Real Estate Company Is Replacing Agents With Robots

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.

Comments

WilliamShatner Fri, 09/29/2017 - 22:22 Permalink

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.

Farmer Joe in … Normalcy Bias Fri, 09/29/2017 - 23:22 Permalink

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...

In reply to by Normalcy Bias

techpriest Farmer Joe in … Sat, 09/30/2017 - 00:08 Permalink

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.

In reply to by Farmer Joe in …

edotabin ElTerco Sat, 09/30/2017 - 09:24 Permalink

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.

In reply to by ElTerco

edotabin Internet-is-Beast Sat, 09/30/2017 - 09:36 Permalink

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

In reply to by Internet-is-Beast

HRClinton takeaction Sat, 09/30/2017 - 03:53 Permalink

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.

In reply to by takeaction

SixIsNinE chubbar Sun, 10/01/2017 - 01:08 Permalink

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

In reply to by chubbar

HRClinton Spinkter Sat, 09/30/2017 - 14:12 Permalink

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.

In reply to by Spinkter

SixIsNinE HRClinton Sun, 10/01/2017 - 01:29 Permalink

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...

In reply to by HRClinton

Utopia Planitia Ray Donovan Sat, 09/30/2017 - 01:22 Permalink

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.

In reply to by Ray Donovan

Chupacabra-322 max powers Fri, 09/29/2017 - 22:41 Permalink

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.

In reply to by max powers

SixIsNinE FixItAgainTony Sun, 10/01/2017 - 01:18 Permalink

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-allege…

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

In reply to by FixItAgainTony