Artificial Intelligence (AI) is hailed as the Fourth Industrial Revolution, following steam, electricity, and computers. There is little doubt that AI will transform residential estate agency in many respects, and 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?
The imponderable ingredient
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. Residential 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.
Consider the average male buyer. He arrives at an estate agent's office and announces, with the confidence of a man who has spent ten 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 and a budget of £5 million. The agent finds precisely that house. 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 £6.75 million. Why? Because he walked through the front door, saw the drawing room and fell in love. There is no algorithm for this.
Interpreting human behaviour
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 whilst the kitchen/breakfast room becomes the fascination. The wife lovingly gazes at the garden while the husband becomes strangely obsessed by the wine cellar. The agent notices and follows them through the 'hills and dales' of their increasingly contradictory requirements, like a sheepdog attempting to herd cats. 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 as a toughness competition
Negotiation is even worse. Take a buyer who thinks a home is worth £8 million and a self-assured seller who thinks it is worth £10 million. Both have had their opinions reinforced by solicitors, spouses, accountants and friends. 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 'bloody-minded' human beings who would quite happily lose the transaction rather than appear to have blinked first.
The agent's job is to persuade the seller that accepting £9.25 million is not surrender, while simultaneously convincing the buyer that paying £9.25 million 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 best negotiators need to possess something which used to be called instinct or perhaps better described as a 'sixth sense'.
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 cauldron. 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 the 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 shut up.
AI may well be the fourth Industrial Revolution. It may solve mathematical problems dating back a century and perform computational gymnastics. 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 £1.75 million are irrelevant? Residential estate agency is, and always has been, an analogue business. As Blaise Pascal wrote in Pensées: 'The heart has its reasons, which reason does not know.'
