Proptech : Disruptor to progress or industry killer
Real Estate technology has seen rapid growth over the last 10 years. Yet industry professionals still debate whether changes are necessary and wonder how they will affect the industry as a whole. But this technology is useful for solving problems. It can bring the archaic real estate industry into the modern era.
What changes are taking place?
Bain Venture Capitalists has broken down the growth of real estate technology into an easy-to-understand summary.
The first new software and data monitoring systems were created as a complement to the traditional marketplace. These software and monitoring companies (think LoopNet and Zillow) allowed real estate markets to function faster than before.
The second phase, which BVC calls the Challenger Phase, has been more disruptive than the first phase. The challengers have created brand-new ways of utilizing technology in real estate. Companies like Airbnb and WeWork are creating new uses for existing properties.
Many other tech-enabled companies and online brokerages have been started and have grown quickly. eXpRealty is an example of an online-only or "cloud" brokerage with the ability to operate in all 50 states. Their agents don't have offices and mainly do what they've always done, work from anywhere. RedFin is another national brokerage utilizing RE Tech.
Real estate marketing has had some upgrades with the introduction of virtual reality tours and drone video capabilities. Essentially, these technologies work to sell the house 24/7 online, without the need to hire a real estate agent.
The third phase—what Bain is calling the Synthesis Phase—started in 2017 and will carry us through to the next disruption. This phase includes the birth of smart buildings and the use of big data for real estate transactions and on purchase platforms.
Proptech is very exciting.
The Internet of Things (IoT) is allowing us to link physical spaces and virtual applications in new ways. Smart buildings are coming into use as residential and commercial properties. Buying and selling is becoming more comfortable and will involve less risk as big data comes into use in research, planning and calculating. And title companies will eventually see their roles shrink as more and more municipalities adopt blockchain capabilities.
Why is change a problem?
The real estate industry has never been quick to adapt to change. Real estate is the only commodity in which transactions take place face-to-face the majority of the time. With the use of virtual reality, cloud-based brokerages and blockchain, industry professionals worry that human interactions will be done away with. In essence, the fear is that technology will turn actual real estate into a virtual world.
What people are missing when they view real estate technology as frightening is a world of opportunity. New platforms, software, buying, selling and investing options are all available today. It has never been easier to embrace technology and use it to your advantage.
Which technology is the most beneficial?
It's all about your goals. Are you looking to bring your residential or commercial real estate brokerage into the future? You can adopt software that will allow your business to compete with cloud brokerages. This will give your agents the ability to obtain advice, get training, write offers and transfer documents—all from the comfort of their own home or their favorite coffee shop.
Property management companies can manage properties, schedule repairs, and analyze current rental rates and property values—all with the help of the right software. They can offer new services to investors based on the big data available through SaaS programs.
Do you run a real estate development job site with sub-contractors who all have different contractual obligations? Would you like to be able to run that job site while on vacation and without the project falling apart? With the currently available technology in real estate development and project management, this is a real possibility, and has been for a few years.
Whether your goal is efficiency, growth or convenience, you can find technology to help you.
How can you use technology to your advantage?
With all the options available today, the possibilities are endless. Your only limit is local regulations at this point in time. If your local registrar of deeds accepts virtual signatures, scanned documents and bitcoin payments recorded on the blockchain, you could buy and sell property with a few clicks of your mouse.
Think beyond what's currently possible, too. If you are tech savvy and a real estate entrepreneur, you'll come up with creative ways to further your business by building upon today’s technologies, too.
Who has access to currently available real estate technology?
Real estate is and has always been a transaction between two parties: a buyer and a seller. That part of the equation will not change. How the sale is conducted will and can change, making real estate more accessible to everyone.
Individuals can now shop online and can purchase a rental property or vacation home across the country sight unseen. They'll never have to visit their properties if they don't want to. The funding, purchase paperwork, closing and receipt of deed can all be done online. The buyer doesn’t even need to hire a real estate agent since a single company can handle the entire transaction. Yes, that company may have agents, but they don’t necessarily have to be part of the transaction.
Similar applications are available for real estate brokers, agents, property managers, home builders, real estate developer, and investors. Technology in real estate has broken down barriers and opened up avenues of profit.
When is the best time to implement a new system?
Most of the currently available real estate technologies will have a little downtime upon initial implementation. If you know business is typically slower during the winter months, that may be the perfect time for software conversion and agent training. You may be surprised to see your new system up and running within a few days to a week.
Where do you turn for advice?
Online, of course! But you can take your interest a step further and run demo software or call the company. By asking questions directly of the vendor, you can see how their solution would handle the specific types of transactions you usually deal with. This ensures their software or system will do what you expect it to do for you. As with anything else, talk to a few similar companies to find the one that’s the right fit for you.
With any new technology, the original version may have been expensive, may have required months of downtime and may have been confusing to use.
Transparency, Efficiency and Bigger Profits
Real estate technology has been around since the birth of the Internet and yet is still underutilized. The last 10 years have brought massive growth to the industry, but like many things, real estate is slow to change.
So how can individual real estate professionals make the best use of technology for themselves?
Imagine a real estate brokerage with many teams of agents. They are all tied into the local MLS and have apps that keep them updated when changes take place. Client MLS carts update automatically based on criteria they set. The client then calls the agent to set a showing and write an offer. The deal is closed, and everyone is happy.
Now imagine doing it all virtually.
This is possible with some of the new technologies available. In fact, you don't even need to physically enter the home, speak to the agent or help fill out the offer…it can all be done virtually. And now with areas on the blockchain, closings can be done from all over the world without ever requiring your presence.
These new technologies may be disruptive, but they open up worlds of opportunity for real estate professionals, homeowners, investors, and tech-savvy business owners.
If you're a real estate professional and haven't researched any of the available technologies, I recommend you take a look at Thomvest Ventures for insight into 140 plus Proptech companies. You’ll learn how to give yourself and your business a competitive advantage.
Eva is a marketing copy and content writer. Her goal is to help businesses set themselves apart and grow!