Hardly a day goes by without another article about how AI will affect our lives but how will it affect those working in estate agency and the wider property sector? In the long term no-one really knows, of course, but in the short and medium term we are already seeing clues about its likely impact.
The first thing it will do is to drive costs down. I recently sold a large lettings and block management business with over 10,000 properties under management. The owners had not invested in prop tech and many of the jobs that could and should have been automated were still done manually.
As a consequence they were spending 82% of their turnover on salary costs leaving just 18% to pay for premises, marketing and everything else. Unsurprisingly they were not making any profit.
Maintenance automation
The sale completed almost a year ago and since then, the transformation of the business has been astonishing. The buyer has installed the latest prop tech and has automated huge parts of the process.
For example, previously most maintenance issues were reported by telephone. The tenant would often have a long chat with the property manager about why they thought the toilet would not flush and what they had done to try to mend it with a piece of string. They would then call one of the contractors, call the tenant again to make an appointment for a quote, call the landlord to discuss the quote, call the contractor to make another appointment to fix the problem then call the tenant again to confirm the time. Once the issue was fixed the invoice was raised manually. In total, a simple repair could take the best part of an hour of staff time at a cost of over £20.
Now, all repairs are reported online. The tenant takes a photograph of the item that needs maintenance and emails it to the property manager. The system selects an appropriate contractor and automatically sends details of the job. The system calibrates a fair price for most routine jobs so there is no need for a quotation. All appointments are booked directly between the contractor and the tenant and the invoice is raised and paid automatically.
The staff salary bill has been reduced to 43% of turnover.”
The amount of time that the property manager spends on most repairs is reduced to zero and the cost savings are huge, the staff salary bill has been reduced to 43% of turnover and, as if by magic, the business is now making a proper profit margin.
The greatest surprise of all is that both the tenants and the landlords are happier with the new system than they were with the old one. Apart from a few teething problems the transition has been a huge success.
Cross-selling opportunities
Maintenance is an obvious area for automation but there are many others. Another buyer has used it very successfully to improve their cross selling rates. They completed on their purchase of a big multidisciplined firm about a year ago. It was generally a well run business but each department was very protective of their clients and a great many cross selling opportunities were being missed.
The solution that they adopted was a bespoke software system that could interrogate their database and alert them to cross selling opportunities. The early results have been very promising.
The penetration rates of mortgage services, conveyancing, rent protection insurance, lettings valuations, sales valuations and survey referrals have all improved markedly. The system has also identified some huge opportunities for their land and new homes department.
These changes are already having a measurable impact on service leads, efficiency and running costs but in the longer term, AI could have a bigger impact still.
Conversation for the conversion
For example a big issue for many business owners these days is getting their staff to use the phone to chase up leads. When I started in estate agency I used to spend many hours on the phone every day chasing up details to get viewings and chasing up viewings to get offers. To this day, it is still a large part of my work and this proactive approach has a huge impact on our conversion ratio of instructions into sales.
However, a lot of younger sales people hate using the phone and prefer to send emails which are less effective.
An automated call is better than no call.”
Until recently, chatbots were written tools, but there are now now very realistic systems that will actually make a voice call. Are they as good as a talented sales person? Not yet. However, an automated call is better than no call at all and I can see further development coming soon in this area.
AI and prop tech is too important to ignore and the companies that use it best will gain a significant commercial advantage. I believe this so strongly that I have just made an investment in an AI marketing agency. It will be fascinating to see how AI and prop tech develop.
