial intelligence, new players can challenge them. This state is what I call a “status quo vacuum.”
What if you created the startup that finally developed the perfect matching algorithm for clients or the best way to aggregate listing data? Here are some ideas of how innovators in real estate could use AI to change the way business is done.
Seller and Buyer Matching
There are already various platforms offering matchmaking algorithms to pair buyers and sellers. Yet, the models lack holistic data aggregation, learning functions, and adequate parameters. We will see eventually a platform combining it all, making the home search process easier, smoother, and more efficient.
Legal Research and Financial Due Diligence
Companies like Leverton are already using artificial intelligence in semantic language processing, which can read through complex legal contracts and work through financial data, to smooth transactions. This is just the beginning. In the future we will see rapid text and voice data analysis, which can improve market research, competitor monitoring, sentiment analysis, and customer service. Such services may eventually allow real estate transactions to happen faster and at lower costs.
Prefab’s reputation isn’t exactly fabulous. Studies show consumers associate words like “prefab” and “modular” with mobile homes and double-wide trailers, and they feel factory-built homes don’t offer the quality or diverse options of conventionally built homes. But prefab manufacturers have a new message to share: These aren’t the boxy, plain vanilla, kit-made homes that in the past you could order from a catalog. Today’s factory-built homes, they argue, can be just as stylish and sturdy as homes that are constructed onsite (which are also known as “stick-built”).
They’re not necessarily cookie-cutter either. Computer-aided design allows for greater customization and personalization, offering shoppers the ability to design their new homes themselves. Those interested in smart-home technology and sustainability will be able to seek out those features, too.
Still, prefab’s public relations problem may be stifling demand. In a 2007 study, the Department of Housing and Urban Development found that limited awareness about advances in factory-built housing—particularly regarding its visual appeal—was dampening the style’s growth. But that could be changing, according to Fred Hallahan, a housing consultant with Hallahan Associates in Baltimore who specializes in prefab research. “The general public—and that includes real estate professionals and builders—have a big part in helping to change the perception of what modular and manufactured housing means today,” says Hallahan. “Prefab housing has the same degree of aesthetics and function at the same price—or maybe even lower price” than traditional homes.
“This is not your grandma’s double-wide ranch. We try to break new ground in what’s achievable in modular construction,” says Brian Abramson, cofounder of modular-home builder Method Homes based in Seattle, citing features such as vaulted ceilings and curbless showers. Abramson’s company offers styles from modern to traditional and is able to combine factory-built modular units with onsite construction elements to meet customers’ design requests.
Architect-led customization is helping these homes shed the homogeneous label. “We’ve never built the same exact floor plan,” says Steve Tuma, president of Landmark Home & Land Co. in Michigan City, Ind., which sells panelized home kits for anywhere from $50,000 to $10 million. “Every customer is different and has different needs. The belief that prefab is a production line that doesn’t want to change is untrue. We take advantage of having a production line, but we give customers what they want.” Home shoppers work with a design team to customize more than 2,000 of Landmark’s standard plans. Like other panelized and modular companies, Landmark also ensures each home adheres to local and state building codes.
What do you say to buyers who look at a listing’s floor plan only to focus on the large space labeled “dining room” that they know they’ll rarely use? The fact is, buyers and sellers may have vastly different perceptions about how they want to live in the same home. But that doesn’t have to be a deal-killer.
Part of the problem stems from how architects and builders label rooms on plans, says Chicago-based commercial interior designer Mary Cook. “Rooms get designated and labeled for specific purposes, so it’s difficult to break that perception and think about them as spaces that are something else,” she says.
But as a real estate professional, you can help make a difference with the descriptions you write in your marketing materials and with the way you talk about space in a listing. Clever copy can provide just the right inspiration for buyers who might have otherwise turned away.
A huge log-burning fireplace dominating a living room can be recast as a “built-in entertainment center to gather around,” suggests designer Lonnie Unger of Fredman Design Group in Chicago. Just be sure to make concrete suggestions that buyers can visualize, even before they zoom in on photos or step through the front door.
Whether you’re working with sellers who have outdated notions of their listing’s assets or with buyers who can’t imagine how they’d use a space that doesn’t seem to apply to their lifestyle, we’ve amassed some talking points that can help you smooth out the conflict. Here are five examples to inspire you to help your clients imagine what can be, rather than allowing what is to become a deal breaker.
1. What it is: Oversized walk-in closet
The big closets that came along with the McMansion trend were often outfitted with shelves, rods, cabinets, and even storage islands and seating space. As conspicuous consumption falls out of favor, these spaces may seem like a waste for some buyers, who’d rather spend their square footage elsewhere.
What it can be: “Practical laundry space adjacent to master bedroom.” Because large walk-in closets are usually well illuminated and may even have a window for daylight, they offer numerous possibilities. How about an upstairs laundry by the bedrooms? After all, this is where most of the dirty clothing originates, so why should home owners trudge down to the basement with their hampers? If the space is large enough, a built-in ironing board or folding counter could work well, and closet shelving can be repurposed as a place to keep laundry supplies. If there’s leftover space, home owners could carve out a corner for crafts. Jennifer Ames, a salesperson with Coldwell Banker Residential Brokerage in Chicago, notes that this idea is often appealing because few home owners want to give up a whole bedroom for such activities these days.
2. What it is: Built-in kitchen desk
As kitchens became gathering hubs with more equipment, counters, and seating, many home owners wanted a desk with wall plugs and phone jacks where they could pay bills, schedule family activities, and place a large desktop computer and landline. But the downsizing of computer equipment, greater use of laptops, tablets, and cell phones, and the pervasiveness of Wi-Fi throughout a home has resulted in fewer people demanding this feature, says designer Leslie Lamarre of TRG Architecture + Interior Design in San Mateo, Calif..
What it can be: “Bonus kitchen storage space with universal design counter.” Because desk space is usually lower than traditional counters, it can be an awkward space to stage. But as more home owners look to open up the cooking experience to the whole family, they might benefit from having a prep space that can be used by kids or adults who may be more comfortable sitting. Have sellers pack up that old desktop and stage the space with colorful ramekins and a playful, sturdy cutting board. Desk bookshelves can be transformed with a few nice cookbooks and cabinets can easily be reimagined as pantry storage space, since there’s rarely enough of that in most kitchens anyway, Lamarre says. If sellers want to make some easy upgrades, they might consider adding pull-out racks that permit easy access to kitchen gadgets and dry goods. A light can be installed to switch on automatically when the pantry opens, which is always a nice touch.