Tech is transforming real estate at a speed that worries some and excites others.
But many would agree that current real estate transactions trigger as much anxiety as joy. A deal can take months, with a string of third parties showering sellers and buyers with fees and paperwork. Those with inside knowledge have an edge in the market, while the ordinary person’s buying process is steered by experts and administrators.
Can technology put ordinary homeowners and home shoppers in the driver’s seat?
Simplicity and Transparency
Residential real estate technology is making transactions simpler and more transparent. Key advancements include:
- Online databases with ever-increasing stores of information available to the general public.
- Faster closings, thanks to technology such as electronic notarization, and remote notarization of deeds over webcams.
- 3D home staging and virtual open houses.
Granted, some sellers and buyers are not tech-savvy, and many brokers and mortgage specialists still prefer traditional, in-person meetings at key junctures of a home sale. But those junctures are precisely where the Spring 2020 stay-at-home rules forced people and organizations to adopt the latest tech knowledge. Read on for the most interesting ways technology is shaping the present and future of real estate sales.
Real Estate Meets Property Tech
We’re all used to online submissions of paperwork surrounding the conveyance of property. The technology sector continues to become ever more enmeshed with the practice of selling real estate. A few examples:
- It is normal procedure for counties to scan deeds into recorders’ databases and make deed information available online.
- DocuSign is well known to buyers and sellers today, and the National Association of Realtors’ Second Century Ventures division has been instrumental in its rise.
- Electronic signing can also be done with Vasco’s eSignLive, Adobe Sign from Adobe Systems Inc., and a number of others.
- Digital document notarization is a growing practice, and some counties now allow the electronic recording of deeds.
- Zillow launched its residential realty portal in 2006, and acquired its forerunner Trulia in 2015. The rise of Zillow has made owners’ and brokers’ listings available to any seller or buyer with internet access.
- In times of social distancing, innovations such as Zoom and Facebook Live are helping realtors meet their clients’ needs for both safety and convenience.
Seeking the “Hassle-Free” Real Estate Transaction
It was only a matter of time for companies that list property to begin trading it. SoftBank has invested hundreds of millions in the residential real estate startup Opendoor. The concept: an iBuyer model. Its message: “there’s an app for that” when it’s time to buy a house. Since Opendoor burst on the scene in 2014, several other iBuyers have become active in various regions of the country. Zillow Offers integrated the iBuying model, as did a number of big-name real estate firms.
In 2020, a pandemic put iBuyers on hold. But reports of the model’s demise have been greatly exaggerated.
The iBuying concept has taken real estate shopping in a new direction. It is opening doors to homes by remote control. Buyers can read real-time details about how many people have viewed the home, while artificial intelligence can ferret out potential buyers even before the home goes on the market. Newer advancements include home loans through the iBuying companies Opendoor and Zillow. The model has evolved into a one-stop home shopping experience.
And by selling with iBuyers, a homeowner can get a cash offer in as little as one day. Brokers enjoy high commissions and customers get quick closings. Win-win? Many people think so.
Stories about the model’s demise came out during the early part of the Covid-19 pandemic, but these reports have been greatly exaggerated. After a temporary halt in early 2020 due to public health concerns, Opendoor, Offerpad, Zillow and Redfin are all busy getting cash offers to sellers with this new way of doing real estate business.
The iBuying business model has its risks. A precarious economy presents a test for it. If people have trouble qualifying for mortgages, the big iBuyers, who buy homes from sellers essentially to flip them, could wind up holding thousands of empty homes. On the other side of the coin, because it skips the open house phase, iBuying is uniquely adaptable to the social distancing era. “Most importantly,” as Mike DelPrete has observed, “selling a home to an iBuyer provides certainty in a time of uncertainty — and we are definitely in a time of uncertainty.”
Exciting Innovations Ahead: Smart Home Tech
Smart home technology is changing house hunting. It’s changing the selling process. It’s changing the way we live in our homes. Here’s just a sampling of the changes we’re seeing.
New Ways to Explore Houses
Virtual reality (VR) and augmented reality (AR) turn floor plans and images into 3D experiences. We can now enter an interactive scene that makes a realistic walkthrough possible from wherever we are. Look for AR — and related gadgets, like smart glasses — once we have a major rollout of 5G. Look also for mobile real marketing through QR codes (the digital, square barcodes people can read with their smartphones) in towns and cities.
What constitutes transparency, accountability, and the ethical use of data? The debate will continue.
Smart home technology inside houses is already becoming mainstream. It can help keep people secure, well, and active. It can adjust the indoor climate, and lessen our impact on the outdoor climate. Residents’ data could shape the future of building design, with artificial intelligence picking up on the impacts of aspects of our home environment on stress levels and overall health.
At the same time, wherever information is tracked, people have questions about how personal information is gleaned, sifted, and used. We can expect continued debate about what constitutes the ethical use of data.
Fintech and Proptech
Fintech, or financial technology, refers to innovative stores or value and payment methods, from the wallets in our smartphones to digital currency. Real estate employs specific types of fintech, such as secure money wiring portals for loans. What else is in the cards?
Consider proptech, a term coined by blending property and technology — just as financial technology became fintech. Proptech includes apps that make the housing market more accessible to non-experts. It also helps with the day-to-day activities involved in real estate decisions. For example, companies have begun to use geolocation in housing search apps, so users get an alert when they’re near a house for sale. Another recipient of SoftBank funds, Compass, has created a smart for-sale sign that lights up when someone approaches to offer details about the home by sending the curious to an app.
Blockchain may turn out to be the next proptech game-changer, but adoption depends on whether regulators and industry groups decide to buy in. The promise of blockchain as a property technology is that transactions will be recorded in an error-free and automatic process, and transfers will occur according to the precise terms of the deal. Blockchain as proptech could also offer a remedy for the imperfections of surveys and title searches.
Blockchain, of course, began with bitcoin, but whether bitcoin will be the main store of value is unknown. Some have proposed the idea of a propcoin specific to the property sector. The idea will be to increase liquidity and reduce bureaucracy in at least some segments of the real estate market.
Key Question for the Future
Technology will continue to play an integral role in the future of real estate. The use of apps to channel transactions and enhance our enjoyment of real estate is clearly in the picture. Perhaps the key question is whether tech can put us in control of one of the biggest financial decisions we’ll ever make, while reducing our vulnerability to fraud — and reserving a fair degree of consumer privacy.