A Glimpse of the Future: The Latest Trends in Real Estate Technology
Swipe right? Swipe left? Like or dislike? Save or ignore? These days, anything can be decided with the tap of a finger on a mobile screen—including a potential new home. With a recovering economy and the vast potential of technology to solve the ever-growing need for properties, there has been a boom in the real estate tech industry. As of 2015, $1.5 billion has been pooled towards real estate tech ventures. That’s 350% higher compared to 2010, and these ventures—many of them being startups—have been developing tools that aim to innovate the home search process. Names such as Trulia, Zillow and Street Easy come to mind with their innovations which drove—and continues to drive—a major impact of success in the industry.
Today, real estate tech is now expanding with focus shifting towards the very lucrative commercial sector—from office buildings to industrial warehouses. Motivations such as higher transaction values as well as competitive advantages drive many real estate tech developers to grab this worthwhile opportunity. Most of them stem from New York City which, according to Cushman and Wakefield, has been the leading commercial real estate hub since 2010. The rise of real estate technology, however, goes beyond the U.S. with professionals from other major metros—like London, Paris and Tokyo—maximizing the advantages that real estate tech provides. This leads to the emergence of an interesting set of trends that may dictate the future direction of the industry.
Mobile Technology, a Platform for Everything
Mobile devices have always been a part of everyday business, given the “on-the-field” nature of real estate. Agents contact clients and vice-versa, allowing the service to transcend office walls. With new technologies and globalization enabling easy access to information and services across geographies, professionals can find the necessary online tools to efficiently approach any situation. Prospective clients can search for new rental spaces or book open houses from the comforts of their home. Brokers can easily pull up relevant property information for sharing and respond to clients in a timely manner. Sellers can manage the entire transaction process from behind their tablets. Networking can even be done between key real estate professionals through the online social sphere.
Given the free benefits and advantages that real estate technology offers, some fear the “death” of the real estate broker. Evidence, however, suggests that brokers still play a vital role in the industry. Successful brokers adapt to new technologies to connect to clients and to improve the way that they market listings. Ultimately, their knowledge and expertise continues to provide the “human touch” that tech companies and consumers value.
Crowdfunding as a Source of Finance
No one can deny the importance of a mortgage in securing attractive assets and properties, and with the signing of the 2012 Jumpstart Our Businesses (JOBs) Act, relaxed finance regulations opened up opportunities to improve real estate lending. One popular example is through crowdfunding—a method of financial sourcing that allows businesses to accept contributions without having to go public. This gives the average investor more access to investment platforms that were once reserved for high-net individuals and investment firms, allowing him or her the chance to gain higher returns.
Of course, crowdfunding has its weaknesses. Charged fees from using the platforms can add up costs, and at the same time, it may not be as friendly to inexperienced lenders and developers. Despite some of these setbacks, it still remains to be a popular real estate financial source with more platforms still in development.
Online Property Management Software
Online property management is still a young sub-category of real estate technology. With industry-wide adoption at around 10%, there is still a massive opportunity that’s ready to be tapped in developing this powerful type of software. Think of Yardi or Appfolio which promises to streamline property deals while allowing users to stay mobile. Through an artificial intelligence that integrates the entire transaction process, clients and agents no longer need to manually compare numbers and follow up on their deals. The end results are improved communication, faster service and time efficiency.
Real Estate Research and Data Analysis
The most important real estate decisions are heavily based on information gathered. There was a time when analysts would need to pick up their calculators to compute complex formulas, and surveys would be rolled out to provide a demographic census for investors to carefully evaluate. Technology, however, revolutionizes the research process and maximizes the ability to obtain all kinds of data. Clients and agents are not the only ones to benefit from this. Developers monitor data trends related to zoning maps, energy costs and climate factors so they can discern key opportunities that are both attractive and cost-efficient. Investors search online for documents that contain comprehensive market data as part of their due diligence.
In an environment that treasures the richness and breadth of information, technology that eases the search process makes a huge difference in decision-making. Through real estate research and data, professionals can easily collect, analyze and share information that leads to more informed choices and faster closings.
The Emergence of “Smart Contracts”
Arguably the most reliable transaction record system to date, Blockchain technology provides the safest way to transfer deeds and make contracts for important property deals and mortgage acquisitions. Through its encrypted ledger, this “smart contract” creates a mathematical algorithm that assists in exchanging funds and keeping track of a series of chronological events related to payments and deed transfers. In addition, it creates digital IDs for verification purposes without having to rely on third-party involvement, thus eliminating the risk of tampering and fraud. Conversations regarding this latest development are still ongoing, especially in real estate media and conferences with professionals hoping to expand its use in the industry.
So, what will emerge next? The possibilities are endless as more technologies are still in the process of being developed. More innovative ways are expected to flourish from these ventures, making this an exciting time for industry professionals as they continue to anticipate new ways to improve both residential and commercial acquisitions and finances.