Remember the days when buying a home involved realms of paper, pamphlets, and brochures? Glossy sales material, purchase agreements, and mortgage applications were finally followed by the actual closing docs eating up precious filing cabinet space. Now it’s possible to do the whole transaction on your phone — and that includes taking a walkthrough of the home too. You can thank proptech for easing the pain of paperwork. Proptech is a fancy term for the digitization of real estate. Putting the entire home searching, buying, selling, renting, managing, investing, financing, and even construction experience in your pocket. Like the rest of the world, real estate has gone remote.
If Covid was good for anything it was shifting the needle forward a decade or so. No one has to be anywhere anymore. A WiFi connection teleports you to any location and sends any docs your way. A swipe of a finger and a multi-million dollar home is yours.
Proptech is the umbrella term for many tech branches of digital real estate that encompass:
RETech (real estate technology)
CRETech (commercial real estate technology)
Fintech (financial technology), and
ConTech (construction technology)
These days technology is intrinsically bound to every aspect of real estate. Let’s look a little closer:
1.Virtual Showings
Digital walkthroughs can take several forms:
A pre-recorded video tour readily available online or through social media
A Matterport walk-through where a buyer can view a 3-D profile of a house and then zoom in to a specific location to examine it in detail.
A live private showing from an agent on Zoom, FaceTime or Facebook Messenger
A fully immersive experience using 3-D headsets.
2. Home Staging
Virtual staging, an augmented reality tool, allows furniture to be inserted into a real-life home, showing online buyers what a home would look like furnished. It’s actually a tremendous advantage to both sellers and agents. Sellers don’t need the expense and disruption of moving furniture and hiring a stager and agents can start showing a home almost as soon as they have the listing.
3. Chatbots
Every online sale or customer service business is using AI chatbots. No longer the realm of science fiction, as AI gets more advanced, learning as it goes, more nuanced answers can be dispensed to customers who will find it hard to believe they are not talking to a human. According to Business Insider, chatbot’s market size is set to grow from $2.6 billion in 2021 to $9.4 billion by 2024. For real estate purposes, brokerages could have chatbots set up to answer questions about properties, arrange showings or even make offers.
4. Off-Market Listings Through Big Data and Analytics
Once real estate agents held the keys to the real estate castle. Buyers had to go through them to access the MLS and exclusive listings. The emergence of Realtor.com, Zillow, Trulia, Redfin and the like has made every listing available to everyone as soon as it hits the market. Previously investors looked for off-market deals by scouring county records for liens, bankruptcies, divorces, probate sales along with out-of-state owners or people who have owned their homes for a long time. Now technology has stepped in and several companies cross-reference all this data providing possible deals long before they hit the market — for a fee, of course!
5. Potential Buyers Can Be Sourced Before They’ve Even Started Looking
Using the same big data and analytics potential buyers can be identified through rental properties, new job hires announced on social media, wedding announcements, and graduations.
6. iBuying
It was hardly a surprise when iBuyers such as OpenDoor, Zillow, and Offerpad went to sellers directly, offering them a guaranteed sale for a discounted price, taking the place of wholesalers who had flipped homes, quickly re-listing them on the open market. The advantage with an iBuyer was that they actually closed on the home, paying transfer taxes, whereas many wholesalers simply assigned the contract and pocketed the difference, leading to murky legal waters.
Interest in iBuyers peaked during the early days of Covid when homeowners were afraid of strangers entering their residences but waned when the housing market soared through lack of inventory. Don’t expect iBuyers to go away though. They’ll be back once the housing market cools.
Using the same big data and analytics potential buyers can be identified through rental properties, new job hires announced on social media, wedding announcements, and graduations.
Pros and Cons of Proptech to Real Estate Agents
There has been a lot of conjecture regarding proptech and how it might affect an agent’s livelihood. It’s not without reason. Cutting out the middle man and presenting homes directly to buyers is a concern. But there are still laws and protocols that come with buying and selling homes and an agent’s ability to adjust to incorporate technology will influence their ability to keep the deal pipeline flowing. Here are some of the pros and cons of technology in the buying and selling of real estate.
Pros
1. Keep In Sync With Buyer’s Needs
A buyer is going to look online for a home first before selecting an agent. An agent’s job is to make sure they have a strong online presence on social media and on listing sites to attract a buyer’s calls.
2. Streamline The Home Buying Process
There’s no doubt that during Covid proptech tools such as virtual showings were a huge benefit to both agents and buyers. These aren’t going away. They speed up the whole process and by staying at the forefront of a buyer’s needs allowing an agent can do more showings in a shorter space of time and thus sell more homes. A live walk-through via Zoom or FaceTime allows a buyer to stop an agent and ask questions, something that can’t be done on a pre-recorded walkthrough or with Matterport. An agent should make this point to any potential buyer.
3. E-Signing Eliminates The Need For Paper Work and Maintains Digital Copies
The lack of physical paperwork is a huge relief for all concerned and stops delays that used to occur by lost documents or illegible scans and faxes.
4. Social Media Allows A Massive Outreach
Social media has done wonders for home sales, with agents able to reach global audiences with the swipe of a screen and at little cost.
5. Potential Buyers and Sellers Can Be Identified Early
Big data and analytics are a part of our lives and are here to stay. Although some start-ups with brokerage licenses are now approaching developers directly to list their properties with them for reduced fees with the promise of attracting targeted buyers, such as listwithclever.com, it’s up to the bigger brokerages to stay on top technology and use their number-crunching algorithms to their advantage, finding deals before they materialize on a listing site.
Cons
1. Inexperienced Agents Could Mislead Buyers
When everything and the kitchen sinks wind up on the internet it’s easy for a potential buyer to get confused. If a bad agent, hungry to sell a home, misleads a potential buyer into getting a bad deal there’s not much anyone can do about it.
2. When Home Staging Turns Into Creative Staging
Some renderings are so lifelike it’s hard to believe they aren’t real. However, a rendering is only a virtual simulation and when what’s being represented isn’t what’s being sold problems will surely arise. Similarly, virtual showings through pre-recorded videos or Matterport are fine for a first look but before buying an in-person or Zoom walkthrough is recommended.
3. Non-Tech-Savvy Agents Might Have a Hard Time
According to aceableagent.com agents over 40 years old were 55% more likely to be concerned about the rise of PropTech rendering them obsolete. In order to stay current and do deals, Luddite agents need to face their fears and take a course or two.
4. Buyers and Sellers Can Communicate Directly Without the Need For an Agent
Wholesaling has been around for a while and although some municipalities are outlawing it unless the buyer is licensed, technology will inevitably find a way for deals to happen without an agent being involved. When third-party companies make data available for anyone prepared to pay for it sellers will look for ways to circumvent a broker’s commission.
5) The Personal Side of Buying a Selling A Home Will Diminish
With all brokerages planning to have a heavy virtual presence, look for the old way of buying and selling real estate to be gone for good. There was an undeniable charm about in-person showings, open houses, the smell of oatmeal cookies, and the human aspect of convening around home and even making a friend or two along the way. Real estate will be far less personal now. It’s the end of one era… and the dawn of a new one.
Summary
Adapt or get left behind. Technology will continue to change the way we live our lives. Real estate is just one part of the equation and it’s inevitable that the way in which we buy and sell homes is going to morph. As with any industry, changing with the times is essential to remaining