Attention English-speaking readers: Please note that this post is specifically relevant to Brazilian readers as it discusses regional aspects of the law. However, it should also be mentioned that many of the topics covered, such as the acquisition of personal data through illegal means or the use of big data and AI tools without transparency, may be relevant to readers in other countries as well.
Thank you for your understanding.
Maurício Pinheiro
Introduction
In the scenario of the modern real estate market, a mysterious spectacle often unfolds, where brokers and real estate agencies play the role of authentic collectors of virtual properties, proudly showcasing them on their electronic platforms. And I’m not talking about the metaverse!
Picture this: brokers comfortably seated in front of their computers, indulging in the irresistible page of the major real estate agency’s website, filled with tempting offers, and boasting, ‘I captured this one.’ They wait, as if participating in a cosmic ritual, for some perfect client to, by a twist of fate, be enchanted by one of these real estate gems and, as if by magic, get in touch for a visit.
In this way, it seems like they are making money with minimal effort, riding the waves of fluctuations in website traffic and placing all their faith in advertising, sitting comfortably (or are they?)… After all, as the saying goes, good advertising can sell even sand to a nomad in the desert.
And, agreeably, a brokerage fee of 5 to 6% on the substantial value of a property is indeed attractive, isn’t it? Especially when the responsibilities of brokers seem to boil down to: 1) make an initial contact by phone; 2) send a photographer of questionable quality to capture images of the property; 3) place some signs on windows or facades (and insist weekly via WhatsApp to reinstall them…?); 4) wait for the IT guy to upload the ad on the page; and 5) wait for the rare cosmic conjunction: the visit of the ideal client followed by the signing of the pre-sale contract. And as the number of captured properties increases, the probability of this conjunction happening (with the least effort possible) grows, a simple statistical matter.
A crucial observation that some brokers may be neglecting is the fact that their questionable practices are spreading like viral bad publicity among clients who want to sell or rent their properties to third parties—and I’m referring to the true owners of these properties! On the other hand, for those who choose to buy or rent for personal use, I see no issues. They will find ease and convenience in online platforms, where the diversity of options and the practicality of transactions make the experience highly satisfactory. In this case, the broker is only needed to schedule a visit and guide them to the property.
Beware, you modern brokers who prefer the easier path, as you may soon be replaced by Artificial Intelligence algorithms. After all, who needs human intermediation when the platform practically sells the property? We will return to this point later on. The fact is that many of these modern brokers end up being mere gatherers, later becoming passive spectators who wait for the brokerage fee to fall from the sky and their commission in their pocket.
This approach, besides being questionable, reveals that many of these modern professionals are, to the detriment of new technologies, losing the essence of the true role of a broker: the ability to negotiate, persuade, and establish real human connections. Not to mention the complete lack of knowledge about the properties they are selling. I have witnessed brokers stalling clients and, in certain cases, waiting for the property owners themselves, who happen to be present during the visit, to describe the property. What an embarrassing situation…
While ride-sharing drivers earn crumbs for their service, platforms take the lion’s share of the cake. Perhaps that’s why there are as many ‘gatherer-brokers’ as there are food delivery app drivers and Uber drivers. I bet the commissions for these gatherer-brokers aren’t that great, and surely, they too are deluding themselves. Sadly, modern slavery is voluntary (where is Solon when we need him?)!
Everything indicates that the job crisis triggered by artificial intelligence will increasingly value non-technological professions that require human interaction and empathy (Kai-Fu Lee would agree; if you don’t know him, you know nothing about the role of AI in the world today).
And how we miss the times when ‘old-school’ brokers made direct contact with clients, using nothing more than a notebook with contacts, good small talk, and a polite yet sharp tongue.
And believe me, I’m not being Luddite; I view with favor the realistic prediction of the replacement of most professionals by machines and robots (not just brokers, but also doctors, journalists, lawyers, educators, and especially politicians, among others). After all, synthetic brokers will certainly not be lazy to chase clients (initially virtually and later with mechanical legs).
May the remaining survivors be true brokers (and professionals) in the old-fashioned way (truly human!)
The Ideal Broker According to AIs
Using advanced prompt engineering techniques, which simply involve asking ChatGPT (in addition to Bard and Claude), we were able to outline the ideal profile of a real estate broker to ensure an efficient sale or rental of your property. These professionals will never be replaced by AI unless it achieves AGI (Artificial General Intelligence), self-awareness, and passes all possible and imaginable Turing tests. Until then, there will always be individuals who prefer to interact with humans, especially those already marginalized by technology in specific age groups (the elderly) and those considered digital illiterates.
Robots, Ageism, and the Explicit Discrimination against Digital Illiterates
It is absolutely appalling to observe how the unrestrained proliferation of robots, under the guise of progress and efficiency, is turning a vital area of the economy into a true human disaster: customer service. In a callous quest to cut costs, companies of various origins overlook the fact that behind every request, doubt, or problem is a person, a customer who expects to be heard, understood, and respected. This growing use of excluding technologies (robots, chatbots, etc.) is explicitly ageist and discriminates against digital illiterates as well.
Instead of investing in solutions that promote authentic human interaction, companies are dehumanizing customer service, turning it into an impersonal labyrinth of automated responses and algorithms that only increase customer frustration. We are witnessing the replacement of genuine human connections with pre-programmed responses, which is not only disrespectful but also perpetuates a discriminatory cycle of digital exclusion. It is time for companies to rethink their strategies and recognize that cost savings should not come at the expense of dignity and respect for customers but rather from providing good service. Technology should be an ally in improving service, not an obstacle that marginalizes those who are not fully immersed in the digital world.
True innovation should be inclusive and humanized, not a means of excluding and discriminating. In fact, companies and jobs with such human components will be the only ones to survive the fourth industrial revolution. Remember this when trying to access a bank’s call center, health insurer, brokerage, etc.
One day, you will be elderly, and if things continue as they are, with technology evolving exponentially, you will be excluded…!
After numerous iterations and adjustments, we have obtained the following recommendations in the search for the ideal real estate broker:
Exploration of the Network of Contacts: When looking for the ideal broker, start by exploring your own network of contacts, seeking references from people who have already received satisfactory services, or asking for recommendations from friends. Prioritize “full-time” brokers with an ‘old-school’ approach, valuing mastery, experience, empathy, and importance in personal dealings. Interview several brokers, as specialized brokers may offer deeper knowledge and specific resources, adapting better to your needs.
Communication Assessment: Evaluate the broker’s communication by observing the speed, effectiveness in responses, and technical knowledge. Address aspects such as experience, marketing strategies, fees, and approach to specific situations in the real estate market. A responsive and communicative broker can expedite the process, minimizing frustrations during the transaction. Before delving into business details, test the broker’s ability to engage in a 20-minute casual conversation (Small Talk) on any topic. Analyze patience and communication skills; avoid brokers who often speak excessively without backing it up with actions, who show distraction (difficulty in maintaining eye contact for more than a minute), and generally have superficial knowledge and a less consolidated culture (depending on Google for various information). You know who the chatbots are refering to…
Online Reputation Check: Verify the broker’s online reputation using review platforms. Analyze feedback from previous clients to gain a comprehensive view of the broker’s performance. Ensure that the broker is properly licensed, confirming the registration according to legal requirements and real estate industry regulations. Request the CRECI number right from the first contact and confirm that it is not an assistant of another broker. Don’t pay attention to assistants. Only talk to brokers who hold the CRECI. Also, search on sites like Jusbrasil for information on legal actions involving your prospective broker. This site is an excellent tool to check if the broker has a clean record and is reliable. Oh, and if it were possible to use a digital tool to classify them, separating the wheat from the chaff…
Availability and Flexibility: Finally, ensure that the broker is available and flexible, adjusting to your schedule and meeting your specific needs. An ideal broker should maintain contact 24/7, providing a channel for questions, such as a direct WhatsApp line.
As mentioned, unlike these, modern brokers (not to mention Nutella brokers, in the brazilian slang, to avoid any discrimination against this delicious chocolate hazelnut spread) in their relentless pursuit of easy money seem more committed to capturing properties for their online agencies than actually performing the challenging service of sales or rentals. This leads us to a colossal problem, which is how new property capture companies leverage Big Data technology, Open-Source Intelligence (OSINT), and AIs to mine, consolidate, and sell personal data without authorization to Real Estate Agencies, thus violating the General Data Protection Regulation (GDPR), in Brazil the Lei Geral de Proteção aos Dados (LGPD).
Violation of LGPD in Real Estate Capture
The General Data Protection Law (Lei Geral de Proteção aos Dados – LGPD) has sparked a profound discussion in the context of real estate property capture in the Brazilian real estate market. This legislation encompasses the regulation of the collection, processing, storage, and sharing of personal and sensitive data, aiming to protect the privacy and rights of data subjects. With the implementation of this law, companies in the real estate sector are now prohibited from acquiring, sharing, and obviously selling personal data (such as personal contacts and property details like addresses, for example) without the prior consent and approval of individuals and users.
This new paradigm has made it more challenging to access information from entities such as SERASA, which have always provided credit-related data and registration information for individuals and companies. Now, I’m here thinking, does the Jusbrasil I mentioned earlier violate the LGPD? Escavador is another questionable site that discloses personal information with an appearance of legality. It’s obvious! Only those who don’t want to see it… And there’s no legal disclaimer that contradicts it!
In the realm of active property capture, the LGPD plays a crucial role in ensuring people’s privacy, especially protecting them from harassment through unwanted phone calls and emails perpetrated by property-capturing brokers.
How does this process occur? In a simplified manner, numerous technology companies (which, for obvious reasons, will not be mentioned here), including various startups specializing in OSINTs, apply Big Data mining techniques on the web. In this procedure, they extract personal data from clients as well as details about their properties, covering information such as names, phone numbers, addresses, and property values. This data is collected from a wide range of sources, such as social networks, ads on online platforms from other brokers, and even photos of signs with ads at specific addresses (it is possible, for example, to use a drone and a simple AI image recognition algorithm).
These pieces of information are then processed by advanced artificial intelligence algorithms, using neural networks that establish connections and hidden correlations in the data. This process culminates in the creation of information packages that encompass personal data, such as phone numbers and addresses, of individuals interested in selling or renting their properties. Included in these packages are details such as the property’s value and its address, often without these individuals being aware of this procedure.
These packages are then made available by technology companies to property-capturing brokers or large real estate agencies as a service, often through monthly subscriptions. Upon receiving these packages, property-capturing brokers initiate a process of active and persistent approach to clients, seeking to persuade them to include their properties for sale or rent on their agency’s platforms. This method illustrates the complex nature involved in property capture, highlighting the centrality of technology in collecting, analyzing, and sharing (questionable) data to drive sales strategies.
This practice has a clear parallel with the Cambridge Analytica scandal in 2018, where estimates indicate that personal data from 4.5 million Brazilians were illegally extracted from Facebook and used without prior consent. It seems that there are still many startups with business models similar to Cambridge Analytica, including in Brazil, and more specifically in the real estate market.
Despite the considerable amounts of personal information online, the LGPD seeks to establish ethical and legal parameters for the use of this data, recognizing the need for a balance between technological innovation and the protection of privacy. Thus, even in the face of challenges posed by regulations, they play a fundamental role in creating standards and expectations for the responsible collection, processing, and sharing of personal data, contributing to the construction of a more ethical and respectful digital environment. Efficient regulation is essential to address the complexities of the digital age, ensuring that technology advances in accordance with the fundamental values of society.
In this complex scenario, we emphasize that even the Brazilian General Data Protection Law (LGPD) has limited effectiveness and is easily circumvented due to susceptibility to manipulation due to the widespread availability of personal data on the internet. Additionally, similar to many laws in Brazil, known for legal insecurity resulting not only from complexity but also from the proliferation of regulations that, instead of providing clarity, often manipulate citizens like puppets. Much of this legislation proves impractical, poorly drafted, redundant, and excessively wrapped in rhetoric – a true manifestation of excessive sophistry! This legal entanglement not only contributes to confusion but also serves to fatten the pockets of lawyers, creating a judicial caste that, at times, seems distant from the needs and realities of society.
Returning to the discussion about the LGPD and acknowledging the efforts of those involved in its formulation, it is notable that this data, widely accessible, can be seemingly consolidated within legal limits, given that it was available on the network, using artificial intelligence (AI) algorithms. Even aware of these limitations, the effective implementation of LGPD is essential for the preservation of privacy and individual rights, especially in the context of property capture and other digital activities.
It is crucial to emphasize that the LGPD expressly prohibits the sharing of personal data without proper authorization. This is the critical point! Companies intending to use this data must obtain prior permission from owners transparently, and data deletion must be conducted through a clear and efficient process. Unfortunately, the lack of transparency about the origin of collected data is a cause for concern, with some companies acquiring information through various means, from commercial transactions to artificial intelligence algorithms in the Big Data and OSINTs ecosystem. This lack of transparency is unacceptable as it compromises compliance with the LGPD. Companies have a responsibility to ensure the protection of owners’ personal data, ensuring transparency and compliance with existing legislation.
Imagine a site that categorizes people, all with photos “published” on the internet. It is well-known that just five photos found on Google Images and a well-trained Neural Network are enough to infer your sexual preference. From there, it’s only a small step to spread the news that you are into BDSM or swapping partners, not to mention other preferences behind closed doors. In light of this, how does the LGPD position itself? After all, the data (photos) are public. The same goes for your political preference (remember Cambridge Analytica). How do Jusbrasil, Escavador, and property capture platforms respond to this challenge? They are all in the same delicate situation… But anyway, we are in Brazil!
Once again, returning to the real estate market, after the data is disclosed, recruiters initiate harassment through phone calls, WhatsApp messages, or even personal approaches, whether through intercoms or doorbells. By then, the damage to people has already been solidified, and the actions for redress begin… But in reality, what can the average person do is just put out the fire:
- In these circumstances, options to deal with the situation are limited. An effective measure to protect yourself from unwanted calls from unknown property captors and brokers is to set up your phone to block all numbers not on your contact list. There are several apps available for this purpose, specifically designed to combat unwanted calls, such as those from telemarketing. This is particularly relevant due to the LGPD, as a privacy breach can occur when third parties have access to all your contacts.
- Additionally, make use of the blocking feature on WhatsApp to get an additional layer of protection against unwanted messages. This helps keep your digital privacy intact by filtering messages from unwanted contacts.
- In the context of unexpected visits related to real estate ads or signs, take a proactive approach. If someone rings your home intercom based on information seen in a real estate ad, be clear and direct the person to your broker. Instruct them to contact the broker directly whose information is available on the sign or ad link. This practice not only avoids unnecessary disclosure of personal information but also efficiently directs inquiries to the appropriate channels, especially if you are collaborating with a specific real estate agency or a traditional broker (the ideal).
Possible Solution: Single Personal Data Registry via Blockchain
The blockchain technology offers innovative solutions to address growing challenges, especially in the real estate field, by providing secure and decentralized storage of information related to ads, properties, and transactions. In this context, each user receives a unique identifier on the blockchain, providing more granular control over who accesses and shares information, strengthening security and privacy in this and other sectors.
Furthermore, the integration of smart contracts on the blockchain represents a significant advancement in transparently managing user consent for the use of their personal data. This mechanism allows users to automatically grant or revoke access to their data, providing greater transparency and control over the use of their information, aligning with ethical and legal principles of data processing.
Regarding privacy concerns, implementing controlled anonymization techniques on the blockchain proves to be an effective approach. These techniques enable the secure sharing of sensitive data while preserving the confidentiality of personal information, unless the user explicitly grants permission. This way, the need for data is balanced with the preservation of user privacy.
Consider a scenario where an advertisement for the sale of a property is registered on the blockchain, including incredible photos transformed into NFTs. This ad can be efficiently shared with all brokers while preserving the owner’s personal contact information, also stored on the blockchain and properly encrypted. This encrypted data can be securely and directly distributed from broker to broker, providing a seamless experience and preserving the seller’s privacy, all according to their preference.
This innovative blockchain approach offers an efficient and secure solution for the disclosure and transaction of real estate, depending solely on the seller’s will. By eliminating cunning property captors and increasing the bargaining power of property owners with real estate agencies, it might even organically reduce abusive fees.
The immutable nature of the blockchain also significantly contributes to the traceability and auditing of transactions. This feature provides a complete and unalterable history of all transactions, allowing transparent tracking of data access. This transparency creates an auditable record, promoting accountability and ensuring compliance with regulations.
Additionally, data tokenization on the blockchain proposes an innovative rewards system. Users are incentivized with tokens for allowing access to their data, which can be used to access additional services or obtain discounts. This practice establishes an incentive system that values active and transparent user participation in the platform.
The adoption of interoperable standards on the blockchain is crucial to ensure efficiency in the interaction between different systems and platforms. This approach promotes broader and safer integration, facilitating collaboration between various entities and strengthening the effectiveness of the technology in various scenarios, including the real estate sector.
Finally, promoting education about blockchain and its privacy advantages is a fundamental element. This initiative aims to encourage both users and companies to adopt this technology as a means of protecting data, emphasizing the benefits and importance of privacy in a constantly evolving digital context.
The successful implementation of these blockchain-based solutions can strengthen security, transparency, and control over personal data, mitigating the challenges faced by current regulations.
By the way, let’s hope that AI, along with blockchain technology, soon puts an end to another century-old plague in our society whose dark tendrils of Evard also extend to the real estate market: the damn registration offices (but that’s a topic for another article). Goodbye, registration offices, your days are numbered. The message to their owners is that they better learn to work for real.
About Abusive Brokerage Fees
When analyzing the Acquisition Form (never check the exclusive sale option!), concerns arise when we see the abusive brokerage fees in small print, especially regarding the continuation of efforts after the initial acquisition phase.
Relevant questions about the justification of brokerage fees, often set between 5% and 6%, become prominent when we observe that brokers’ efforts to attract buyers seem to decrease considerably once the property is already on the real estate platforms.
These percentage-based fees become even more questionable when considering that crucial tasks in selling a property, such as drafting pre-sale contracts, could be handled by professionals like lawyers at more affordable prices or even through technological tools (like ChatGPT) without additional costs. By the way, it’s curious to note that they often follow a standard model, where only customer and property data are entered, sometimes intentionally with errors to ensure extra complications and gains for notary offices.
With this in mind, it is essential to demand a clear explanation of all fees involved in the process, including commissions and additional costs. A reliable broker not only provides this information from the beginning but also establishes open and transparent communication throughout the process, presenting, for example, a cost breakdown (notary and brokerage fees, taxes, etc.). If the broker doesn’t know these values upfront, run away from them.
Obviously, the brokerage fee should be subject to negotiation in a truly free market. We are all familiar with the corporatism that permeates professional organizations in Brazil, such as CREA, CRM, CRO, OAB, CRECI, among others—a dark legacy from the communist soviets of over a century ago! Did you know that the word ‘soviet,’ совет in Russian, means ‘council’ in Russian? These organizations regulate professions, fragmenting market niches among their followers, often ignoring meritocracy and exerting considerable influence over the Brazilian state, shaping everything from legislation to guidelines for professional education in universities. Ultimately, they impose restrictions on the free market. In a market that demands trust and clarity, transparency in fees is essential to ensure satisfaction and mutual trust between the broker and the client. But more fundamental than that is the free negotiation of fees between the client and the broker, escaping the values stipulated by the real estate soviet.
Try to negotiate; if brokers and real estate agencies do not accept, worse for them. Competition is overwhelming, and there will always be those willing to lower profit margins to work on selling or renting your property, even against the guidelines of the real estate soviet.
Finally, I would recommend that the form containing the contract with the brokerage be applicable exclusively for each of the visits from genuinely interested clients, completely unlinking it from the acquisition process. This strategy aims to create an environment in which the brokerage is encouraged to actively seek buyers or tenants to show them the properties, instead of just waiting for opportunities to arise. I don’t see any illegality in that.
In this context, it would be advisable to negotiate the terms of the announcement with the real estate agency or broker but postpone the signing of the sales contract form with the brokerage until they present a concrete interest in your property. This protocol should apply exclusively to specific situations, ensuring that the partnership with the brokerage is activated only when there is a manifest demonstration of interest from a potential buyer or tenant.
This approach promotes greater flexibility and adaptability to deal with the intrinsic dynamics of the real estate market. By unlinking contractual relationships from predefined deadlines, space is opened for more personalized, needs-oriented negotiation with potential clients. This flexibility not only simplifies the process for both parties involved but also highlights the importance of quality human interactions and customer satisfaction. By refraining from arbitrary deadlines, the approach allows for a more agile response to changes in market dynamics and customer decisions, ensuring a more effective partnership aligned with the goals of all stakeholders.
Conclusion:
In summary, facing the current scenario in the real estate market, where brokers and real estate agencies resemble collectors of virtual properties on electronic platforms, questions arise about the true essence of the broker’s role. The pursuit of rapid acquisition and substantial commissions seems to divert attention from human authenticity and dedication to negotiation. Concerns about invasive practices using new technologies to circumvent the limitations of the General Data Protection Law point to the need for innovations, such as blockchain-based solutions, to ensure transparency and control over personal data. Ultimately, the true broker, identified by advanced language models, stands out for building authentic relationships, exploring networks, and maintaining effective communication, resisting the threat of AI. The revision of traditional taxation practices, along with the promotion of transparency in negotiations, emerges as a priority. The opportunity for open negotiation of brokerage fees in a free market aims to restore trust and adopt a customer-centric approach.
Acknowledgment: I express my gratitude to the friends who are real estate brokers and lawyers, who, motivated by the challenges affecting their professions, willingly shared detailed (and often guarded) information about their trades in exchange for their anonymity.
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References:
LGPD (in Portuguese)
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