Get ready for the rise of the real estate robots.
Big data and artificial intelligence are starting to be used to sell pricey residential real estate — and that is likely to be bad news for brokers.
At one company that recently began using real estate robots, an 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.
The box is called Rex, and is deployed by REX Real Estate Exchange, an online marketing platform founded by former Goldman Sachs executive Jack Ryan.
In its current generation, Rex can’t do it all, so 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.
Rex does not use the Multiple Listing Service, or MLS, and charges just a 2 percent fee instead of the traditional 6 percent. It is already in California and launching in Nassau County on Aug. 1.
In addition to offering up a lower-cost alternative to brokers, Rex Real Estate Exchange employs Big Brother-like analytics to find prospective buyers — and reel them in once they are on the hook.
For example, Rex, working with its own analytics along with IBM’s Watson, Amazon’s Alexa and Google AI, will follow prospective buyers as they continue their shopping on their home computers — serving up focused ads as they surf the Web.
Rex gathers big data online on potential customers beyond their search histories to “target those people with ads so effectively they will click on them because we know who they are,” says Ari Sternberg, Rex’s head of digital marketing.
Once Rex has your IP address, it can see what kind of house you own and, through your searches and purchases, what your life is built around.
“A homeowner may see the house online and ask their broker to show it to them. He may say he can’t or that it’s sold,” Ryan observes. “But then, because we have already captured that IP address, we will invite his client to our open house.”
The AI robot may very well appeal to millennials as they grow to house-buying age.
Roughly 8 percent 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 Real Estate Exchange employs Big Brother-like analytics to find prospective buyers — and reel them in once they are on the hook.
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.
Most homeowners aren’t happy about giving 6 percent to the brokers and, by using his services, they save $25,000 on average, Ryan says.
Meanwhile, fee-hating sellers have already spawned several online brokerages that charge less. For instance, Redfin charges 1.5 percent to list a home, but doesn’t cut out the competition that may bring a buyer, putting the total commission at 4.5 percent.
ForSaleByOwner has packages starting with a free, 30-day listing — and brags it sells a home every 38 minutes. Other online services may charge 1 percent to list.
At Zillow, home buyers in Las Vegas and Orlando are now allowed to make “instant offers” without a broker.