By: Chris Tell at http://capitalistexploits.at/ [9]
I spent a recent weekend looking at some real estate. It used to be a favourite way for me to spend time and I realized how much I really miss it. I was reminded of how 99% of real estate agents are completely useless.
No, I mean not just incompetent but really useless and thick... really thick. Sometimes it's easy to tell thick people apart. You can ask them random questions or just initiate conversation, and when their knowledge fails to extend beyond what's on TV and the weather, you've probably got yourself a thickie.
Alternatively, you can measure the distance between their eyes, measure their arm length to height ratio, count the number of times they repeat the same meaningless words such as "fab" or "retro" when trying in vain to describe a crappy box of a house, or you can leave them in a room full of banana skins and see what happens. I say this because it's important to try to steer clear of thick people. Your sanity demands it.
To be fair, I had one great experience amongst 4 dismal ones. Pareto's law seems to run true.
Normally, I don't pay a heck of a lot of attention to peoples attire, what car they drive or such things, just ask my wife. That said, some things stand out, and like a goat in a fish tank you can't help but notice.
The first agent I met for the day was such a "goat". He arrived 20 minutes late, pulled up in a 20 year old Ford Falcon complete with a purple sparkly paint job, lowered suspension, darkened windows and a Fatboy number plate. I was immediately worried. The car screamed "I want to be a Fatboy but can't afford a Ferrari and I have no style."
Of course, driving around in a Ferrari for work as a real estate agent, selling anything other than multi-million dollar mansions screams, "I am a shark" and would probably distract clients from the houses they're meant to be buying, while they instead glare at the car thinking ill thoughts about the agent. Let's just say that as a salesperson's appearance matters.
When it comes to looking at the property, whether it be land or buildings, any monkey can look around and see what there is to see. What an agent needs to be able to do is to explain what can't be seen by the naked eye. In this instance any modicum of knowledge outside of "there is the dishwasher" would have been useful. Clearly my expectations were too high.
I looked at 4 properties, all in the same area, and asked the 4 different agents the same questions:
- What is the areas growth rate?
- Who is coming to live here and why?
- Are there any major projects in the area that are going to affect demand - either positively or negatively?
I'd done a bit of research prior to stepping out the door. I referred to this earlier in "6 Ways to Improve Decision Making" [10]. I hate wasting time so I'm not going to bother looking at something which I haven't got at least some level of knowledge about. As such I could have answered all of the 3 questions above but wanted to use them as a starting point to find out more. Alas, I completely flummoxed all 4 of these "experts".
It would have come as a gigantic surprise that a 14 ha development was already underway for a very exclusive private school just 2 kilometers away. A simple Google search would reveal this but that might interrupt getting Facebook updates. Growth rates in the area have been off the charts for the last 10 years and employment opportunities have been opening up causing demand growth. Anyone living in the region should have some level of knowledge of this but don't go expecting to be educated by most real estate agents.
This is far from my first encounter with real estate agents and it is not unique. What this means is that the buyer has to do the work themselves. This is a good thing really for the buyer, especially if you're an educated buyer and know what you want.
I recall for example buying a property some years back. I wanted to put a contract to the vendor and the agent was unaware how to proceed. I walked out to my car, and 5 minutes later came back with a signed contract. I always used to keep a few copies complete with the relevant clauses I needed. The agent, a middle-aged woman, obviously completely in a flap as to what she was meant to be doing, began recoiling and actually trying to dissuade me from buying. She'd probably never had a sale before and had no idea what to do. I helped her out in a big way. I explained to her how difficult it would be to drive home without legs and that, unless she took my contract to the buyer immediately, that was the only way she'd be traveling.
Back to my weekend fun. The absolute best agent by far was a woman who clearly was running multiple things in her life. Namely being a mum as well as selling real estate.
How do I know this? Well she drove one of those chest freezers on wheels as the car salesmen call it. People mover. The only reason anyone would drive such a horrible box is to transport screaming, messy kids around. I know, trust me.
This woman was awesome. She knew the demographic because she lived in the area and her kids went to local schools, she also knew about the new school coming in, she knew what arterial roads bordered the property she was showing me, she knew what traffic was like, what demographic was living in the area, what zoning existed and where, she knew that 80% of people living in this area were home owners not renters, she knew what the typical yield on properties was, what it had been in the past and how cap rates have collapsed, and she had a list of recent comparable sales drawn up to provide me. Hallelujah, I was in love!
What then is the solution?
Well, I propose using technology. Everywhere I look people are far more engaged with their phones than with real people. Let's further this trend and profit from it. Heck, why fight the trend?
Let's develop an app for real estate buyers. At the push of a button we can find out area details, historic growth rates, median incomes, median sales prices, strategic plans such as highways being built etc. In short, let's take that wonderful woman, driver of the chest freezer, and put her onto your smart phone. We could even use her voice to guide you through the topics you browse. That will take care of the generic statistic driven data.
Then what we'll do is combine that technology with another technology which is far from fictitious and a company we have invested in via our Seraph [11] private syndicate. This technology is augmented reality. Check it out here [12].
Now imagine for a minute what can be done with this technology. In the real estate space you could "virtually" walk through that property you want to view while augmenting yourself into the picture, or perhaps augmenting your furniture in the lounge, your dog chasing the cat in the garden. I'm sure you can think of a number of amazing uses yourself. Let's get it done before Google snaps up this company making shareholders, yours truly included, very happy indeed.
Most importantly we'll do away with countless unnecessary real estate agents and we'll have our own virtual agent at our fingertips. Like it or not, this is coming. Based on my weekend experience I can't wait.
- Chris
"Any sufficiently advanced technology is indistinguishable from magic." - Arthur C Clarke