Brokerage REX Real Estate Exchange is giving real estate agents a run for their money, providing property sellers a more inexpensive way to sell their homes.
The company is using robots that rely on artificial intelligence (AI) and machine learning to sell homes for a commission fee that is lower than what most realtors ask for.
When Ron and Marilyn Hougardy sold their home through REX Real Estate Exchange, they essentially hired a computer to handle the transaction.
One of the reasons that they followed this route is the 2% commission they pay to hire the AI-driven service run by the brokerage firm. The commission fee is 3% to 4% less than what clients normally pay a human broker.
How REX Computer Works
The traditional path starts with agents listing a property to multiple listing services to find bidders.
But in the case of AI robots, it was the computers that crunched over a hundred thousand data points to find likely buyers and then target them with website and social media ads.
With the computer’s capacity to handle a huge amount of data, it can identify thousands of potential bidders and buyers.
According to co-founder and CEO of REX Real Estate Exchange, Jack Ryan, “We can tell everybody who lives within five miles of your house who has the basic means and motivation to want to buy your home.”
Whoever clicks on the REX ads will be identified by the computer as a potential home buyer. The machine will determine in real time what those people have in common and then find more people just like them.
Coupled with data about recent purchase decisions made and homeownership history, the computers can narrow down the number of buyers. They can also deliver future ads that are tailored to an individual’s behavior.
REX also buys and gathers data from retailers and businesses that sell information about purchases consumers made to advertisers and third parties. From the data collected, the company will look into people’s purchasing behavior.
As for homeownership history, what the computers will look into is whether an individual actually owns a home, has positive equity, or has enough money to make a down payment.
They would also determine if a homeowner is planning to move out soon. If they recently purchased a big screen TV, the answer is likely to be no.
Based on the data analyzed by the computer about comparable home sales in a specific area, REX data scientists will input facts about a home for sale and then introduce new variables to identify their effect on the probability of selling a property for a certain price within a set number of days.
How Tailored Ads Are Made
The initial batch of ads that is disseminated after a home is set for sale is based on a hypothesis that shows where buyers are likely to be found and who they are.
Based on the people who clicked the initial ads, along with their homeownership history and purchase behavior, a new set of ads will be delivered. This time, they are tailored to meet requirements.
Ryan also said that ads are customized based on the features of a home or the surrounding community that will boost the probability of it being sold faster or at a higher price point.
“There are dozens of pieces of data, each of which changes the probability by one or two percent,” he added.
Since its launch in 2016, REX has closed 231 transactions using artificial intelligence.
To date, $25.5 million in funding has been raised by the brokerage.
Some of its investors include Best Buy founder Dick Schulze, Crate and Barrel founder Gordon Segal, former McDonalds CEO Jack Greenberg, and Sun Microsystems co-founder and former CEO Scott McNealy.
Although REX is one of the alternative real estate brokerages that are tech-driven, they still employ a team of 22 agents across it many offices. The robots don’t show up in open houses by themselves, after all, but are handled by a REX staffer.
Also, robots do not guide buyers and sellers to a variety of real estate transactions, such as the inspection and closing process. There is a still need for human input.
Ryan confirms this by saying, “When you’re selling the most important asset of your life, you want to know there’s a person who cares about you in addition to the computer.”
REX Real Estate Exchange represents both sellers and buyers.