Apart from being a speaker at Inman Connect NYC 2024 — an event at New York Hilton Midtown in New York City January 23 – 25 where the residential real estate community gathered to learn, share, and network — I also attended a number of the speaker sessions in the audience.
There were three top takeaways.
Everyone is talking about Artificial Intelligence (AI) and here is why:
Artificial Intelligence is expected to revolutionize how we work and live and it is likely to do it very quickly — and that could include how you buy and sell a home. The thought that the drudgery of your work can be delegated to a bot for little or no money seems like a dream come true.
Agents are already using AI to create long property descriptions with plenty of exciting adjectives making even the humblest abode sound like a trophy property.
It is expected to boost profitability. Scalable has been a buzz word for a few years now and in the personalized, labor-intensive business of being a top NYC real estate agent, plenty of us have scanned the internet to learn how we can do more with less.
At The Boland Team we have discovered that AI may give us some great recommendations for how to run our business better or how to write a better blog piece but at the end of the day technology cannot replace the value of human interaction and advisory services.
A seller or buyer is transacting in each case with a unique property. Even in a new development, where you may argue there are a number of apartments with the same floor plan all being sold at the same time, it is worth noting that each apartment will have its own unique features. Apart from different views on different floors, due to normal construction processes there will always be special features to each apartment with some having higher ceilings or a different amount of storage space. While these differences are usually slight, they make a difference to many buyers.
There are plenty of potential applications which do not seem realistic based on the demonstrations and talks I attended. One owner of an AI company claimed that by making the transaction faster, people would buy and sell residential properties more frequently. Dismissing the time and costs along with the need to purchase property may seem plausible to someone focused on tech but the reality is buying a home and especially for a first-time home buyer, is a huge expense.
Despite good intentions and planning, other big tech ideas have failed because they did not appreciate that on the ground local experts are still needed to help people buy and sell homes. A prime example is Buying platforms which failed spectacularly. There are likely to be plenty of AI real estate offerings which are more hype than help. The winners will endure.
In 2024 big tech will fight it out for the consumers digital attention and data.
This is like the battle of the Olympians, led by Zeus, and the Titans, led by Cronus, for control of the universe. When I spoke with Andrew Florance, the CEO of CoStar Group, he told me they have big plans for Homes.com and CitySnap.com including an ad campaign with Dan Levy. Why Dan Levy? If you have not seen the SNL skit about Zillow property porn, you owe it to yourself to watch it now. Of course, Zillow is the largest competitor of Homes.com so co-opting the celebrity who gave Zillow so much free press foreshadows the scale of the battle ahead.
Here is why it should matter to you. If you have ever looked for a property on a site like StreetEasy — which is owned by Zillow — you may have encountered difficulty contacting the agent representing the seller of the property you wish to see. Instead, you were directed to another agent who either paid to be on that page or has agreed to pay Zillow a portion of their commission when you transact, and they represent you as a buyer’s agent.
The consumer’s frustration stems not only from being lured into a conversation and potential professional relationship with someone who is not of your choosing but also being put into contact with someone who cannot answer your questions. For example, I know of one buyer who was looking for a Harlem condo but when they tried reaching the listing agent for an appointment, they were put in touch with an agent who lived far outside the city and missed the appointment. The buyer also felt the agent did not have enough local knowledge to add value to their search process.
CoStar Group on the other hand, who owns CitySnap, does not employ this process. They currently have a policy of not interfering. We shall see how this plays out. In either case looking at CitySnap as an alternative to StreetEasy for your search may be a worthwhile use of your time. It is worth noting that this is the only property site that works directly in cooperation with the Real Estate Board of New York.
Brokers and agents alike are focused on the potential outcomes of the class action suit filed in Kansas City and the spate of copycat suits which followed in its wake.
What it means for sellers and buyers is not clear yet but there are some pragmatic considerations for anyone transacting in NYC. Sellers now have a choice if they pay the buyer’s agent commission.
In the past the sellers always paid the commission for both sides and the listing agents agreed to split the commission with the agent bringing the buyer. Over 80% of all transactions in NYC are done with an agent representing the seller and a separate agent representing the buyer. The high percentage can be attributed to how complicated the buying process is in
In NYC, the amount the buyer’s agent would be paid is clearly stated in the listing systems for transparency. Now transparency will be brought to a new level as buyers will also know this amount in advance. While bringing transparency to the consumer is to be applauded, it will also cause more complications. For example, you may be looking to purchase an Upper West Side condo or a condo in Murray Hill.
In either case regardless of your price point you will have a fair number of choices. Each property will list how much the buyer’s agent is being paid. If you have chosen to work with an agent, you may end up having to pay that agent if the seller has not chosen to do so.
In NYC, the minimum amount of a down payment can be well beyond 10% and the closing costs are anywhere from 5-7% depending on the sale price of the property and the type of property you are purchasing. If you decide to purchase a co-op instead of a condo or a townhouse, the board will evaluate your purchase application based on your financial viability.
Most boards require you to show you have 12 to 24 months of housing payments in the bank after you close. The reality is the amount of cash on hand needed to purchase a New York City condo, coop or townhouse is likely to be far more than what you would need in the rest of the country.
Meanwhile the seller is not obligated to spend money on the sale of their property until the closing apart from a few small fees associated with the managing agent. It is far easier from a financial standpoint for the seller to pay the buyer’s commission.
It is clear that big changes are ahead as technology intersects more with our daily life. If it causes more confusion than clarity, please reach out. We are always happy to answer your questions.