Southern California's real estate market is as cold as the snow currently adorning the mountain tops. Interest rates are rising. Inventory is decreasing. And there are very few deals.
In a depressed market, top agents (those with experience, connections, and large numbers of clients) typically maintain a modest but steady stream of business. The ones who starve to death are the agents at the bottom, those who are new to the industry and have only made a few sales.
These agents are becoming more and more eager to generate leads and are trying different ways to find leads. Some companies are outsourcing work overseas, while others are turning to AI and automation as a last resort in their search for a seller.
In a record pandemic market, there were so many deals that most determined real estate agents could make a living. In 2021, more than 43,000 single-family homes were sold in Los Angeles County, and in 2022, more than 42,000 homes were sold, according to the Multiple Listing Service.
During that time, tens of thousands of people participated in the National Assembly. National Association of Real Estate Agents (NAR) members have grown by 200,000 since 2020 and will reach a record 1.6 million in 2022. Real estate wasn't just a steady job. It was a way to jump into a higher tax bracket.
However, in 2023, mortgage rates skyrocketed and the market began to freeze. Only 11,539 single-family homes were sold that year, and sales have continued at a similar pace so far this year.
Some agents simply call it quits. In California alone, NAR lost 9,723 members from December 2023 to January 2024, a decline of 4.75%. But even after the decline, California still has the second-most active real estate agents in the nation at 194,964, all vying for a very small group of sellers.
At the peak of the pandemic market, 29-year-old Tyler Andrews sold Inland Empire real estate, hoping to use his outgoing personality to sell homes as Los Angeles residents flocked to the area during the pandemic. I tried. He got his license and helped a few of his friends find homes, but ultimately quit in 2023 because he wasn't getting paid.
He's one of many agents rushing into real estate to get a taste of California's latest gold rush.
From the outside looking in, listing a home on a hot market seems like the easiest get-rich-quick scheme. The house sells in a few days, and the 3% commission on a $1 million sale is $30,000. If you represent both sides of the transaction, that's $60,000.
However, the real estate industry is not an easy industry to enter. Although you typically only get paid if the sale closes, most homeowners in any market still prefer to work with an experienced agent.
In hot markets, sellers look for agents. In a cold market, agents must find sellers. The situation is boiling over in many areas, including Leimert Park, where residents are being bombarded with agents asking if they are interested in putting their homes on the market.
Cold calling can be time consuming and stressful considering the anger of the person receiving the call. So some agents are leaving that thankless work to machines.
A few companies, such as Slybroadcast and Salesmsg, offer “ringless voicemail,” a robocall-adjacent tool. This allows agents to send prerecorded messages directly to your voicemail box without your phone ringing. Often the message is intended to fool you into thinking you missed the call, such as “Sorry, I missed you!” Please call me again if you have a chance. ”
In 2022, the Federal Communications Commission declared this trend a type of robocall, saying it is illegal if the caller does not have the recipient's prior consent. But that hasn't stopped agents from sending such voicemails to potential customers.
“I don't have time to spend all day on the phone,” said one real estate agent, who requested anonymity because using the technology can be taboo. “You have to find customers somehow. You have to be creative in a market like this.”
The idea is as follows. An agent can spend eight hours a day calling every house in the neighborhood and asking if they want to sell their homes. Or he can send 500 silent voicemails at once. Then, those who go out of their way to call back are more likely to need the services of a real estate agent.
Andrews said he had heard of other agents experimenting with such technology as the market cooled in 2023, but he didn't try it himself because it didn't seem authentic. . It would also have been an extra expense that he didn't have the budget for.
Mary Thompson has owned her home in Beverly Crest for over 10 years. Last year, she received multiple silent voicemails asking if she wanted to list or buy her home.
“I was fooled by the initial story. I called back and ended up spending 15 minutes on the phone with an agent asking about my plans as a homeowner,” she said. “You don't have to call me back anymore.”
According to the YouMail Robocall Index, U.S. consumers will receive more than 55 billion robocalls in 2023, an increase of 5 billion over the previous year. Approximately 15 billion were telemarketing calls and 8 billion were scams. California consistently ranks as the state with the second most robocalls after Texas.
In response to thousands of complaints about nuisance calls, the FCC established a robocall response team to combat the influx of robocalls, many of which targeted homeowners.
Last year, the commission blocked a robocall campaign by MV Realty, a real estate brokerage that sent misleading robocalls about mortgages. A company whistleblower told a Seattle news outlet that employees were taught how to use software called PhoneBurner and required to make at least 450 calls per day.
Other companies, such as VoiceSpin, provide agents with access to autodialing software. This software literally automatically dials numbers from a list. VoiceSpin uses AI and machine learning to help agents drop voicemails directly to your inbox, record calls, and use your area code so you're more likely to answer a call. Become.
In that case, you will be talking to an agent, and in some cases, you may find yourself talking to a robot without even realizing it.
Technology company Ylopo recently uploaded a video showing its AI assistant talking to prospective homebuyers who are planning to move to the coasts of North or South Carolina. The company said this is “one of thousands of AI calls already being made to Ylopo customers every day.”
Cinc, a real estate lead generation platform, provides agents with an AI-powered digital assistant that intentionally misspells words and uses emojis to make interactions with potential leads seem more human. Masu.
NAR itself offers an AI scriptwriter powered by ChatGPT that analyzes housing trends to help agents appear more knowledgeable about the market. Agents can also choose a tone that is professional, engaging, or conversational.
Earlier this month, the FCC continued its fight against robocalls by outlawing robocalls that use AI-generated voices. Because this ruling is so new, it is unclear how companies using this technology will be affected.
In a market this slow, it can be difficult to even find a number to call. Technology becomes useless if it is wasted on the wrong potential customers. So many agents are looking for leads.
Fiverr, an online marketplace for freelance services, has seen the emergence of a large number of listings that provide agents with potential leads for potential buyers or sellers. One of the most prolific is Abhishek Rai, who has written over 3,000 five-star reviews offering clues about aspiring sellers, vacant properties and absentee owners since joining the platform in April 2020. I have collected more than one item.
Rai, who is based in India and goes by the handle @virtualguy2020, typically charges $10 for 100 leads, $50 for 650 leads, and $100 for 1,500 leads.
“Real estate agents have tight schedules, but outsourcing lead generation allows them to focus on other aspects of their business, such as meeting with clients, showing properties, and negotiating,” he says. I did.
Rai has customers all over the United States, many in Southern California. He added that lead generation is a specialized skill and not all agents have the expertise to find leads on their own.
He scours real estate sources such as public records, online databases, real estate records, tax records, and foreclosure listings for clues.
To be clear, the vast majority of agents in Southern California still do business the old-fashioned way. But people who try new things often do it to make a living.
According to NAR, the median gross income for real estate agents with 16 years or more of experience in 2022 was $80,700. But those with less than two years of experience earned just $9,600.
A report from business networking platform Alignable found that 31% of real estate companies struggled to pay office rent in January.
AI’s subtle inroads into the real estate industry aren’t necessarily surprising, as AI has permeated nearly every profession in recent years. But for an industry that has long relied on human connections, such as handshakes, open houses, fresh flowers, and other personal touches, the infiltration of AI into cold, sterile homes is worrying some. .
“When you need a real estate agent, you need a real estate agent you can reach out to,” Thompson said. “I don't want anything to do with their AI assistants.”
