For an industry ripe for technological disruption, real estate has experienced more of a gentle prodding. While the majority of home buyers kick off their search online, often on tablets and phones, actually closing the deal still requires sending a black-and-white fax. Drone captured videos offer a bird’s eye view of a property and virtual reality tours are in the works, but assessing a home’s value is still a painfully manual process absent of algorithms.
So what’s been disrupting the industry’s, well, disruption? In Canada, a lack of access to meaningful data and information has put a glass ceiling on innovation.
While minor developments, such as widespread use of e-signatures, are inevitable rollouts, massive changes won’t occur until shifts are made to the industry’s core: When restrictions are loosened and companies are granted greater freedom to innovate.
Brokerages have made some progress on the technology front, developing CRM systems and providing more data points to buyers. But we want to do more, especially with sold data, which until now was not accessible, online to the public.
That’s why we’ve been heavily involved in the Competition Bureau’s hearings and rejoiced at the fact the Toronto Real Estate Board is now required to open access to sold data.
Here’s a look into why sold data matters and what it means for buyers, sellers and the industry at large.
Currently, house hunters can browse properties for sale online with almost complete freedom. But that’s where it stops.
For those who want to know even basic information on when a property was sold, how much it fetched on the market and how long it took to close – they’re in the dark and reliant on a real estate agent.
So why is open access to sold data so critical? For one, buyers will be more informed of what homes are actually selling for versus their asking prices (which are often over-inflated or intentionally low to incite bidding wars).
Sellers will also be able to independently access vital numbers that provide insight into their home’s value – most Canadian’s largest asset. Above all, open data pushes for greater accountability – diminishing the power of those who thrive in an environment where consumers are less informed as well as casual players who dip their toes part-time and are not vested in the betterment of the industry.
The new rules also set a precedent that could open the gate to other changes, such as more robust tracking on foreign investors.
Rather than chain people to a Realtor, we believe making data available at no obligation will be a win for the industry as whole, rewarding those who place service above all else.
Tools and Predictive Models
The first change most brokerages will adopt given the new regulations is obvious: Email alerts that inform people when a home in their neighborhood is purchased, and how much it was purchased for.
In the past, sending mass emails that dispensed sold prices of homes were against industry rules.
With unbridled access to sold prices comes the opportunity to create massive data models that spot the top neighburhoods to buy in, as well as predictive AI systems that pin-point the hot markets of the future. All at house hunters’ fingertips, not just industry insiders and Realtors.
Imagine: interactive tools that show how everything from school zones, walkability, nearby businesses, seasonality and transport impact a property’s value – based on hard numbers rather than rough guestimates. Tech-savvy brokerages could develop clever bots that answer people’s questions on the spot about sold prices, inventory and more.
For individual homes, buyers would be able to track how much a property has sold for over its lifetime. Estimates on what a home’s purchase price will be versus its asking price could be provided too, and for investors, calculations of expected rental cash flow would be an indispensable asset.
Even models that predict how much a home’s resale value will increase in the next 2, 5 and 10 years could be developed.
These tools, made available to everyone, would allow house hunters to make smarter data-driven decisions tailored to their personal wants, needs and budgets.
Will agents become obsolete?
So far, our emphasis has been data, but that’s just one side of buying a home. Numbers are important, but the decision to buy or sell a home doesn’t play out like a massive math problem – it’s emotional and personal.
That’s where a real estate agent comes in.
An agent’s value goes beyond home evaluations and parsing through sold data. Realtors are there as your consultant, providing advice on how to keep your emotions in check, providing indispensable advice not captured in data trends, and above all, offering their experience.
While most people buy or sell five homes in their lifetime, experienced agents have hundreds of deals under their belt. That plays a huge part in their ability to lead negotiations, getting the best price and marketing a property to prospective buyers.
One only needs to look at the U.S. as an example where access to historical data caused no dent in the number of people who use Realtors. Agents pushing the envelope on service will stay on top; real advice in the offline world will always matter in real estate.
Rokham Fard is a cofounder of TheRedPin.