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The real estate industry is one of the slowest when it comes to adopting technology. Every innovation and technological advancement has been perceived as a disruption to the traditional model of real estate business.
In short, technology is a game-changer.
According to the IBIS World Industry Reports (2018), US real estate is a $35 trillion asset class and generates over $1 trillion in revenue annually. Yet, venture investors have been skeptical about investing in real estate tech until recently. Based on recent studies on PropTech investments, it has been noted that there is a rise of 36% each year in Global PropTech funding, signifying a possible acceleration in the near future as more real-estate tech solutions crop up and venture investors enter the market.
If this is an industry that has historically been difficult to disrupt with technology, then why is there a sudden investment boom in real estate technology?
The Evolution Of Real Estate Technology
The real estate industry is inherently data-driven. But the biggest blocker to growth and exposure to technology was the unavailability of this industry data in the public domain. The technological evolution in real estate commenced around when businesses were introduced to personal computers and database management systems.
With the advancement in computing power, the US market in the mid-1980s witnessed development in alternative real estate investment. As a result, data that was previously private became accessible for public consumption. This was one of the most significant characteristics of the first wave of PropTech, which lasted well into the 2000s.
What is PropTech?
To put it simply, PropTech is property technology, i.e., any technology for the real estate space that makes buyings, selling, renting, managing, and using properties easier. It can refer to a variety of services and technology platforms that operate in the real estate industry. It could be in software (like property portals), hardware (like sensors), or a service.
The rise of PropTech can be credited to the dramatic technological trends circling the conservative sphere of the real estate industry. It seeped in when the need for tech-driven transparency and the power of data organization and management that tech innovation offers emerged.
The Three Phases
The growth of traditional real estate business was not centered upon technological advancements. But the emergence of tech trends and the gradual shift of the conservative model of real estate to a more dynamic one accelerated the growth of multiple verticals within the business.
PropTech is part of a larger ecosystem. Its presence itself affects and gets affected by four main verticals -
- Investment & Finance
- Planning & Building
- Buying & Selling
- Management & Operations
It is not a simple progression towards digital transformation in real estate but an active acceptance of innovations that essentially disrupt the traditional business model and replaces it with more efficient and data-driven ways to conduct it.
The Key Drivers Of The Evolution
The most prominent driving force behind the fast-paced adoption of technology in the real estate market is the rise of the Internet and the rise of internet users. The millennial demographic has contributed dramatically to the overall changed experience of real estate.
- 50% of millennials use mobiles to look up homes, around 26% use the same medium to take the next step in the home buying process.
- Nearly 95% of home buyers use the Internet to look for homes, while 54% of home buyers indicated that using the Internet for primary research was their first step in the process. (Real Estate Tech Trends Report, 2018)
- Over 90% of real estate agencies have adopted AR and VR to provide better services to their potential consumers.
However, technological advancements in the real estate industry are not limited only to enhance the experience of the consumers.
How has it impacted the real estate business? What effect did it have on the evolution of sales and marketing in real estate teams?
The Impact Of Technology On The Real Estate Industry
The technological evolution in real estate has also changed the perspective of buyers and sellers in the industry. It is now so intricately tied to our daily lives that we don't realize how we have been instrumental in aiding these changes in real estate businesses.
Sales & Marketing
The evolution of real estate technology has changed the way realtors approach the sales process.
Even though the rise of the Internet has changed the structure of the sales process, making it a lot more efficient and less time-consuming, the real estate agent continues to be at the center of this.
The third wave of the real estate tech evolution has introduced the industry to productivity tools and analytics that focus on agents, who are instrumental in making the sales process a quality experience for the consumers.
In 2018, over 87% of the population relied on a real estate agent to assist them in purchasing their property, out of which around 90% of millennials worked with an agent to take the next steps.
With the consumers gaining greater autonomy in checking the property listings and getting in touch with a realty company or an agent, realtors need to focus on better marketing solutions and sales processes to convert more leads.
It is now more critical than ever for real estate agents to have a social media presence and build a reputation that is made visible. Over 42% of buyers prefer to connect with a real estate professional referred to them by somebody they know.
The multiple communication channels such as texts, calls, emails, and social media have reduced the time lag between a reachout and response. To close the gap between a buyer/seller reachout and a consequent follow-up by an agent, there is also a need for technology that helps real estate teams manage their leads and their agents’ performance.
Agents today have a multitude of marketing resources at their disposal. Real estate professionals can now access a pool of apps and tools such as lead management solutions, responsive MLS-integrated websites, comparative market analysis software and so on.
Real Estate Technology reduces a truckload of manual labour in the entire sales process of a transaction and shines the spotlight on the real estate agent. It allows the agent to focus on the sales process that actually involves a potential client.
The most basic but essential step in the sales process of a real estate transaction is getting hold of well-qualified leads. Lead generation platforms such Zillow Premier Agent helps real estate teams generate leads and also provides an all-in-one marketing solution to get in touch with potential clients.
Ylopo is a marketing platform that helps real estate brokers, agents, and teams generate new leads that have just begun their house hunt.
Apart from being a tech platform used for lead generation and marketing, it also allows seamless integration of one of the most powerful innovations in real estate tech - Artificial Intelligence through RAIYA (Real Estate Artificial Intelligence Your Assistant)
McKinsey research states that -
Salespeople who have adopted AI have increased leads and appointments by up to 50%, which helped them develop and sustain relationships with leads that converted later on.
Artificial Intelligence is transforming the industry and how real estate professionals conduct business in myriads of ways. A very common usage of AI is through chatbots on websites of realty companies. It helps optimize time and respond without delay to potential clients and answer questions that don’t change for every customer. It can also leverage automation with a CRM system to respond promptly to leads and help the team focus on top-priority tasks.
The next step in the real estate sales process is following up and managing your leads. A CRM is a must-have for every real estate business. It eliminates the cutthroat competition that causes leads to slip from your plate onto another team’s. It is the primary step in the adoption of technology in the sales and marketing process of a real estate business.
FollowUpBoss, BoomTown, and Chime are some of the popularly used CRMs in the real estate business.
In real estate, 90% of business decisions are made based on data.
Data analytics has significantly impacted the decision-making trends in the real estate business. The industry is now moving over conventional analysis methods to draw hypotheses and harness opportunities for profitable investments.
Here are some of the major benefits of analytics for real estate businesses.
- Data analytics helps real estate brokerages gain deeper insights on their business and access a magnified view of agents’ performance
- Risk mitigation by predicting future price to make profitable decisions
- Improved marketing strategies based on data insights for better customer reach and engagement
- Insights into latest trends based on profitable locations, deep dive into market cycle risks
The Covid-19 pandemic in 2020 also contributed to the exponential pace at which the real estate industry is adopting new technologies and embracing innovations.
Digital tech has left an indelible mark on how the industry now functions. It has disrupted every traditional model and replaced it with a more efficient and fast-paced mode of operating, be it lead generation, marketing, communication, or simple data organization.
The real estate industry has now entered the tech race subverting the assumption that this sector will continue to remain immune to the rapid adoption of new technology.