How Technology is Fueling the Real Estate IndustryLike other industries, technology has transformed the real estate profession. In the last 10 years alone, the number of internet connections in the world has increased from less than 1% of the world population in 1995 to about 40% today. There were ten times as many internet users in the period from 1999 to 2013. From viewing properties to signing the deal, real estate business protocols are largely moving online.
We’ll explore some of the ways the rapid growth of technology has affected the real estate industry in general and explain what it all means.
The Changing Environment
The days of faxing documents back and forth are gone. A new generation of real estate professionals and buyers have never used a fax machine. Home buyers and renters are now using apps and websites instead of newspaper classified ads as a way to find properties.
The Rise of the Rental Market
Fueled by the recent mortgage crisis, rising home prices, and a younger generation that doesn’t feel the same need to buy real estate as their parents, the demand for rentals is skyrocketing. A recent study by Harvard University found that the rental population is expected to grow by approximately 4.2 million between 2015 and 2025. At the same time, many major cities are experiencing low rental vacancy rates, with Manhattan at 1.75% and Los Angeles at 2.75%.
Consumer real estate apps and websites like Zillow, Rent.com, and Trulia make it easy for realtors to list properties and for renters to find them. This move toward digital marketing has created the expectation of easy to use online interfaces in commercial real estate as well as on the consumer side. Landlords who haven’t adapted to new technology are finding they must compete with tech-savvy management firms or risk being left out in the cold.
Old analog ways of working are increasingly being replaced by new cloud-based platforms that offer the latest tools for marketing, selling, and leasing real estate. Web services can now provide landlords and brokers with the ability to track inventory, run analytics on property performance, and syndicate listings on consumer sites.
Investors are taking this seriously. Real estate technology investments have reached record highs, hitting $1.7 billion last year. Growth is expected to rise, as investors take advantage of available opportunities for innovation in the real estate industry.
Advantages to Seniors
Advances in real estate technology have advantages for seniors as well. Seniors may be less mobile and unable to drive to realtors or look at multiple properties when they want to buy or rent a home. The idea that seniors are unable to use technology is largely a myth. According to the Pew Research Center, 58% of people over 65 use the internet. This number was just 15% in 2000. Today’s retirees may have worked with computers for more than 30 years, and even older seniors are using smartphones and tablets today.
The bottom line is that technology that makes it easy for consumers to buy or rent a home can benefit seniors even more, allowing them to view listings from their homes and freeing them from the need to make unnecessary trips.
Drones Take Off
This year, the Federal Aviation Administration (FAA) approved using drones for commercial purposes. Real estate agents are already using this new technology to show properties in a completely new way.
Drones can shoot video that allows potential buyers to see a property in ways not possible until now. Buyers can see the property from every angle without having to be there in person. There’s even software that can take drone footage and turn it into a 3D model that can be displayed online or printed with a 3D printer. While drones are currently a way to market high-end properties, as they become more commonplace, less expensive, and easier to use, it won’t be long before drone imaging will be a requisite marketing tool for even moderately priced homes. Additionally, drones can be used to examine the state of the roof and for other home inspections that currently require the use of a ladder.
The Appraisal Process
Technology has facilitated the process of appraising a property, which was once extremely labor intensive and involved a lot of paperwork. In the past, an appraiser had to physically measure a property, an arduous task that took hours. Today, laser devices can measure a room in a snap. Hard copies have been replaced to some degree by apps that include appraisal forms as well as the ability to compare similar properties.
Every technology has its pros and cons. While most of the technological advances discussed above benefit both buyers and sellers, some changes wrought by new technology create challenges for real estate professionals.
Websites like Zillow allow anyone to find the value of a property, along with the value of neighboring properties. Buyers may use this information to try to negotiate the best deal. While the data on housing prices is easy to access, it isn’t always accurate. The result is that agents must deal with buyers who may have unrealistic expectations and the misperception that they’re not being treated fairly.
Loss of Face-to-Face Relationships
The real estate business thrives on personal contact. Real estate professionals say the increase in online technology means they lose touch with their customers. The personal relationship between agent and client is essential to those who are buying or selling a home, and face-to-face meetings and phone calls are necessary to build those relationships. Social media and email can help develop the personal connection, but actual face-to-face contact will cement it. People in the industry must understand that apps and websites can save time, but the focus should always be on building personal relationships.
Real estate professionals looking to transition to using modern technology in their business must consider the cost — there can be considerable expense involved. In addition, real estate companies should take into consideration that some older professionals may need more training to learn the new technology.
New technological developments can save time and increase efficiency. Those who are reluctant to embrace change and new ways of working can find themselves left behind, so it’s important to keep up-to-date with the latest industry trends. Identify the strengths and weaknesses of any new technology to take advantage of the positives and work around the negatives. In the end, you’ll work smarter and the client will be the one who benefits.