Real Estate Company Is Replacing Agents With Robots

Tyler Durden's picture

With robots slowly but surely taking over every semi-skilled occupation including in a bizarre development, the production of cocaine which may well unleash the era of cocaine deflation upon Wall Street (a welcome development in light of ever-shrinking bonuses), a new - and familiar - industry has emerged as the robots' next target. According to Newsday, a California real estate technology company that aims to lower the cost of home-selling by using robots and “big data” instead of commission-based real estate agents has recently opened a Long Island office.

The latest potential source of tech-inspired deflation, REX Real Estate Exchange, which charges a selling commission of only 2% instead of the usual 5 to 6%, launched its Long Island operation this summer. The Los Angeles-based company expects to start listing New York-area homes on its website, rexchange.com in the near-term.

Traditional real estate fees “are just crazy high compared with every other industry in the United States,” said Jack Ryan, Rex’s CEO and a former partner at Goldman Sachs. Decades ago, investment brokerages charged 12 cents a share for stock trades, but now they charge less than a penny, he said. By lowering real estate fees, he said, his company is “doing the same thing with residential real estate.” In the process - if successful - it will also put countless people out of work.

According to Newsday, REX, which has raised $16 million from investors, is not the only company seeking to upend the residential real estate sales model. Another new entrant to the housing market is EasyKnock, a Sag Harbor startup that is rolling out a website designed to match sellers with buyers without the intervention of brokers. The company, which has raised $1.2 million in venture capital and plans to go live at any moment, has lowered commissions even more, to just 1.5% and does not list homes on the Multiple Listing Service of Long Island, said co-founder and chief executive Jarred Kessler. The MLS is a way for brokers to share information about homes for sale.

“We’re a broker-free ecosystem,” Kessler said.

Among national brokerages, Seattle-based Redfin charges sellers a 1.5 percent listing fee — or 1 percent in a few communities, including Washington, D.C. — though unlike REX and EasyKnock, it also pays a commission to the buyer’s agent.

 

In a typical home sale, the commission gets split between the seller’s and buyer’s brokerages. If a home sells for $300,000 and the seller pays a 6 percent commission divided equally, each brokerage receives $9,000 and pays out a portion of that to the agents.

Like any threatened ecosystem, long Island real estate brokers expressed skepticism about the tech-focused companies’ prospects for success. “Discount brokers have attempted to be around for many, many years, and they just fall away because it is important to provide good personal services to the seller and to the buyer,” said Joe Moshé, owner of Plainview-based Charles Rutenberg Realty.

To be sure, few home sellers choose to bypass agents. Last year and in 2015, 89 percent of home sellers used a real estate agent, the highest share since at least 1981, said Adam DeSanctis, a spokesman for the National Association of Realtors.

Buyers typically start their search online, he said, “but at the end of the day, most people are still relying on the value a real estate agent provides.”

That could change, however,  once sellers and buyers discover how much they could save, REX’s Ryan said. For instance, he said, if the seller or buyer of a $500,000 home saves 3 percent on real estate brokerage fees, that adds up to $15,000.

Despite the discount fees, REX will provide full service, he said. The company expects to employ 10 licensed, salaried real estate agents here by the end of the year, and 50 by next year, Ryan said. The agents will guide buyers and sellers through listing and marketing a home and negotiating a sale, but the most sophisticated work will be done by computers, he said.

REX finds likely buyers by doing rigorous analysis of consumers’ income, location, spending habits and other data, and it reaches them through targeted ads on social media and other sites, Ryan said. The company even tracks potential buyers’ browsing on its website, so if a buyer spends time checking out one home’s pool and its zoned schools, that buyer will get more ads for homes with pools and information about schools, he said.

“It’s working brilliantly in southern California,” where the company closed 30 home sales in June, he said.

 

The company does not list homes on services such as the MLS. Instead, Ryan said, it uses ads and listings on websites such as Zillow.

But rather than relying on commission-based agents to provide information about homes, it is testing a tabletlike “robot” named REX that will be stationed in listed homes, programmed to answer some 75 typical questions. The Alexa-like tabletop box can answer nearly any question a prospective buyer lobs in its direction — from when the roof was last repaired to where the nearest Starbucks is.  Since in its current generation, Rex can’t do it all, a human rep is also on site, greeting potential buyers. Rex also employs licensed brokers and salespersons but is paying them salaries rather than commissions.

The AI robot may very well appeal to millennials as they grow to house-buying age. Roughly 8% of sales in 2016 were from For Sale By Owner sites, a National Association of Realtors study found, while 89 percent of the sellers used a broker. Rex is trying to increase that 8 percent number by being super smart. Its research has found that the average buyer for a $500,000 home lives within 12 miles and for a $1 million home lives within 18 miles. But for a $50 million home, the buyer is global and already owns a home worth at least $10 million.

One California home seller said REX provided better service than the traditional agents he had used before in a dozen or so transactions.

Bob Simpson, 62, of Ventura, agreed to be interviewed by Newsday at the request of REX.

 

Simpson said he liked that his for-sale sign listed a webpage dedicated to his own home, instead of to a brokerage’s website, and that he always got quick responses to his questions.

 

Moreover, he said, when his home sold for $518,000, “we saved $21,000 by using REX. That’s indelibly inscribed in my head.”

 

One of REX’s Long Island-based agents, Bryan Starck, 22, who moved from California to Great Neck two months ago, said he has met with 10 to 15 buyers so far. The lower fee “makes a ton of sense” to sellers, and so does the use of technology to identify buyers, Starck said.

“You used to really need a traditional agent to buy a home or sell a home,” Starck said. But now, he said, “there’s an unprecedented amount of information available . . . I really do think this is going to be the company to change the industry.”

If he is right, then your next real estate agent may look like this.

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WilliamShatner's picture

Huh, funny.  Got a friend leaving a good job to become a realtor. 

Guess he's tired of the job security and the good benefits he has with his current job.

Told him the RE sector is ripe for automation and that he's making a mistake.  He didn't like hearing that, but at least I warned him.

takeaction's picture

Realtors are WORTHLESS.   This is a low "Barrier to Entry" job that does not deserve the pay that is received.  It is a scam.  Just like the Diamond Industry.  Somebody like Amazon needs to blow this market up...

Normalcy Bias's picture

A large percentage of Realtors are totally worthless, but I've also seen diligent agents save otherwise intelligent buyers a fuckload more than the typical 3%/side/split commission.

Intelligent people are frequently overconfident in a game they often don't understand.

ACP's picture

Robocop did this in 1987 and the real estate business is JUST getting around to it?

https://www.youtube.com/watch?v=E3vgz-FYS04

To paraphrase Dave Chapelle, "Nigga that was 30 years ago..."

 

El Oregonian's picture

"HAL, open the Pod bay doors!" Sorry Dave, I'm afraid can't do that"

Excerpt from the 1968 movie "2001: A Space Odyssey" 

https://www.youtube.com/watch?v=dSIKBliboIo

 

Open the Pod bay doors, HAL. "I know you and Frank were planning to disconnect me, and that is something I cannot allow to happen." Alright, HAL, I'll go in through the emergency airlock.

Truthoutthere's picture

HAL,for fuck's sake please open the front door.We have an open inspection at 11.

herbivore's picture

From the standpoint of groundbreaking technical brilliance, 2001 A Space Odyssey is (was) an astonishing achievement, never mind the thematic content which itself was decades ahead of its time. In the pantheon of great films, it's in the top tier, although for me the last 1/3 fell a little short.

SixIsNinE's picture

well, of course it had to be...
simultaneously Kubrick was doing the studio shooting for the Moon Landing hoaxes.

RIP Stanley !

oh, since we're talking 2001 -
here's a pentagon report from 2001, a real one, about how to propagate electromagnetic fields over our flat earth realm.
http://www.arl.army.mil/arlreports/2001/ARL-TR-2352.pdf

political_proxy's picture

Sure that is cool. But is Robocop a hot real estate agent sexbot that puts out?

Farmer Joe in Brooklyn's picture

Lady in my parents' neighborhood thought she was really smart and sold her place with no representation. Sold her place for $240k and could have easily gotten $325k. She was in it for $150k or so and felt like she was making out like bandit...but she left A LOT of money on the table.

Not everybody is equipped to fend for themselves in the internet fight club without someone in their corner...

techpriest's picture

Speaking of, I'm not convinced that Rex knows how to deal with inspection reports, inspecting foundations, etc.

From the article, the Rex robot is actually quite simple, and is mainly doing regression to compute which people go with which houses (you spend more time on houses with pools > you probably want a house with a pool).

I'm not sure if the "75 typical questions" include things like "how much will it cost to get the 100 Amp box up to 200?" or "Is that crack in the ceiling a sign of a structural problem that will kick my ass in 5 years?" or other such things that will eat the 4% savings in minutes.

ElTerco's picture

That's ok, because most real estate agents know anything about their job either.

Essentially all Realtors know how to show houses and get you to sign documents. They more often give wrong answers to simple questions, rather than just saying, "I don't know".

edotabin's picture

AI and robots....lol.  all you need to replace a realtor is a cassette player with a recording"Now is a great time to buy" Realtors could've been replaced in the 60s.

Seriously, a good realtor can be very helpful but finding one will be difficult. The reason is very simple and it applies to almost all professions:   When something is done strictly for money the end result is almost never good. You get quantity over quality.

Anybody who is serious about real estate is a realtor and acts on their own behalf to save the exorbitant fees/commissions.

Also, many car dealers are moving away from the commission based model as well. They'll pay $10 an hour plus $100 per car.

Internet-is-Beast's picture

All that money for matchsticks, plywood, gypsum board, hollow core doors, and a compostion shingle roof. Could a house be built with cheaper materials?

edotabin's picture

Everyone knows that wood resists hurricanes, termites and mold better than concrete. Sheeeesh! Lol

Profits..... I get it. When overdone though it causes people to do the wrong things for the wrong reasons and elevates money to the status of God. Quantity over quality.

It's a pity too. We can build much better houses today than 30-40 years ago but if you skimp on everything like that the end results will be crappy.

SixIsNinE's picture

i watched a house go up this summer - one of the last empty lots on the golf course - really one of the better lots around...

and i saw the sticks and materials you describe build it.

fairly disappointing.

but of course the finished house LOOKS good.

BobbyRay's picture

Tell us "how" these realtors saveed buyers a fuckload.  On a $2M home (not uncommon in some areas) was it worth $60,000?  Hire a RE Attorney at an hourly rate.  They are worth something but not even close to what morons pay them.

HRClinton's picture

The consolidation will leave the Top Performers, many of whom can "seal the deal" in ways that a robot cannot - unless a Sexbot is involved in that 2% Commission.

In which case, "It's always a good time to buy" might hold dome truth.  ;-)

If I'm gonna psy 6%, then the Agent had better look amd perform like my fave porn stars. Quid pro Quo/Ho.

boattrash's picture

takeaction, Do you remember, many years ago, when Wal-Mart looked into selling new cars at $200 over delivery cost?

The car dealers were shitting bricks! I can't remember if Govt stepped in and stopped it, or if Wal-Mart stopped it before Govt stepped in...

TheLastTrump's picture

You're a good friend, keep on keeping on being GOOD. That's what's important, nothing else matters.

 

https://www.youtube.com/watch?v=tAGnKpE4NCI

 

Metallica - Nothing Else Matters
Michael Musashi's picture

Ah yes, making people useless in every industry.

The big bet on Wall Street for the future: Bet against humanity!

Stock up on guns and food because Wall Street is gunning for you and your family.

Spinkter's picture

I am investing in the sexbot industry. I just look at the bots compared to the average female on the streets, wearing an extra 30-100 lbs, spandex, purple and pink hair, and think bots, whats not to like?

chubbar's picture

I've said it before, as soon as they develop a sexbot that cleans, does laundry and cooks, they won't be able to keep them on the shelves. We are probably 10 years away from this reality but it's coming (no pun intended).

SixIsNinE's picture

this IS prison planet, if the ptb get their way.
these convenient little computer phones & robots will be helpful
oh - i was going to link a new look at some bombshell japanese "female" version robots who look extremely real -
and the new headline is this:
Marilyn Manson, 48, is crushed by two giant pistol stage props and rushed to hospital midway through singing Sweet Dreams at New York concert

HRClinton's picture

If you haven't done so yet, check out the British TV series HUMANS.

Among many other important human-cyborg issues, it also covers sex with cyborgs ("Synth", as they are called in the show).

If men and women want to avoid extinction due to plummeting men-women sex and reproduction, then both genders had better rediscover and cater to each others sexual wants snd needs. Or it's "Bye-bye bitch/jackass, and hello sexbot!"

BTW, (((TPTB))) don't mind, if people break down the Nuclear Family for them, by substitution a human mate with cyborgs that "play house and sex games". That means that allegiance has shifted from loyalty to each other, to loyalty to the Overlords, via the Cyborgs/Synths.

SixIsNinE's picture

you could still get some nasty STDs with cyborgs/bots though...

CYNTHIA will kill you !
CYNTHIA - the engineered bacteria released in Gulf of Mexico to eat up the Deepwater Horizon BP oil disaster (60 sq. miles oil slick) - but surprise! it is mutating and likes to eat living things, people definitely.

synthetic biology/nanotech unbridled :

https://journal-neo.org/2016/09/14/cynthia-the-flesh-eating-s/

Cynthia: Flesh-Eating Synthetic Bacteria that has Gone Wild
https://journal-neo.org/2016/09/14/cynthia-the-flesh-eating-s/

http://www.etcgroup.org/content/2016-year-wasnt-normal

http://www.etcgroup.org/content/four-steps-forward-one-leap-back-global-...

http://www.etcgroup.org/content/bleeding-veggie-burger-has-no-basis-safe...

HRClinton's picture

Shatner, I sure hope you're the real McCoy.

:-)

Ray Donovan's picture

I told my agent a version of uber for real estate is coming soon, he laughed.......

TheLastTrump's picture

He who laughs last motherfucker, he who laughs last....

Endgame Napoleon's picture

That is probably because he knows that no matter how many human agents are displaced by the robots, the state will still charge them fees and make them take more tests to maintain their licenses.

techpriest's picture

I think it depends on the context.

For negotiating the price or finding small details, I doubt it. The AI hasn't come close to that currently, though maybe in 10 years it will.

For unlocking the door, answering basic questions, and managing the documents - these are all low-hanging fruit.

Utopia Planitia's picture

The last RE agent I used decided to go AGAINST me at the final price negotiation. Of course he wanted the price to stay as high as possible, to juice his commission.  I had not seen him behave like that until we were hammering out the last dollars and cents on the deal. That was the last time an RE agent was anyplace close to any discussion involving dollars (or other assets). Never forget there are 3 parties going for their own self-interest when an RE agent is involved:  the Buyer, the Seller, and the RE Agent.  Each has a different objective.  One adversary is enough - why add to the difficulty?  But they sure have a laundry list of "reasons" why you "need" them.

Zoomorph's picture

Would Hitler approve of me buying this house?

delmar Jackson's picture

The lowest hanging fruit and most profitable for takeover by AI will be medicine, education,  and government. 

Endgame Napoleon's picture

Robots will be more polite that many government employees.

techpriest's picture

If robots have no personality, then 0 is better than negative.

HRClinton's picture

Hell, I'd start in the damn Boardroom and Executive floor!

HRH Feant2's picture

Good! Realtors are a waste of money. Someone unlocks the front door and I have to pay them 3%? FOAD.

BarkingCat's picture

I wish it was only 3%. 

6% is the standard commission. 

Truthoutthere's picture

Holy shit.It's only around 1.5%(OK,off higher prices,I'll give you that) in Australia.Your American realtors must sure drive some fancy cars.

techpriest's picture

Its a requirement actually. People think less of realtors that aren't driving a mortgage payment on wheels.

political_proxy's picture

They don't even have fancy crack pipes.

max powers's picture

i saw this in 1987, the original "robocop"

 

https://www.youtube.com/watch?v=RuV4rzRJyCo

Chupacabra-322's picture

Great catch.

Predictive Programming

The theory proposes that public media (such as films, television, news casts, etc.) are deliberately seeded with subtle clues to future social, political, or technological changes. According to the theory, when the relevant change is later introduced into the world, the public has become used to the idea through exposure, and therefore passively accepts it rather than offering resistance or opposition. Predictive programming is therefore thought to be a means of propaganda or mass psychological conditioning that operates on a subliminal or implicit level.

FixItAgainTony's picture

Yep, TPTB are moving the Overton Window, instead of people's common sense.

SixIsNinE's picture

with headlines like this,
week in, week out -

teacher in California "Allegedly"

Teacher arrested for allegedly contaminating THOUSANDS of flutes given to California schoolchildren with his SEMEN
http://www.dailymail.co.uk/news/article-4937518/Teacher-arrested-alleged...

and the obligatory female teacher who rapes a young male and gets a slap on the wrist or a year and a half sentence...

yadda yadda yadda

HRClinton's picture

Predictive Programming algos are scouring blog sites, from which to learn. And post, so they can evolve.

I swear that ZH goldbugs are Gen.1 AI algos, as are crypto bashers, because I just can't imagine humans being that stupid.