COVID-19 is a catalyst for a sea change in future real estate prospects and careers. Proptech and especially blockchain, smart contracts, smart locks and cryptocurrencies promise secure and trusted “peer-to-peer” transactions, especially with respect to the multi-trillion dollar real estate industry. These companies and their proudly disruptive technological inventiveness, marketing prowess and deep pockets are collectively going to decimate the grossly over-saturated Canadian Realtor community.
COVID-19 is forcing everything to an online presence and organized real estate institutions have done little to prepare their members for the rapid technological and fundamental societal changes, particularly social distancing. Do a quick search on the internet for “technology adoption” and compare how long it took for 25 per cent of the world’s population to embrace 20th-century convenience inventions such as typewriters, light bulbs, telephones, computers and flight, and then compare to how long it took to adopt 21st-century inventions like optical media, internet, mobile phones, sub-sonic bullet trains and telecom.
Many brokerages of all sizes will fail. Boutique and specialty brokerages may find new opportunities if they can figure out what their role is in this new paradigm. Realtors today, even with their skill in social networking and marketing, will evolve to become local market and property data collection and blockchain “input” specialists, or possibly real estate lawyers will supplant or merge with them.
If so, Realtors will devolve to a greatly reduced and limited local area customer service and support role, probably as agents or more likely employees of worldwide listing service companies. The high commissions will become a thing of the past for most Realtors as the requirement for real estate legal knowledge and capability, and the process of matching buyers and sellers are taken out of the hands of Realtors.
Crowd funding will play an important role in the new order. Developers and sellers will be able to attract 1,000 investors who each have $1,000 or $10,000 to invest, instead of the small community of connected people today who currently try to find a few well-heeled investors.
New forms of housing ownership and renting will overwhelm an already beleaguered legal system, especially the entirely dysfunctional Landlord and Tenant Board (LTB) in Ontario. Realtors have already experienced all their hard work brokering a sale or purchase torpedoed by short-term legislation that prevents tenant evictions, even for those who haven’t paid rent for months. This is just one of dozens of severe backlashes that will further cripple the housing industry, which was already suffering from its own pandemic crisis – shortage of housing.
Most of the current traditional Canadian organized real estate institutions will collapse and regulatory agencies will find that their raison d’etre turned 180 degrees when they weren’t looking. How can any provincial regulator impose their legislative will on a peer-to-peer company based in the U.S.A., U.K. or Germany? These regulators for the most part presented themselves in the past as protectors of consumers … against whom? Predatory Realtors? In peer-to-peer transactions, against who will the regulators be protecting consumers? Other consumers? Billion-dollar listing companies?
Organizations like CREA, provincial associations and real estate boards all have their insatiable hands in every Realtor’s pockets. Some of these organizations are floundering with no viable mission or purpose. Management of some of the very largest real estate boards has demonstrated a profound lack of awareness of the 60-foot tsunami heading their way. Organized real estate and the MLS don’t stand a chance against the trillions of dollars, euros, pounds and yen that global corporations are spending on R&D to bring buyers and sellers together directly without the need for “trusted intermediaries” like Realtors, lenders, traditional lawyers, mortgage agents, insurance agents and even land registry offices. Timeframe? Less than 10 years; possibly as soon as five.
Oh, you think “relationships” are the mainstay of Realtor success, and technology can never replace that? Why do kids sit next to each other and text rather than talk? How would you define that relationship, and will that continue through to adulthood when those same kids are ready to own their own home?
Social distancing will dramatically impact conventional relationships of all kinds. Peer-to-peer connectivity orchestrated by a trusted entity (blockchain, not companies or people) will empower strangers, each with their own agendas, to connect directly and resolve differences without the need of a mediator, traditionally a Realtor. You think not? Are you willing to bet your career on that? You might want to take some time to do a hard reality check. Gatekeepers of the MLS are living on borrowed time.
Rebuke me if you wish. I’d love to hear why you think I’m wrong. Write your comments below and I’ll try to reply but belay the traditional character assassination that some Realtors seem to fall back on when they emotionally disagree but don’t have any meaningful information or perhaps the mental acuity to defend their counter-position.