Technological innovations are rapidly changing the way buyers and sellers interact with agents, brokerages, and the market at large.
Technology, now-so more than ever before, has become ubiquitous in almost every facet of our lives. The largest and most traditional industries have become the biggest targets for new technology and tech startups, intending to disrupt massive and long-standing markets with innovative technology. It happened to the hospitality industry with Airbnb, and it happened in the taxi industry with Uber. Disruption is an often overused term in the startup space, but that is exactly what is happening in real estate today.
We became interested in researching the real estate industry when we recognized the confluence of a handful of factors that signified a changing industry. We spoke to executives across approximately fifty real estate companies – from household names like Douglas Elliman, to luxury boutique brokerages in New York City, to tech startups working in the space – to learn how leaders on all sides of the industry were thinking about technology.
Real estate brokerages have existed in the United States for nearly 200 years, operating largely in the same way for the majority of that time. Over the years, a handful of companies have cemented themselves as industry leaders, growing to astronomical agent counts and transacting hundreds of billions of dollars annually across the commercial and residential markets.
Even so, over the last decade, the real estate market has seen a significant shift. Ask anybody not involved in real estate what they think of brokerages, or real estate agents, and you’re unlikely to get a very friendly response. The real estate industry is, by it’s nature, stress inducing. Buyers and sellers are expected to make extremely important decisions and transact large sums of their savings, based on the information provided to them by a company and agent who both make their living off of the commission from the same deals they work on.
Our conversations provided some interesting insights into the ways technology is changing one of America’s oldest industries. Here are four important trends that existing players are talking about right now:
The Shift To Mobile
As eyeballs continue to shift more and more away from desktops and towards mobile devices, real estate brokerages are striving to remain relevant in their marketing efforts. Several brokerages have adopted both client-facing and agent-facing mobile apps, in an attempt to stay current in a world that has become decidedly mobile-first. Douglas Elliman built their externally facing app, Elli, dedicated to allowing potential buyers to browse properties and contact an agent, all from their cell phone. Simultaneously, they released an app for their agents called MyElli. MyElli allows agents to manage and monitor their clients, sharing listings and chatting with them via an in-app messaging platform.
Traditional brokerages are now extremely cognizant of the fact that all of their online content must be mobile-optimized, and that many clients expect to be able to engage with their real estate agent and brokerage through a mobile app.
Engaging Customers Through Data
Recognizing these frustrations as an opportunity to capture market share, a multitude of startups have begun offering a wide variety of resources for potential homebuyers that aim to provide the clarity and independence that the traditional real estate process lacked. Tools like Zillow’s Zestimate and the Compass Markets app capitalize on the abundance of publicly available data to provide individuals with an unprecedented level of insight into the real estate market; access traditionally only available to real estate agents. Brokers want people to spend more time viewing their digital properties and gathering as much information as possible in one place.
Data is equally important to real estate agents. Brokerages such as Porchlight in Denver are now providing tools, both off the shelf and custom built, that allow agents to be as informed as possible on the constantly changing markets around them.
Startups Look to Disrupt
While some companies have focused on the data and analytics component of the real estate market, others in the tech space have found opportunity in circumnavigating the brokerage process entirely. Websites like HotPads, StreetEasy, and VeryApt work to empower buyers to handle their own property search, connect with landlords, and set up viewings.
These proprietary platforms utilize intelligent algorithms to customize your search so that you’re only viewing the kind of apartments you want to see - a feature that gives people complete autonomy over their search process while providing an experience that feels customized and personal. In addition, they connect buyers and sellers directly in order to minimize transaction costs and fees.
While there are many startups in this space who have built great technology and seen success, real estate as an industry remains undisrupted. When you mention real estate and tech, the first company that comes to most people’s mind is Zillow. Zillow, while certainly a powerful force in the industry, is not a disruptor. They do not sell real estate: Zillow makes it’s money by selling ads to real estate agents. It is an exceptional top of the funnel lead generation tool, but it cannot close deals.
Optimized Internal Processes
In an industry that is completely built on commission, any time an agent isn’t selling is a loss. Between the appraisals, negotiations, legal work, mortgages, and commission splits, real estate deals come with an incredible amount of often tedious but extremely important work. This work is at odds with an agent’s interest to be selling as much and as often as possible.
Brokerages large and small have turned to technology to reconcile this. Internal tools that facilitate this process and automate much of the tedious work have proven to be game-changing resources for agents at some of the country’s top brokerage firms. Products like Folio, a Gmail plugin that helps real estate agents better manage transactions, are empowering real estate professionals to more succinctly handle their business.
As the wave of technology continues to sweep across the real estate market, the brokerages who are taking advantage of these four trends are differentiating and growing faster than ever before.