real estate automation

Will Real Estate Technology Automate You Out of a Job?

Technology is fundamentally altering every aspect of real estate. While many of its impacts are positive, increasing accuracy and speed for workers across the industry, some are left asking the question: will the wave of disruption overwhelm their firm and even their job?

“I think we can all agree that the current approach to real estate is broken,” said Marc Rutzen, co-founder and CEO of Enodo, a software firm that utilizes machine learning to underwrite multifamily properties, at a recent Propmodo Live event.

While data sources like CoStar or Axiometrics have made the underwriting process much easier to complete, these platforms haven’t truly disrupted the industry – they still require a human to perform calculations in a spreadsheet. Future advances, what Rutzen describes as the second phase of disruption, will truly affect the real estate field by leveraging computerized processes that are more accurate and quicker than even the best analyst could hope to be.

“What this entails is disrupting the existing workflow. Not just enhancing what you do but changing the way you do it all together,” Rutzen said.

An example of phase two technology would be a platform, like Enodo, that automates the underwriting process entirely. Such a system would render traditional tasks, like selecting comps, a thing of the past. But with greater efficiency will come transitions in the roles that real estate professionals are tasked with.

“So the jobs that [increasing technological advances are] disrupting right now are for one, analysts and advisors. People that look at data and tell you what that data means for your investment,” Rutzen said.

It isn’t just number crunchers who may feel a pinch, either. Other professionals, with vastly different roles in the industry, may see their positions become threatened by high-efficiency, low-failure machines and automated processes as well.

“Now, any tech conversation would not be a tech conversation if it did not mention blockchain [a digital list of records that can be viewed but not altered] to some extent…it is my prediction that title insurance will be the first to be fully disrupted and replaced by blockchain. I think it just makes sense – blockchain is designed to chart the chain of custody of an asset over time. It does it without fail. Title insurance is because you can’t do that with human means,” Rutzen said.

Other real estate roles that may face disruption, in Rutzen’s vision of the future, are appraisers and brokers. Rutzen expects both of these types of professionals to face disruption as artificial intelligence-powered building analyses become more efficient and transparent, cutting out the middleman in an increasingly liquid market.

The next step in the evolution of real estate technological disruption, and the level still to come,  is what Rutzen refers to as phase three – a playing field in which real estate assets can be traded with the fluidity of the stock market.

“It’s going to happen in commercial real estate. Especially with crowdfunding, especially with  the ability to own fractional shares of buildings and the ability to track markets, the ability to understand value instantly, why would you want to go through a broker – or go through anyone, for that matter – to transact or invest in a property,” Rutzen said.  “And you will not need to. I predict 10-15 years from now, this will be the primary method that most smaller investors are allocating their capital toward real estate.”

With related developments, such as the rise of index funds, which may one day allow investors to target specific neighborhoods or areas based on certain criteria, and algorithmic trading platforms that can outpace even the best analysts, the future of the real estate field may just be unrecognizable in coming years.

“So the jobs disrupted by this last wave – it’s every job. The way we do things will be fundamentally different ten years from now, fifteen years from now, than it is today. But that doesn’t have to be a bad thing,” Rutzen said.

Several critical steps – starting today – could spell the difference between firms and professionals that ride the wave of disruption upwards, and those that get swallowed by it. First, a level of statistical ability is already more important than ever before. Second, becoming an early adopter of disruptive technologies will give those more agile firms wider margins than their competitors. And third, emphasizing the creativity required to make deals and transactions truly work will remain a critical – and human – part of the equation.

Despite the alarm that Rutzen’s comments are sure to raise, especially amongst analysts, title professionals, appraisers and brokers, he expects the real estate market to see a number of unprecedented benefits arise from all this disruption. Rutzen foresees the industry will experience standardization and greater liquidity in the future, with automated processes and universal data sources shortening transaction times to a matter of days.

“For the record, I think there will always be a human component,” Rutzen said. “It will just be a higher-order component…how do I know how to talk to this guy and this guy and make them come to terms on this? How can a machine do that? It just can’t…I just think it’ll be more enjoyable to do it in the future when you can focus on the value that really matters.”

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Propmodo is a global multimedia effort to explore how emerging technologies affect our built environment.

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