Middleman economy thrives in property market

Some critics of the Internet and other disruptive technologies warn that technology will replace the middleman.

Artificial intelligence will replace lawyers, bankers, stockbrokers, real estate agents, and even doctors. A computer will argue before the High Court, negotiate the sale of a company, advise clients on a property transaction, and perform open heart surgery.

Preposterous? Absolutely. Technology fear-mongering usually comes from incumbents who have chosen to resist new technology, for business reasons, instead of embracing it.

For those professionals who embrace new technology, the middleman economy is booming and they have never added so much value to their clients.

In marketing parlance, we call these people early adopters. In his seminal book Crossing the Chasm, Geoffrey A Moore describes early adopters as those businessmen and professionals who want to be among the first to incorporate new technologies with the objective of improving their products and services. They see technology as an advantage, not a threat, to their businesses.

Nowhere is this more evident than in Singapore’s property market.

Early adopters in real estate are using Big Data and advanced software applications to advise clients on the entire property transaction from pricing to marketing; to home search; to valuations; to pre-qualified financing; to offers and negotiations; to insurance; to mortgage loans; to conveyance; to closing; to property management; to refinancing; and eventually to upgrading.

Using digital technology, these real estate agents put their clients in the driver’s seat. Their clients get more choice, faster processing, customised solutions and cost-savings. At the same time, the financial system achieves transparency and stability.

No longer is property being dealt in the shadows of the market. Real-time pricing is almost instantaneous and ubiquitous. Now in Singapore, agents can get full valuations within 24 hours of field inspections. These valuations are often better documented and less expensive than those done without technology.

These advancements in pricing and valuations are good for market governance and reduce risk. They give agents and their clients transparent, neutral and fact-based pricing information that can be trusted and used to find the right prices for the right homes. This information is documented to help mitigate the risk of going to court over misleading pricing or collusion on valuations.

Meanwhile, pre-qualified financing also improves market governance and reduces risk. Buyers know exactly how much they can finance before making their offers. It means they are less likely to risk losing their down payments. These digitised pre-qualified loans, mortgages and valuations mean that mortgage underwriters and the regulators know exactly what risk the financial system is assuming as new loans come in.

Furthermore, banks and regulators can use computer-generated valuations to mark-to-market mortgage portfolios in real-time for early-detection of threats to Singapore’s financial system.

Isn’t technology combined with professional middlemen great? They deliver great value: Transparency, expert advice, good market governance and more value for money. This is a win-win-win-win for consumers, middlemen professionals, financial institutions and regulators.

Recently, Mr Lawrence Wong, Minister for National Development Minister for National Development Minister & Second Minister for Finance, spoke to PropNex and ERA, the two largest estate agencies by property agent count in Singapore. He advised the agents “to focus on service and new ways to add value”.

Singapore’s top agents are doing exactly that. Not only are they delivering sound, reliable and professional advice, they are helping their clients secure the right home at the right price; manage risk and return by using transparent financial products like mortgages; and protect their homes through proper property and financial management.

Early-adopter middlemen are embracing technology in many professional services. The next time you engage a professional, ask him or her how he or she uses technology to deliver excellent service and value to you.

ABOUT THE AUTHOR: Sam Baker is Co-Founder and CEO of SRX Property, SRX.com.sg.