BLOG: Is AI the estate agency servant or master?

As we all know, Artificial Intelligence (AI), is the Fourth Industrial Revolution, or so we are told. The first gave us steam, the second electricity, the third computers and now the fourth has arrived, apparently determined to make the rest of us redundant.

There is little doubt that AI will transform residential estate agency in many respects. Indeed, in certain parts of the business it may perform a merciful act of euthanasia.

The great digital property portals – Rightmove, Zoopla and OnTheMarket.com – may eventually discover that an algorithm can perform much of what they do at a fraction of the cost. Why employ thousands of humans to shuffle property details around the internet when a computer can do it without taking a lunch break?

A rather imponderable ingredient

But residential estate agency contains one rather imponderable ingredient which is proving remarkably difficult to digitise – people. And people, particularly those buying homes, are not predictably rational. This awkward little fact is one of the foundations upon which the profession has been constructed.

Estate agents may rank somewhere between car salesmen, bankers and politicians in the public popularity stakes, yet paradoxically, 97% of people moving home still use them. So is there something going on here that the algorithms haven’t quite grasped?

Consider the average male buyer. He arrives at an estate agent’s office and announces, with the confidence of a man who has spent 10 minutes discussing property with his wife, that he wants a six-bedroom house in London, a large south-facing garden, excellent schools, parking for two cars, with a budget of £5million.

The agent, being a diligent fellow, finds precisely that house, after all, he is just doing his job. The buyer sees it and hates it, yet three weeks later he buys a five-bedroom Victorian house in a different area, with no garden, a north-facing kitchen, a leaking roof and a price tag of £6.75million.

Why? Because he walked through the front door, saw the drawing room and fell in love. There is no algorithm for this. There is barely a psychiatrist with a diagnosis for it. The client doesn’t necessarily know beforehand, what ‘turns him on’ and only realises it when he sees it.

Sheepdogs attempting to herd cats

This is where the experienced canny agent earns his money. He watches rather than merely listens. The swimming pool, which the client solemnly declared to be a ‘non-negotiable’ pre-requisite, receives four seconds of attention while the kitchen becomes the fascination.

The wife lovingly gazes at the garden while the husband becomes strangely obsessed by the wine cellar and nobody mentions that they have just fallen in love with a house £2million above their budget. However, the agent notices and he follows them through the ‘hills and dales’ of their increasingly contradictory requirements, like a sheepdog attempting to herd cats.

Estate agency…is not simply the transmission of information, it is the interpretation of human behaviour.”

And this is the point, estate agency, particularly at the higher end, is not simply the transmission of information, it is the interpretation of human behaviour. It is an analogue, not binary process.

Negotiation a toughness competition

Negotiation is even worse. Take a buyer who thinks a home is worth £8million and a self-assured seller who thinks it is worth £10million. Both have spent the morning having had their opinions reinforced by their solicitors, spouses, accountants and friends all of whom, naturally, are experts in ‘cocktail party valuations’.

The seller thinks the buyer is ‘taking the mickey’. The buyer thinks the seller is delusional, yet both desperately want the transaction to happen, but neither would dream of allowing the other to discover this secret fact. What follows is essentially a ‘toughness competition’ between two stubborn human beings who would quite happily lose the transaction rather than appear to have blinked first.

However much an intractable problem this may be to conventionally trained estate agents, Glentree’s sales team are well experienced in these medieval arts and their homespun methods of negotiating the ‘impassable’ (sometimes called impossible), come into being. After all, it’s bread and butter to them and they have the ‘T-shirt to show for it’.

The agent’s job is to persuade the seller that accepting £9.25million is not surrender, while simultaneously convincing the buyer that paying £9.25million, is not capitulation and to know when to push, when to retreat, when to say absolutely nothing and when to close the deal and shake hands, somewhere in the middle ground known as ‘No Man’s Land’ (the clue is in the name).

The best negotiators need to possess something that used to be called instinct or perhaps better described as a ‘sixth sense’, but with a ‘tin ear’ to the expression, ‘no, it can’t be done’.

AI will undoubtedly become extraordinarily good at analysing previous negotiations, but…”

AI will undoubtedly become extraordinarily good at analysing previous negotiations, identifying patterns and calculating probabilities and it may even produce a beautifully coloured graph, explaining why the seller should accept £9.25million. Unfortunately, the vendor may have just decided he wants £9.5million because his friendly neighbour told him his house is worth it, over lunch.

The truly accomplished agent is not merely reading the pattern. He is sitting opposite the man. He can see when he is bluffing, when he is frightened, when his wife has changed her mind and, occasionally, when the client himself hasn’t the faintest idea what he wants and needs somebody to guide him.

Clients invariably ask for one thing and buy another. The purchaser who insists upon Belgravia suddenly becomes fascinated by Richmond. The man who says he could never contemplate a flat, buys one because it has a lovely terrace. The woman who insists that a garden is essential, falls hopelessly in love with a fourth-floor apartment because ‘the light is extraordinary’. Try putting all that into a spreadsheet and make sense of it. I dare you!

Negotiation closer to a dating agency

This multi-faceted process is actually closer to a dating agency than a conventional retail transaction. Love, lust, vanity, insecurity, status, fear and emotion are all part of the bubbling caldron.

AI therefore has an enormous role to play but as the agent’s servant, not his replacement. It can make him faster, better informed and more efficient. It can handle administration, analyse markets, identify prospects, write descriptions and sift through oceans of data.

All of that is enormously valuable. But the essence of residential estate agency is not finding the house. It is discovering why this particular person will buy this particular property at this particular moment and then, getting two parties, each convinced that the other is an idiot, to agree on a value at which they can both walk away, believing they have won.

The more sophisticated AI becomes, the more valuable is human touch.”

That is not a binary process it is an analogue one. And here lies the delicious irony, the more sophisticated AI becomes, the more valuable is human touch. Once everybody can produce a perfect brochure in fourteen seconds, write a valuation in three seconds and identify every property matching a buyer’s stated criteria before the kettle has boiled, none of those things will distinguish one agent from another.

The distinction will be whether the agent understands the people, sees the hesitation, notices the sideways glance, knows when “I’ll think about it” means “I’m interested but don’t want you to know it”, and, most importantly, knows when to be quiet.

Fourth Industrial Revolution

AI may well be the fourth Industrial Revolution. It may solve mathematical problems dating back a century and perform computational gymnastics that would leave most of us reaching for our tranquillisers. But there is one problem it may struggle to solve, why does a perfectly sensible buyer walk into the wrong house and suddenly decide that a leaking roof, a north-facing kitchen and an extra £1.75million are irrelevant? Ask the algorithm this and it will probably need a lie-down.

Residential estate agency is, and always has been, an analogue business, and t’was ever thus.

“The heart has its reasons, which reason does not know.” – Blaise Pascal, Pensées