See ya later Foxtons - algorithms are the new estate agents
by Jackie A
3 months ago
It's all about flipping
A little background info needed here - over the pond, investors are still pouring money into buying US homes, despite rising home prices. These data-driven tech companies buy your home from you, give it a paint job, toss out the wine-stained carpets and pop it back on the market with a nice little profit - or rent it out to single families. Not happening in the UK yet because frankly zero is happening on any front here (yes you, Brexit). But it's coming....
Here's an example of how the 'iBuyer' property market works
Last month in Phoenix, Arizona (on the bucket list), a beige, three-bedroom house (not on the bucket list) sold for $240,000. The seller Opendoor Labs Inc., a real estate tech company that’s become a unicorn in just three years and which is now in 23 US cities and planning to launch in 27 more by 2020, had paid $215,000 for the house in January. Then it pimped it up and put it back on the market. Guess what? A clever machine told the company both what to initially buy it for and what to sell it for.
No humans are involved in showing buyers these properties
Estate agents in terrible ties or pencil skirts fumbling with keys and trying to remember where the nearest school is? Ova. The algorithm's already done that. Prospective buyers of Opendoor homes turn up to view the property alone and simply download an app to unlock the door - known as a 'self-tour’. They can then wander around the empty (nothing to steal), newly painted home at leisure. Anyway, who really needs someone to say “...and here’s the bathroom!” Estate agents RIP.
It’s super easy for sellers too
Want to move on in life? All sellers need to do is fill out an online form and upload some pics. No having to hide all the dirty laundry or have would-be buyers trudging through your living room at 9am on a Saturday morning. There's no waiting for buyers to get a mortgage either - these tech property people have access to loads of cash. And no need to fix that dripping tap or perform time-consuming selling “hacks” - the decorators are waiting to move in as soon as you get that offer. (In truth a real human does review the property to make sure you're not selling a total dud). The cost? A hefty 6-11% in fees - the price of convenience in an age when moving homes is one of life’s great stresses.
The algorithms don’t just favour new, cheap, homogenised homes
The iBuyer market started out using mostly family homes on suburban plots. The average sold for $250k but the market is now moving to big cities like New York and LA. Ariel Tavivian, founder of New York-based Compit, an automated valuation platform, is preparing to launch the iBuyer concept in the expensive and more nuanced Big Apple, and will rely on algorithms to navigate the complex property types. Rob Hahn, a real estate analyst at 7DS Associates, believes that by 2024, iBuyers may be involved in almost 60% of transactions in the US.
“It’s the dawn of e-commerce for real estate”
So says Rich Barton, Chief Executive of the massive property listing firm Zillow. Zillow, Offerpad ('Hi. We want to buy your home') and Opendoor all deploy house-hunting algorithms that can spot a sunny garden in a great school area quicker than you can say MBA (master bedroom with bath). But their ambitions don't stop there. Zillow plans to offer a single digital platform where you can sell a home, shop for a new one and get a loan to buy it, all from your phone. Jeez. “Honey, I’ve ordered the Uber and sold the house”.
According to the endlessly fascinating websitewillrobotstakemyjob.com, estate agents score an 86% chance of having their jobs nicked by AI or robots. For nuclear power reactor operators its worse - 95% (although anyone who has watched the brilliant Chernobyl wouldn’t work or buy a home anywhere near one).
Journalists? 11%. Just saying.