How Digital Technology Is Changing The Real Estate Industry
Like any other industry, the real estate sector also has a variety of operational activities and processes that can be optimized and transformed with digital technology with the goal to improve productivity and profitability. In fact, we can already see a change in the behavior of real estate agents, sellers and occupants (owners or tenants), who are today more open to embracing digital technology through the value chain. Enabling this transformation is the deluge of data that is now being gathered and harnessed right from construction and purchase to real estate management. All that data is helping agents sell better with deep customer insights, is helping customers do extensive research and make the right decision, and is improving the overall living experience. There is a marked improvement in the quality of services and processes.
What’s evident is that the key driving factors behind digital transformation are a good buyer experience, efficient processes and compliance with regulations. The buyer experience especially is a key factor be it commercial or residential, because buyers want a seamless experience right from property discovery to post sales maintenance. There is also a demand for transparency, accountability and honesty in all operations and business dealings such as contracts, paperwork, etc due to the size of financial transactions. In fact, the volume and size of finances involved and from the safety perspective, the real estate industry is always under a close watch of government agencies making compliance a big concern. Enter digital technology that can alleviate all these concerns.
Let us look at the top ways in which digital technology can transform the real estate industry.
#1 Search and buy
According to research, by the year 2017, more than 51% of real estate buyers were using the Internet to research and make a real estate purchase (commercial or residential) decision. Today, if any real estate agent or firm worth its salt ignores online websites and listings, they are sure to miss the gravy train. It’s not a new concept at all. Any business needs to be present and sell where customers are looking, and today’s buyer is all about digital tech. If the real estate agent/firm has their own website then it is worth the effort to invest in digital marketing tactics like SEO, online advertising, etc.
#2 Real estate agent 2.0
So here’s a fact. With so many property listings and websites easily available now, it is very easy for buyers and sellers to connect directly and eliminate the middle-man, i.e. the real estate agent. Even Whatsapp has become a popular way of sharing property details and finding buyers. But the good news is that agents are not completely out of the picture. Not if they see these new channels as opportunities to increase their market reach by leveraging digital marketing and offer customized services by using analytics to understand buyer needs.
#3 Changing site visits
There is a two-pronged approach to how digital tech will change site visits. The first is the operational aspects where agents can use websites or custom software to schedule site visits and also plan pre-visit requirements like a deposit, online forms, valid ID proofs, financial references, etc. The second aspect is a more radical change, where virtual and augmented reality apps can provide a 360-degree experience of the site online from anywhere and without the need to ask the buyer to travel or spend time scheduling a meeting. Imagine being able to view a property by moving around a property virtually and experience the size and placement of rooms, sizes of windows, even the fixtures like wardrobes and closets, or being able to step in to the bathroom and get a feel of the shower area. Advanced VR software even allows buyers to virtually check out the neighborhood. It’s like going to the site without even stepping out of your home or the agent’s office. Think Pokemon Go!
#4 Digital documentation
Preparing documentation related to the rental or purchase of any property, commercial or residential, used to take hours. The documents were prone to manual errors, and in cases where the purchased property was in another city or country, there would also be the hassle of including regional laws and regulations. But today there are several websites and automated tools available that take a fraction of the time needed earlier to prepare all documentation. If engaged early during the transaction, these portals record and manage each step right from documents needed for the first visit pre-requisites to transaction-related documents, payment information, ongoing rental revisions, etc. Such portals also allow direct validation credentials with government authorities, enable digital verification of documents, and help with other legal requirements. For the buyer, this means transparent pricing and taxation, transparent and legal payments and the elimination of fraudulent transactions.
#5 Estate management
Even the way properties are designed, built and then managed can be transformed. In fact, there is already a prevalence of the Internet of Things, or IoT, in several countries. One such example is smart sensors that leverage data to guide and help manage buildings of all kinds. In New York, realtors, agents, and owners are using smart sensors and mobile technology to monitor commercial and residential complexes in real time and that too remotely. These sensors share continuous data on the condition of equipment, service interruptions, security scenario and even something as specific as building temperature. Scheduling repairs, controlling fire breakouts, reducing wastage of resources like water and electricity have been made so much easier by IoT adoption.
#6 Building intelligence – yes, it exists!
While we’re on the topic of how technology is transforming tasks that were until now completely manually intensive, let’s also consider Business Information Modeling or BIM, which means managing the entire lifecycle of a building using digital technology. BIM is an intelligent 3D model-based system used primarily by construction, architecture and engineering professionals to understand tools they need to plan, design, construct, and manage properties. It helps manage design phases and keep track of operations. This includes everything from the design and construction of a building, to the optimization of a building’s use of space and/or occupation and the related equipment.
#7 Analytics for Insights
Real estate investors have already been using artificial intelligence (AI) powered data insights to help with their decision-making. AI is giving them insights into market trends, identifying new opportunities, charting out realistic revenue and growth plans, and even highlighting possible loan defaulters where applicable. In addition to BIM and estate management as talked about earlier, AI-powered insights are helping real estate investors control expenses, increase investment returns and reduce risk.
#8 Digital Image Classification
Imagine selecting and posting photos, keying in details and managing listings of hundreds of properties manually. Sounds overwhelming, doesn’t it? Thankfully, real estate agents can now use digital image classification to automate photo selection by using machine learning to categorize site photos and even tag them within seconds. They can now easily sort images based on multiple characteristics like room type or number, special features, design styles, location, fittings, date required and so on. By combining this tool with their marketing software, agents can run more targeted emailing campaigns and location-specific ads.
Having said all this, the question remains that how truly ready is the real estate industry for a digital transformation. In our opinion, the level of adoption and maturity vary across the world, with the US taking the lead in the adoption of digital technology for real estate transformation. There’s no doubt that the industry has several challenges to reach digital transformation faster and catch up with other industries. The market is ripe with available technology and innovations that can manage multiple nuances of the industry and create lasting experiences for sellers and buyers alike. Leading firms are already started taking a bite-sized and phased approach to using technology as a business enabler and to improve customer experiences and operations. For the laggards, our message is to shape up or ship out.
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