A new Vancouver-based company called Joy is creating an AI real estate agent that will give buyers back 70 percent of the sales commission.
The goal is not to replace live real estate agents, Joy co-founder Kyler Bruno said, but to work with them. Human real estate agents, meanwhile, say their personal touch and expertise can’t be replaced by artificial intelligence.
Bruno said Joy is still in development. It doesn’t have a working AI model yet. Beta users are currently working with real estate agents over text.
Joy’s goal, Bruno said, is to offer buyers an alternative option to the traditional process of working with one real estate agent motivated by commission. Joy eliminates this conflict of interest, Bruno said.
Joy’s release comes on the heels of a settlement with the National Association of Realtors, which took effect Aug. 17.
Before the settlement, if someone was selling a house, their agent would split the commission with the buyer’s agent. The buyer’s share of the commission could be advertised with the home, attracting buyers’ agents to houses with the highest commission. However, that meant buyers’ agents might not show homes that would be good for buyers but bad for their commission.
The settlement means those commissions can’t be advertised on the multiple listing service and homebuyers have to sign a contract with their agent before viewing a property. Now, if the seller is not offering any compensation or commission for the buyer’s broker, the buyer may have to compensate their agent out of their own pocket.
But Bruno said Joy removes this financial risk by ensuring buyers won’t have to compensate the real estate agent if there is no buyer’s agent commission.
“With the (National Association of Realtors) settlement … you’re likely going to see a lot of entrances into this space,” Bruno said. “I think over the next decade, there will be lots of different ways to acquire properties and sell properties, which is, in the end, probably the best thing for the consumer — having the options to do whatever makes sense for you.”
How does Joy work?
Joy will use public data, like that found on Zillow and Redfin, to help buyers find homes for sale, schedule tours with live real estate agents, suggest offers and answer questions 24/7, Bruno said. A live, licensed real estate agent helps buyers make the final transaction.
“The difference between us and working with traditional agents is … that you’re not ever actually meeting us in person,” Bruno said. “One of the main things that we’re aiming to have with this platform is give people a more affordable way to buy properties and then just an easier and less stressful experience.”
One way the company plans to do that is through instant responses and tours that work around clients’ schedules, not agents’.
“We should have a much quicker way of getting people booked and viewing properties,” Bruno said.
Another way Joy will reduce cost and make the process easier, he said, is by giving buyers other options for homebuying. Contracts with traditional real estate agents often demand exclusivity, meaning the client can only work with that real estate agent. (This is because agents are only paid through commission once a transaction goes through.) Joy allows clients to work with other real estate agents on homes not viewed through its service.
“They’re not forced into being stuck with us,” Bruno said.
Joy will also be able to make recommended offers for clients, just like a live real estate agent, based on public data on the house and the prices of similar homes sold recently.
What do humans think?
Mike Lamb, a broker with Windermere Northwest Living, has been working as a real estate agent in Clark County since 1980.
Although he is more of a fan of the traditional process for homebuying, he doesn’t have any major concerns with Joy. It’s healthy to have a variety of business models in real estate, he said.
“Competition is good, and you see what works and what will survive,” he said.
His main concern, however, is Joy’s ability to calculate an offer. Public data on homes is often faulty and would need to be updated constantly to reflect shifts in the market.
“It’s funny because I have clients go, ‘Oh yeah, this house looks nothing like what it looked like online.’ I mean, that happens all the time with all agents. And so it goes back to why it’s helpful to have local knowledge and out looking at stuff,” he said.
Square footage, a major driver of home value, is also often listed incorrectly. The only way to truly know the square footage, Lamb said, is to measure the house in person.
“You can ask any experienced real estate agent. You can’t trust the square footage in the assessor’s database. It’s wrong more often than it’s right,” Lamb said.
Bruno said the offers that Joy will create are simply suggestions and that buyers should offer whatever they feel comfortable with.
“No one has to follow anything that we say, just like traditional agents,” he said.
Lamb said his clients often use his recommended offers due to his experience but agreed they are just suggestions.
“We can make a recommendation, but our clients may not necessarily agree that that’s what they want to do,” Lamb said.
Terry Wollam, a broker at Wollam and Associates, said he believes that AI will struggle to replace the relational role of a live real estate agent.
“There are aspects of the role that AI could do, but the parts that add the most value would be difficult,” Wollam said in an email.
That includes local knowledge of a certain area and identifying whether it would be a good or bad fit based on his clients’ interests and life circumstances.
“So much of the role is functioning like a counselor of sorts to the client,” he said. “It can be helping to consider familial or pet impacts, finances and investment strategies.”
Bruno said although clients will eventually be working with the AI model, they’ll also interact with several live real estate agents.
“For us, we don’t foresee real estate agents going away any time soon,” he said. “I think when you look at it from a consumer perspective, there should always be choice. … Some people might look at Joy and be like, ‘Hey, that makes a lot of sense to me.’”
