If you don't build it, then someone else will. And that's the lesson we learned, especially about technology and AI-based products and services for real estate, from Tamir Poleg. He is the CEO of The Real Brokerage, and we had a deep, deep dive into AI and the transformation that is possible in the real estate industry because of it. Some of it is scary, some of it is really great. Efficiency is a big positive, and you'll really enjoy this conversation. So, thanks for joining.
Thanks, Tracy. Excited to be here.
Congratulations on your Real Trends verified brokerage ranking of number five by volume and number six by transaction sides. Congratulations. So, we've talked more in the last couple weeks than I think in two years. So, I'm really excited to talk to you again. And I wanted to dig in a little bit about some of the topics that we talked about for the interview that I published on HousingWire. So, you had said that Real is really focused on tech innovation, and I wanted to get into that. What is that, and how do you define success with that?
I think that it goes back to why and how we founded the company. We started the company back in 2014. And I think that throughout the years we always asked ourselves, are we a technology company or are we a real estate brokerage? And every time we would say, okay, we're a real estate company, but we're also a technology company, or we're a technology company that operates a real estate brokerage. But I think that technology plays a role in different aspects. And I'll try to describe a few of them. It's no secret that this is a low-margin industry and the margins are shrinking for brokerages, which means that you have to become more and more efficient in your operations. You need to automate as much as possible. You need to be able to scale without adding more operating expenses. You need to leverage the existing human capital but also the software that you are able to build in order to automate processes that will eliminate the need for humans in the back office. So I think that from the very beginning we were trying to focus on, instead of for example marketing, agent marketing, property marketing, we were trying to focus on efficiency, operating efficiencies. So we're trying to understand what are those tasks that are being handled by humans in the back office of a brokerage and how can we replace those humans with software. So I'll give you just a couple of examples. We, a year and a half ago, we launched LEO, which is our AI assistant for agents. LEO currently answers 2,000 agent questions a day. So, think about how many humans we would need in order to answer 2,000 agent questions. So, that's number one. And this makes us extremely efficient. And we measure efficiency by the number of full-time employees to agents. And that ratio is the best in the industry. And that is due to the fact that we are able to automate through software. So that's number one. Number two, another thing that we just recently launched is automated broker review. So as you know, brokers have to review every file that agents sign with their clients. And in order to approve a file for payment, we need to verify that we have all of the documents in place, everything is signed, all of the paragraphs are filled in, all of the boxes are checked. And typically humans are doing it. And now we created an AI tool that knows how to look and read documents and immediately provide feedback to the agent saying, 'Hey, you're missing a signature on page eight and you're missing the lead paint disclosure.' So instead of a human reading through hundreds or thousands of documents every month, we now have AI doing that. So what I'm trying to say is that AI is instrumental in our ability to continue and grow profitably and scale without adding operating expenses.
At the same time, just 10 minutes ago our tech team gave me a demo of what our AI is doing for clients. And this is a project that we've been working on. They stitched my voice. So, they trained AI on my voice, and they recorded a conversation between a client that's looking for a two-bedroom home, and that client was talking to me. It was my AI, but it sounded like me. It had the same accent, the same way that I'm speaking, and it actually had a conversation with the client. So what we will be rolling out in a couple of months is an AI tool for our agents that will enable them to switch it on and have conversations with their clients, trying to understand or better understand what they're looking for, what kind of homes they're interested in, what is important to them, what their financial situation is, collect all of the information that is required in order to start jumpstart that process of finding homes, and then later on also be there 24/7 in order to provide updates and just improve the level of service that our agents are able to provide to their clients. And again, it will feel and sound as if it's the actual agent that is speaking to them. Obviously, there will be a disclaimer and we will tell them that this is not the agent. This is the agent's AI. But we want to get to a point in which within a couple of quarters, our agents can have voice conversations and also video conversations speaking to their clients without them actually needing to allocate the time to do so.
So, how do you... there will be detractors to that, you know, because real estate is a relationship business. So what do you have to say to people who, you know, and probably competitors who say, well, this is a relationship business, we don't want AI talking to our clients.
Oh 100%, this is a relationship business, but at the same time we have to understand that AI is probably bigger than all of us anticipate, and AI will change industries, and AI will eliminate a lot of jobs. So it's not about whether Real will be using or not using AI. I think that AI is a bigger threat to our industry. And unless we as the brokerage industry, and I urge all of my peers and the CEOs in the space to double down on AI, unless we invest in AI in order to provide the tools for our agents to provide a better service to their clients, somebody else from the outside will be leveraging AI and will end up probably eliminating all of us. So I think that it's not about, you know, this is a personal business and based on relationships. It will continue to be so, but at the same time you also have to try and break down what are those tasks that agents perform for their clients. And we came up with a list of 200 or 250 tasks that agents perform for buyers, for example. And we realize that about 90% of them can be automated or replaced by or enhanced by AI. So it's not about Real or not Real. It's about what consumers expect. And consumers expect you to be 24/7 on. They want immediate answers. They want very knowledgeable answers. They want a lot of information. And sometimes an individual cannot get to that level of service, or I'll put it differently, an individual can be enhanced using AI in a way that is not scalable just based on the human component. So if anyone is kind of second-guessing what we're trying to do, we'll probably let the future decide.
Yeah, absolutely. I mean, I think there's a lot of confusion around AI in the brokerage industry and with agents. They don't understand the true capabilities of it, and they, you know, they're using it maybe to write a listing description or, you know, what are they missing?
I think that what's encouraging is that more and more agents are using AI, and yes, it starts with, you know, very basic tasks like, you know, please help me prepare a listing presentation or please help me draft an email response to that client, but those are just the first steps to maybe more widespread use of AI. I think that we cannot expect agents to build the AI technology that they need. This is on the brokerages. We have the resources, or we need to be the ones that provide them with those tools because sometimes they don't have the resources or they don't really know what they're missing or what they need to build. So, you know, as a company that allocates tens of millions of dollars a year into R&D and a lot of that is into AI research, I think that it's our job to equip our agents with that competitive advantage that is AI-based.
But I was on a panel over the weekend in a conference, and agents asked me, what are we supposed to do now with AI? And I told that agent that as a first step you have to train AI on who you are. So get your AI to know you. Doesn't matter which kind of AI tool you're using. Let's say you're using ChatGPT. Just start conversations with ChatGPT. It will help ChatGPT understand who you are, what you're doing, where you're coming from, what you're interested in. I have a friend who recently started dating a new girlfriend, and every time they had an argument or a misunderstanding or something was going wrong, he would go to ChatGPT and he would actually tell ChatGPT what was going on. And within a couple of weeks ChatGPT was becoming so knowledgeable about their relationship and why is she reacting in a certain way and why did he tell her what he told her. And ChatGPT was actually able to analyze their relationship much better than each of them was able to. So right now most of his responses to his girlfriend are coming from ChatGPT.
What I'm trying to say is that there could be a point in time in the future where AI will actually be making the decisions for buyers and sellers on what to buy or how to sell or for how much to sell. And it could very well be that the buyer's AI will be making decisions with the seller's AI, and the human component will be just there to create, you know, trust and make sure that the transaction moves along. But I think that it's not far-fetched to think that within 10 years AI will... my AI will be talking to your AI. Or I'll put it differently, in a year from now I bet you that this conversation can be done without me being physically present here. It will be my AI talking to you. You wouldn't feel a difference. It will provide the same answers. It will look like me. It will talk like me with the hands and all of that. So it's not 10 or 20 years out. We're talking about quarters. That's how rapid this thing is moving.
Am I talking to your AI right now?
No. No. Now it's me. But, you know, you can never know.
So, how do you think your tech is future-proofing your brokerage for maybe the next generation of home buyers and agents?
Again, I think that if we don't create a competitive advantage for agents, somebody else will be coming from outside of the industry. And we've seen some examples of that happening in the past of companies that came from the outside and thought that with technology they can eliminate the agents. Luckily, most of them failed. Some of them are still alive but they're not really meaningful. I think that there is a chance that in the future something like this will happen. So, first of all, this is kind of a defensive move, making sure that we have what it takes in order to fight with any external force that will be coming in and trying to take away our agents' businesses and our business.
Second, I think that when we're talking about our agents and when I'm thinking about my kids and the point in time in which they will be coming into the industry wishing to buy their first home, they will probably be expecting a different kind of service and a different kind of experience than what the industry is providing them at the moment. And we want to be that company that really changes the way people buy and sell homes using technology and primarily using AI in order for my kids to have the kind of experience that they will be expecting in 5, 10, 20 years from now. So again, it's competitive advantage and at the same time ensuring the longevity of our agents' businesses and our business as a brokerage.
Yeah, I think it's a huge strategic move. Honestly, I don't know that a lot of brokers are, you know, they're dabbling in AI. But I feel like you're much deeper into it than some of them. And it's interesting.
Yeah, 100%. I think that within two weeks I'll probably be able to provide you a phone number that you can call and actually have a conversation with me, and it wouldn't be me. And I think that at that point it will be much more tangible than it is at the moment.
And by the way, maybe another example, you know, as a public company, we have our earnings call every quarter. The upcoming earnings call on, I think it's May 8th, there's a scripted part before the Q&A part. And that part, my part at least, will be read by my AI. It's not going to be me who's going to read it. And I bet you that nobody is going to notice that this is actually not me. At the end we will actually say that that was me, but yeah, as you said, you can no longer trust whether it's a human in front of you or their AI.
