The real estate industry has been facing non-stop threats of disruption over the past 10 years from large corporations, tech companies and even the Department of Justice. Zillow was the most recent company that tried and failed to change the way consumers bought and sold homes, losing $530 Million in the process.
Rocket Mortgage is trying to be both the agent and lender for consumers, offering up to $10,000 in credits during a home purchase. With housing making up 17% of the annual GDP, it’s no wonder that the industry has a target on it’s back. So far, these and other disruptive companies seem to create more news than real change within the industry.
The latest evolution of Artificial Intelligence may finally bring about meaningful disruption to an industry that remains fragmented. Removing just one step of the real estate transaction process could cause a major shift within the industry, and start a new path towards buying and selling homes for consumers.
So I decided to do a deep dive on if (or when) each role of a real estate transaction is expected to be overtaken by AI, in an effort to future-proof my business and find out how well AI can predict the future, beginning with the role of a “Transaction Coordinator”.
To start, I simply asked ChatGPT to tell me when AI plans to eliminate the need for a TC in a real estate transaction. The answer I received was rather detailed and nearly an essay in itself. In true ChatGPT fashion, I asked for a 3 sentence summary to share below.
"The potential for AI to replace transaction coordinators in real estate is a topic of ongoing discussion, but complete replacement is unlikely in the near future. Real estate transactions involve complex negotiations and human judgment, which AI currently cannot fully replicate. While AI can automate certain tasks, the evolution towards AI replacing transaction coordinators will be gradual as technology advances and industry dynamics evolve."
I pressed for more specifics about an actual timeline, and ChatGPT had this to say:
"Considering the complexity of real estate transactions and the need for human judgment, empathy, and negotiation skills, it's reasonable to expect that the complete replacement of transaction coordinators by AI will take considerable time. It could be several years or even decades before AI reaches a level of sophistication and trustworthiness to handle the full range of responsibilities involved in the role.
It's also worth noting that the real estate industry tends to be conservative in adopting new technologies, primarily due to the significant financial and legal implications involved in transactions. As a result, the adoption of AI in real estate may proceed more gradually compared to other sectors."
So in only 3 years, we could see a big change in how real estate transactions are managed. But don’t go changing your profession just yet. AI may be “capable” of performing transaction coordinator duties in a few years, but it might take decades for actual adoption by the industry. Let me expand on some of the issues mentioned by ChatGPT to fully explain why replacing a TC is a much bigger challenge than it seems.
Trustworthiness
If AI is anything like an online platform, it may never be trustworthy. I remember when Facebook first launched and made it’s way into colleges. It was a very trustworthy application and hadn’t yet been corrupted by fake profiles, scams and filled with “fake news”.
Who is to say that AI won’t follow a similar path, capable of being manipulated by those behind the scenes. Trust is extremely important in a real estate transaction as one mistake could potentially ruin a deal and cost an agent a commission. Without trust, an AI will never replace a human TC.
Realtors are Conservative in Adopting New Strategies
The reason that tech is slow to be embraced in real estate is a result of two things:
- The median age of a real estate agent is 57 (the median age of an American is 38).
- Realtors are mostly independent contractors who cannot be required to use software, making technology adoption very slow.
Real estate is designed for older people, not young folks. Income is inconsistent. There are no benefits. There is no such thing as work/life balance. Age combined with the inability to force the adoption of technology, including AI, will continue to keep Realtors lagging behind other industries.
Financial & Legal Implications for Transactions
“The biggest transaction of your life” is a phrase commonly used in real estate to showcase the importance of buying or selling a home. Because the stakes are so high when it comes to housing, there are a lot of consumer protections in place. These same protections will make it more difficult for AI to simply take over.
For example, electronic signatures went mainstream around 20 years ago. Just this year, local governments in Ohio are finally permitting electric signatures and online notarization for closing documents. Just because the technology is available, doesn’t mean it is acceptable.
The role of a transaction coordinator is here to stay, as long as the coordinator continues to bring reasoning, empathy and understanding into the transaction. Even as AI becomes more reliable, trustworthiness may never be fully earned by a machine.
Eventually AI will play a vital role in real estate. But older agents, increasing home values and more legal complexity will slow the pace of AI, compared to other industries.This should allow existing transaction coordinators plenty of time to pivot and adapt their businesses for future success.
Looking for a way for technology to help you manage your real estate team and real estate action plans now? Sign up for Nekst where you can create custom real estate checklists and real estate client portals to keep you, your real estate transaction coordinator and all of your other real estate transaction parties on the same page!
