From: AAAI Technical Report WS-99-01. Compilation copyright © 1999, AAAI (www.aaai.org). All rights reserved.
A Virtual Property Agency: Electronic Marketwith Support of Negotiation
HuJiuru
Departmentof ComputerScience and Information
System
The University of HongKong
Hong Kong
jrhu@cs.hku.hk
Jerome Yen
Departmentof SystemsEngineeringand Engineering
Management
TheChinese University of HongKong
Hong Kong
_iyen @se.cnhk.edu.hk
Alan Chung
Departmentof ComputerScience and Information
System
The University of HongKong
Hong Kong
Klchung@cs.hku.hk
Abstract
useful informationabout property transactions and key
eventsof the real estate marketon the Internet[10].
To havean efficient andreliable infrastructure is
crucial to anyelectronicmarket.Mostexisting electronic
markets only provide limited services, such as,
communicationsupports between buyers and sellers,
databases to increase the selections, and market
informationto help estimationof reasonabletransaction
prices. In this paper, wepropose a newelectronic
market, an Internet-based clearinghousewith a set of
agents to support coordination, negotiation, and
settlement with both numerical data and textual
information. Wehave developed a Virtual Property
Agentfor highly uncertain and dynamicmarkets. Such
approach is extremely helpful to markets that have
complicated negotiation process or require more
expertise,suchas, real estate or usedcar.
Like other industries that needmiddlemen
to serve both
producersand consumers,the role of the middleman
in
real estate industry is evengreater. In this paper, we
proposeto create an electronic marketto support the
processof real estate transactions. Whichis morethan
just listing and searching, it also includes searching,
coordination,negotiation,andsettlement.
In section 2, wewill discussthe role of the middleman
in
various markets. The process of negotiation and
negotiation support systems(NSS)will be discussed
Section 3. Section 4 will be used to introduce the
SoftwareAgent. Designof the Intelligent Electronic
Marketwill be provided in Section 5. Section 6 will
discuss the Virtual Property Agent. This paper is
concludedwith discussionabout future research.
Keywords:Electronic brokerage, negotiation support
system,marketsignaling, agent technology,real estate
market.
2. Role of Middleman
in Markets
Every market transaction consists of searching,
coordination,negotiation,andsettlement.Searchreflects
efforts of a buyeror seller to search for candidatesto
havetransaction. Oncecandidatesidentified, the process
movesto the next step - coordination. Normallyit
involves exchangeof information about the terms and
conditionsto see if anytransactioncan be made.If there
is no suchpossibility, then negotiationstarts, whichis
the mostdifficult step. Throughnegotiation, different
parties aim to reach an agreement by making
compromise
or concession.However
the diffienlt is that
all the parties have their ownobjective functions.
Negotiationsmayhaveto be repeated manytimes before
terms can be finalized. Finally, settlement clears the
transactions.
1. Introduction
Residents of HongKongused to invest heavily on real
estate. Threeof the top five firms in HongKongbelong
to this categoryandalmostall the top ten billionaires
have major investment on real estate. However,since
the financial market turmoil in 1997, real estate
investment has becomerelatively high-risky, which
reflects the uncertaintiesin such industry. Before1997,
government
eould manipulatethe supply side (anetioned
lands for construction) to control the price. However,
this wasnolongerthe casedueto the outflowof cash.
Withthe advancesin informationtechnology,real estate
seemedready to moveon-line. In 1996, RealSelectInc.
openedRealtor.corn[16], whichis managedby National
Associationof Realtors. It lists 1.3 million homes,or
about95%of the existing for-sale inventoryin the U.S.
market.Microsoftalso openedan on-line realty service
[7]. In HongKong, TeleProperty Limited publishes
In a direct search market,buyersand sellers mustsearch
for counterpartsto bargaindirectly. Therefore,the size
of candidates is normallysmall. Witha middleman,
such
situation can be improved. Because middlemanholds
120
informationabout both sellers andbuyers. However,
this
mayalso create asymmetricinformationamongthe three
parties and middlemancould earn unreasonably high
profits by manipulatingthe informationhe has. If they
charge less than that in a direct search market, they
provide a strong incentive to their clients. Whenthe
candidate pool becomessignificant, middlemanmay
haveto offer searchingservicesto their clients [13].
that, by using NSS,managersachievedbetter outcomes
(payoffs) andmorequicklyreachedsatisfying solutions.
NSSalso help users handling the social aspects of
negotiation, whichallowedthemto focus on content and
analysisof negotiation.
4. Intelligent Agent
Zeng and Sycara outlined a meta-framework for
coordinationandstructure of a collection of intelligent
softwareagents [20]. Theyclassified agents into three
categories: 1) interface agents, whichinteract with the
user; 2) task agents, whichactually carry out the user’s
m.sksand3) informationagents, whichprovideaccess to
diverse, possiblyheterogeneous
informationsources.
3. NegotiationProcess
Negotiationis a processby whicha joint decision can be
madeby two or more parties. These parties express
demandsand movetoward agreement by a process of
concession or compromisemakingor search for new
alternatives to moveforward. Demandlevel, bottom
line, concessionrate, losses dueto negotiationbreak-up,
completeness
of informationaboutthe counterparts,limit
andlevel of aspiration, andtime pressure all affect the
outcomeof negotiation. Basic negotiation strategy has
beenproposed[9]:
¯
¯
¯
Sinceeachreal estate transactionis a majordecisionand
the processis verycomplicated,
it is difficult to automate
such process. Therefore, we developedan agent-b~sed
systemto support the negotiation process, instead of
automatethe process. Wesupport the negotiation with
twotypes of information:texts andnumericaldata.
Concedeunilaterally in order to reducethe distance
betweenthe parties.
Stand firm and employpressure tactics (e.g.
persuasive arguments, threats, positional
commitments) to persuade the other party to
concede,whichis called competitivebehavior.
Collaborate to search for mutually acceptable
solution, whichis called coordinationbehavior.
Themajorreasonis that existing automatednegotiation
agents, such as, Kasbah[2], are not flexible and
sophisticated enough. Whichrely only rules, for
example, game theory, which assumes perfect and
symmetricinformationthat identically perceivedby all
negotiation participants. However,most negotiations
haveto deal with eonditionswith imperfect,incomplete,
or asymmetricinformation.
Somenegotiations accompanywith deep distrust or
dislike, suchcan be called a "win/lose"negotiationor a
typical "zero-sum"game. "Businessis a form of human
competition greatly resembling war," summarizesthe
non-cooperative nature of humanin competing for
resources. Porter also studied non-cooperative
strategies
in analyzing the bargaining powersbetweenbuyers and
suppliers [15]. Similarly he treated market signals,
intelligent collection, andstrategyformulation
as tools or
weaponsin negotiation games.
5. Modelfor Intelligent ElectronicMarket
Normally
transactionsin real estate are not rely only on
onesingle attribute. Theyinvolve multipleattributes.
Suchas price range, space, location, ear park, interior
structure, etc. Someattributes people do care, some
attributes are not. Also, someattributes are negotiable,
suchas, price, ear park, etc., andsomeare not, suchas,
spaceandlocation.
Some negotiations
are more cooperative and
constructive. Normally they are called "win-win"
negotiation because they seek congruent goals for
creating win-winsolutions.
Multiole attributes match[
I Consideration set I
Since the 1960sthe conceptof computerizednegotiation
support has evolved from moving computers from
"backroomprocessors" to support negotiators. One
approach was to eombine Group Decision Support
System (GDSS)and Decision Support Systems (DSS).
Researchers have studied howNegotiation Support
System(NSS)alleviated major cognitive and socialemotional stumbling blocks. Perkins et. al. used
practicing purchasingmanagersas subjects to investigate
the effects of computerizednegotiation on the outcomes
of buyerand seller negotiation[14]. Theresults showed
I Op
onon
otI
Figure1. Analysis of preferences and alternatives
121
Whena buying search with selection criteria arrives,
searching agent retrieves all the qualified candidates to
form a candidate set as shownin Figure 1. Buyer can
choose the candidates to form negotiation. Simultaneous
negotiations
were encouraged to create higher
competition amongcandidates.
Then negotiator chooses the negotiable attributes to
develop the utility function. Negotiator’s preferences
over negotiable issues as well as acceptancelevel of each
criterion need to be determined.
Initial offer
utility
precisely,
to affect the opponents’ subjective
probabilistic beliefs about their positions and market
condition. For example, recent transactions of similar
apartments should have impacts on the negotiation.
Also results of simultaneous negotiation with the
candidates will create pressure to the opponents. News
agent receives up-to-date news from Internet. Such
intelligent market should validate and guarantee the
credibility of information.
6.
rating
dynamic market
inform ation
SystemArchitecture of Virtual Property Agent
Counter-offer
Virtual Property Agent is an Intemet-based middlemen
for real estate market. Homesellers post their own
listings into the database and the potential buyers visit
the web site to search for candidates. Oncepotential
candidates been identified, buyers can choose candidates
to visit. After that, the negotiation can be started through
the Internet. Sellers can also have such candidate sets.
The web site supports 24-hour messagetransmission for
negotiators. For each round of negotiation, electronic
market provides the rating based on user’s ownutility
function, and news agent collects on-line information.
Negotiators can either choose his favorable news to
signal his opponents or release his alternatives and
negotiation results to his opponents. E-mail will be
generated automatically to notify the negotiator the
result. Negotiators can accept or reject, and start another
roundif necessary.
Figure 2. Offer evaluation
For the following each around of negotiation, task agent
helps the user rate his offers basedon his utility package
and dynamicmarket information, see Figure 2.
We adopted the market signaling as an incentive
structure for negotiation process [1]. In the relatively
high-risk, and somewhat unpredictable real estate
market, information is crucial to the performanceof the
market. Weuse market signaling to make negotiation
process more efficient and prevent from deadlock as
shownin Figure 3.
Market
Support for pre-negotiation
J signaling
[releasing
opponent
I
~
]negotiableset J
I
[
= Home Listing
Homelisting is the interface for homesellers to post
listings. System provides form for sellers to describe
their homes, such as, locations, building names, sizes,
numberof bedrooms,ask prices, reserve prices, and the
dates to make deal. Multimedia supports, such as,
pictures and short video clips, will be available in the
future.
sigaling
|
favorable
I property news J
Figure 3. Market signaling
Intelligent market allows negotiators send signals to
opponents to create favorable impressions, or more
Da
D
agent
ntab~
Hon K Kong
in
Figure
4:
Property
form ation
(http :llw w w .t©teproperty
A rchitecture
122
of
Virtual
Sing Tan Electronic
.corn )
Property
(http:llw
Agency
Daily
w w .singtlo.com
¯ HomeSearching
Home
searchingallowspotential buyersto set the criteria
to screen and generate candidates. Similar to home
listing, homesearchingprovidesinterface for buyersto
input the similar informationto support searching the
database. If candidates been found, more complete
descriptionof houseor apartmentwill be providedby the
system and visit can be arranged through the system.
Buyerscan start the negotiationproceaswith the seller if
the only discrepanciesare negotiableattributes. If none
beenidentified, buyerswill be notified to soften their
requirements.
Figure 6. Interactive messageand ratit~g
¯ Market Price Analysis Tool
Real estate marketis dynamic,sometimes
it is a buyer’s
market and sometimesit is not. Price analysis agent
extracts prices fromthe historical transactionrecordsin
the samebuilding or in the sameneighborhoodto draw
the curve, whichvividly indicates the trend of price, see
Figure5. Price analysis tools helps the participants to
estimate reasonable transaction prices before the
negotiation.
¯
MarketSignaling
Real estate market is influenced by the supply and
demandforce, financial environmentsuch as mortgage
rate, income,interest rate, equity, andalso government’s
newproperty policy. Wecreate one search agent get upto-date online information from HongKongProperty
Information(http://www.teleproperty.com/)and local
newspaper
Sing
Tao
Electronic
Dally
(http://www.singtao.eom/),
put it into system’sdatabase
and provide news bulletin for market participants
browsing.Negotiatorearl chooseeffective messagefrom
the bulletin to signal his opponents.Anotherkind of
signal comesfromnegotiator’s opponentnegotiableset,
user can chooseto roughlyrelease the negotiationresult,
system will automatically send each around of
negotiationresults with all the candidatesto his ongoing
opponent.
Supportandfacilitate the negotiation
¯ Interactive messaging
Negotiation process involves manyrounds exchanging
information betweenthe parties. Offers and counter
offers will be automaticallysent to buyeror seller by the
interactive messaging
systemuntil twoparties.
¯ Buyer/Seller offer rating
Oncea user enters the system,formwill be presentedfor
the user to choose the negotiable attributes. When
multiple attributes are entered, importanceof each
attribute andacceptablerangeneedto be entered. If only
price is undernegotiation, aspiration level andreserve
level are required.
Notification
¯ Email notice
Emailnotice systemstrongly supports off-line message
transmitting. E-mail Inform Agentwill support the
participantsto fully awareof the progressof negotiation.
Message
about the rating of buyeror seller offers appear
togetherwith these offers to remindthe negotiatorstheir
original objective.
7. Conclusion
In this paper, we propose an electronic brokerage
infrastructure to supportthe coordination,negotiation,
and settlement of transactions that have complicated
negotiation process. Intelligent software agents have
beendevelopedto supportthe operationof this electronic
market. The Virtual Property Agencyis able to help
users quicklysearchfor informationto better understand
the condition of the marketto design the negotiation
strategy, whichincludeboth the textual informationfrom
the selected websites andtransactiondata that stored on
Government’s
database.
Figure 5. Price curve
123
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Figure
Z Imerfime
fornews
andu~rka
Mgm_d~ng
Instead of automating the process, we focus on
supporting the usem with information collection and
providing
channel to communicate with their
counterparts. Comparewith the existing web sites, our
system provide greater flexibility to the users. A user
evaluation will be conducted to comparethe performance
or user satisfaction with that of the other on-line property
agents.
Information
[ 10]Hong
Kong
Property
http://www.teleuronert~.com/
University,
INSPIRE,
Caeleton
[ 11]
http://www.business.earleton.ca/inspire
[12] J.Yen, H. Lee, and T. X. Bui. "Intelligent
Clearinghouse:
Electronic Marketplace with
Computer-mediated Negotiation Supports", HICCS29, Vol. 3, pp. 219-227, 1996.
[13] W. T. Malone, "Modeling Coordination
in
Organizations and Markets," ManagementScience,
Vol. 33, No. 10, 1987, pp. 1317-1332.
[14] W.C. Perkins, J. C. Hershaner, A. Foroughi, and M.
Delaney. "Can a negotiation support system help a
purchasing manager?" International Journal of
¯ Purchasing and Materials Management, Spring
1996, pp.37-45
[15] M. E. Porter, Competitive Strategy: Technique for
Analyzing Industries and Competitors, Free Press,
NewYork, 1980.
[16] Realtor.corn, http:Hwww.realtor.com
[17] R.Guttman, A. Moukas, and P. Maes. "Agentmediated Electronic Commerce: A Survey." To
appear in Knowledge Engineering Review, June
1998.
[18] A. J. Jaffe and C. F. Sirmans, Fundamentalsof Real
Estate Investment, Prentice-Hall, Inc., 1995
[19] Sing Tao Electronic Daily. http;l/www.sin~tao.com
[20] D. Zeng, and K. Sycara, "Bayesian Learning in
Negotiation",
Working Notes of the AAAI1996
Standford Spring SymposiumSeries on Adaptation,
Co-evaluation, and Learning in Multiagent System,
also http://www.cs.emu.edu/~zeng.
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