BLOG VIEW: The New Year is upon us. It has been the north star on the horizon for long enough that companies may have even created a “2021 Vision” plan to outline lofty goals for modernizing their business. However, these companies risk defaulting to legacy operational processes that most other industries left behind years ago. This is having far-reaching impacts on bottom lines across the real estate and mortgage industries.
Paradigm Shift or Adapting to New Normality?
The coronavirus outbreak has exposed the need for digital transformations across the aforementioned industries on a global scale, forcing companies to pivot and adapt where previously unexpected. The situation has now escalated to a tipping point for property technology, or proptech.
Technology is constantly becoming more and more integrated into our daily lives, and it is only a matter of time until every product, service, and business model has been disrupted to a similar degree. Digital innovation continues to transform economies and markets, reinventing how business is done across all industries. Some were impacted immediately, such as the media and telecom industries. Others, such as real estate and mortgage, which are often slower to make changes are only now benefitting from the profound impacts on digital transformation that the events of 2020 unleashed.
The real estate industry as a whole is notorious for being very traditional in its nature and has faced many challenges over the years. Now more open to exploring next-gen digital opportunities, real estate and mortgage companies can now leverage their rich stores of data to address a myriad of societal challenges, such as optimizing land usage to be more efficient and managing the carbon footprint of their assets to be more sustainable. Innovations such as these are propelling innovation forward, past the point where the industry’s sluggish nature can hold itself back.
Welcome to the digital age. Many processes that were previously disconnected or fragmented in traditional models can be performed online much easier than before for anyone in the industry from loan officers and originators to underwriters and servicers. Take the residential real estate market, for instance – you can now “go to a mortgage company’s web site, look at the available properties the listing agents have, determine a property where you want to live, perform a virtual viewing online or a viewing using technology to visit the unit, go through a background check online, sign an application, make a payment, receive a digital key, and then eventually move in.”
With the overwhelming majority of their new origination customers being millennials, the demand for digital innovation has never been higher. Emergent technologies such as smart homes, IoT, automated valuation models (AVMs), machine learning enhanced pricing, and augmented reality/virtual reality (AR/VR) are changing the way end users engage with real estate professionals and their service offerings.
Similar to the drastic growth of the Fintech industry in the wake of the 2007-08 economic downturn, the COVID-19 pandemic will allow for proptech companies to show how they can digitally enhance their customer experience.
So, what comes next?
- Properties sold entirely online, with no need for physical visits;
- Buildings built exclusively by robots;
- Options for home viewing via virtual tours for all residential properties;
- An interconnected network of homes that can interact with one another through the IoT; and
- Green buildings that are fully constructed and maintained by sustainable measures.
Reimagining Business Models
Digital processing for construction, property market analytics, and data collection for sales purposes has been standard practice since the 80s. More recently, companies have set out to maximize their use of next-gen technologies to disrupt the real estate and mortgage industries. The resulting innovations have completely transformed the way we live, work and buy. The success of shared economy businesses like WeWork and Airbnb perfectly showcase this new direction for the. This is even further exemplified in the tokenization of real estate projects via distributed ledger technologies or blockchain. Let us not forget about iBuying, which is quite possibly the most significant of recent changes.
Due to rising expectations from end users and surging market uncertainties, critical real estate stakeholders, such as originators and mortgage underwriters, have begun to emphasize new value drivers beyond simply “location, location, location”, which has been the golden rule in real estate for years.
Proptech, part of a wider digital transformation in the real estate and mortgage industries, now empowers property with resilience from four perspectives: Customer experience, health and safety, operational excellence and digital drive.
Enhancing Customer Experience
Proptech can improve the retention rate of an end-user by enhancing their experience in the build environment and applying language from the mobile application market. By leveraging computer visualization, property managers or landlords can easily capture human behavior as it takes place. Further data analysis is now able to identify user needs by leveraging technologies such as machine learning or big data, providing instant customized service and support. Alternative methods of providing home tours virtually will shape how people shop, find, and ultimately buy a home, with start-ups like Yaza leading the charge.
Achieving Operational Excellence
Achieving operational excellence requires being nimble in a rapidly evolving environment and embracing technological advancements such as AI, IoT and big data. Imagine the value of a property being 100% driven by an AI and next-generation digital AVMs. Property managers and asset operators have succeeded in creating an agile architecture that coordinates applications, APIs, and management systems. Therefore, operational excellence can be realized to save energy, mitigate risks, and enhance workflow efficiency and flexibility.
Accelerating Digital Drive
As technology and real estate increasingly converge, companies that are prepared to digitally transform their business will be at the leading edge. On top of implementing software and deploying smart equipment, real estate organizations must also build “soft power” to improve data quality, talent capability, and enterprise performances.
Maintaining Safety and Health
Actively leveraging technologies such as infrared thermographic scanning systems, AI-controlled robotic vacuums, and auto-access controls can ensure health, safety, and continuity in workforces and workspaces. As the world continues to cope with COVID-19, such measures will become a “must-have” in property management in the long term. The workplace of the future will definitely look different and be much cleaner than ever before.
Embracing the Future
It is time to embrace the new normal. The effects of working from home will continue to ripple throughout all real estate professionals and avenues.
Although proptech is well positioned to help the real estate and mortgage industries reduce costs and increase efficiency, technology alone is insufficient to bring significant changes to the industry. Traditional industry players and other key mortgage stakeholders will need to shape the industry’s future through the thoughtful integration of Proptech enhancements.
It is critical to invest today to digitize processes, differentiate and either drive revenue up, change the customer experience, and drive down expenses to remain competitive.
Ready or not, the future of real estate is here. The proptech solutions of today will help firms lease space faster, reduce portfolio downtime, and drive more revenue in 2021 and beyond. But if a company chooses to stay the same, it will get left behind as the competition charges ahead.
Brad Sivert is head of marketing and proptech for Tavant. The company’s new platform simplifies the home shopping and buying process by streamlining functions such as home search, iBuying, MLS, appraisals, property AVM, real-time data validation, digital brokerage transformations, mobile app development, and real estate agent connectivity portals.