HOW TECHNOLOGY IS SHAPING THE FUTURE OF REAL ESTATE
How technology is shaping the future of real estate.
The technology sector is creating significant disruption in many industries: financial services, transportation, retail, healthcare, manufacturing…
But the real estate industry appears to be lagging on bringing technology into the fold.
In real estate, people are still the primary component in terms of business. They maintain a strong grasp on the critical functions of providing clients and real estate investors with advice, counsel and strategy.
However, technology isn’t threatening to replace the people aspect in a real estate transaction. Instead, it’s aiming to change the way people operate and function within a real estate company.
While the real estate sector has adopted some technology in unique ways, there is plenty of opportunity for it to bring innovation to the industry for both residential and commercial real estate. Tech has the potential to serve the real estate sector and the people that are so essential to its success. We’re finally seeing momentum building with tech sites and applications that make jobs easier and introduce new efficiencies and strategies.
Here are a few ways technology is being introduced and changing the status quo in the real estate markets:
Information availability has traditionally been a major obstacle throughout the real estate industry. Multiple listing service data isn’t currently accessible to the masses, and other data sources are spread across county websites in formats that can make it difficult to parse. This creates a huge challenge for real estate professionals to simply gather and aggregate information, not to mention turn it into actionable insight for an average property buyer.
Technology websites have popped up and gained traction over the past few years to combat this industry-wide problem. Names like Zillow, Redfin, Compass, and HouseCanary are becoming big players and challenging the traditional processes in real estate.
The type of research and data these sites provide used to be an expensive task for the average real estate professional. Times are changing and easy access to real-time data is bringing increased transparency and knowledge to the industry. Data is no longer stuck in a silo, whether it’s due to geographic or competitive constraints, so anybody can go in and do a quick property search to learn more about it.
What does a data-driven approach look like?
Data aggregators like HouseCanary strive to create comprehensive databases that provide a holistic perspective on the real estate market. From specific details about a property to broad economic trends, having as much information that’s available allows buyers and sellers to make the best real estate decisions possible.
HouseCanary notes that increased availability and quality of data, “investors are finding profitable investment opportunities where they never looked, mortgage companies are getting a whole new view of properties they underwrite, appraisers are changing how they appraise, and homeowners have better information to manage their largest asset.”
All stakeholders involved in the process are able to perform their jobs and responsibilities at a higher level and, together, advance the industry as a whole. The data-driven approach works toward the objective of helping people make better real estate decisions.
So how might this affect real estate professionals?
Let’s take a look at how technology is impacting real estate agents and listing services. Companies like the aforementioned Compass are using technology and data tools to enable and facilitate a more consumer-centric process.
Developing an all-encompassing platform allows the ‘Uber’ business model to be applied to the real estate industry. The idea is to integrate technology with the industry’s top talent to enhance the entire real estate experience. Real estate agents are available at the click of a button. Buyers can search for listings in their desired area and more easily perform some of the due diligence steps. Sellers can present their properties in new and unique ways to attract potential owners.
Bringing the real estate markets online offers opportunity for limitless innovations. Marketing strategies have been reinvented as homeowners and property investors are congregating on social media sites. Communicating with a niche market is quicker, easier, and cheaper than ever before. Marketing campaigns are able to achieve new levels of visibility among potential clients.
As Generation Z matures and enters the real estate markets, technology is going to continue to be a major driver for the industry. With their reliance on technology for most aspects of life, they will expect technology to be integrated with their real estate experience. Depending on the agent, you may be able to view a property virtually and on the go. Virtual reality is one technology that will drastically change the way buyers and investors view properties, some even viewing a potential property from hundreds of miles away.
THE INTERNET OF THINGS
The Internet of Things (IoT) is another technological aspect that will impact the real estate industry. The impact of IoT in real estate will look similar to the value-driven approach in supply chain management.
Bringing connectivity to buildings will enable them to collect, aggregate, and analyze a myriad of data points. By implementing key performance indicators (KPIs), the IoT revolution will provide property managers with a data-centric view of the operations and performance of their properties, leading to new efficiencies and potential cost savings. If this could create savings for property managers, consider the benefits that it could provide for real estate investors in the long run.
Imagine the simple scenario of an apartment complex with a handful of community washers and dryers… and how much fuss is created when one of the washers is out of service and tenants can’t do laundry.
By integrating IoT sensors and gateways with KPIs to track and monitor the usage of washers and dryers, property managers will be alerted when a machine is close to its scheduled maintenance, before it needs to be fixed. This helps eliminate delays of service in the laundry department, but provides the overall benefit of predictive maintenance for property managers and tenants.
This is just one example of how the IoT can bring significant value to the real estate industry. Developers are focusing their attention on smart-buildings that are IoT-enabled and provide increased visibility into the property’s performance.
You can see the opportunity that technology presents for the entire real estate sector. But the industry still has a long way to go before they realize the potential of incorporating technology into the traditional models.
Technology is quickly gaining momentum, and when it does hit the tipping point the whole real estate landscape will be transformed. The tech movement should rapidly equip real estate professionals and investors to make better, informed decisions in today’s dynamic markets.