Homebuyers Will Be The Biggest Factor In The Future Of Real Estate Tech
It may be true that 2020 has pushed the real estate industry into using more technology, but it's also changed how tech companies are vying for your business. In the past, it has been younger generations that shape the technology landscape. Now we're seeing older generations and professions that are considered more "old school" try to find ways of doing business without engaging each other directly — and it's changing the status quo.
From the ability to engage each other directly on video calls to passing digital paperwork back and forth to even collecting payments, jobs we normally did in-person are now done online. As the world moves toward working from home, it has changed the definition of "centrally located" and made anywhere with an internet connection a viable option, as urban outpaces suburban areas in price growth.
How Real Estate Is Adapting
Zillow, which made a name for itself estimating a property's value, has moved into the iBuyer space. IBuyers use data to better estimate a home's value, then provide quick offers to sellers for, typically, at least 10% under market. Opendoor also does this, and real estate giant Keller Williams recently launched Keller Offers, another buy/fix/flip tool.
If the real estate industry wasn't already confusing, now it's hard to tell who's a real estate agent and who isn't. Zillow recently announced that in-house real estate agents will work with its iBuyer program to sell homes. This is a big change that may have been brought on by a hot seller's market. It means it is no longer just a listing site that helps real estate agents, but an actual broker competing with agents.
Coming from the other side are ReMax and Berkshire Hathaway — all brick-and-mortar real estate companies that have created online websites and tools for viewing properties online, including getting an estimate of a home's value, similar to what Zillow was known for. These once contiguous industries are blending together to become one, and many agents are being forced to pick a side.
What It Means For Buyers
Now that listings have gone digital, buyers can navigate all available homes without ever having to leave the comfort of their homes. Searching multiple sites is better than spending a weekend driving around the city. However, homebuyers are now having to search multiple sites in order to see the full inventory available since no one site exists that brings all the platforms together.
Digital home tours on Zoom or Google Meets have become the norm, while 3D and virtual reality have finally found their purpose in helping prospective buyers. New uses for emerging tech are shaping the way things are created, and we're used to that. Technology is fast-paced. But the process for buying a home is being revolutionized as well.
Moving Toward A Singular Purchase Model
In 2020, I've seen new purchase models that allow you to get approved for a loan, buy a new house, and then sell your old home all from the same company. The ease of navigating into homeownership is increasing as companies are buying up new startups in the mortgage, title insurance, and escrow services. The race among all of us in real estate tech to be a full end-to-end product is underway.
And it makes sense from a financial standpoint. The traditional 6% market would include a 3% commission to the selling agent and 3% to the buying agent, but as companies move closer to controlling both sides of the transaction (as well as the mortgage, insurance, and title process) they make more money while offering a better product to consumers.
Soon, we can expect that one tool will be able to get you a loan, insurance, a new home, and sell your old home — and it will all be done from the convenience of your phone. Though this may be disruptive to the normal real estate sales model, I believe it will be a welcome event for consumers who have heard what a nightmare buying a home can be. However, it's also going to limit and restrict consumers if we're not careful.
Why Brokerages May Play A Bigger Role
The more brokerages control the inventory, the less a la carte your options. Selecting your brokerage will dictate your lender, insurer, and even the inventory you see. Aggregating all real estate into one MLS system and all brokers working together as they fight behind the scenes for commissions will become a thing of the past, as consumers make fewer decisions after selecting a broker.
Brokerage firms will not only assist during the buying and selling process but will also assist with the ongoing ownership. I envision a simple app that will allow you to pay your mortgage, insurance, escrow, and more. A single payment every month will cover all your monthly home costs and even offer additional benefits and more from companies upstream — offerings like home warranties, maintenance services, utilities, property taxes, product guarantees for things like roofing, siding, and painting, and more.
How It Could Help Fight Fraud
With the increase in wire fraud that is targeted at the real estate industry, it will actually be a great benefit to consumers to have the broker intertwined with the mortgage. In 2017 11,300 people were victims of wire fraud in relation to real estate, costing over $150 million. Finding ways to protect victims couldn't come any sooner. The fewer moments in which money changes hands, the fewer opportunities there are for fraudsters to get involved. A platform that assists the seller, lender, and buyer in a single platform means no third parties are moving money, allowing a safer transaction with fewer opportunities for fraudsters.
The Bottom Line
As real estate brokerages begin to look like real estate technology and real estate technology looks more like brokerages, we will see fewer options but better experiences and security. When the time comes to change how you buy or sell a home, be sure you're ready to adapt.