Buying a home nowadays looks very different from how previous generations used to buy their houses. Most people probably start their search online and get pre-approved online. They might even view the home and close online.
The Covid-19 pandemic has aided the real estate industry’s adoption of technology. Here are six ways technology has impacted real estate and how it might help shape it in the future.
Figuring out how much a home is worth can be hard. Really hard. That’s why, in the past, it was left to appraisers and real estate agents to decide. Now, sites like Zillow and Redfin eliminate some of the guesswork for people and use data to give a rough estimate on the value of a home. Zillow, for example, uses various data for price valuation including the number of bedrooms, bathrooms, square footage, zip code, market trends and many other factors. It even accounts for seasonal influences on home value.
Buyers and sellers are better informed than ever to make reasonable offers and list homes for reasonable amounts respectively. That’s why 95% of home buyers start their searches online.
Closing on a home was once a full-day event. Coordination was difficult between buyers, sellers, agents and lenders. Now someone can close on a home in California while hitting the links in Florida. Many companies allow for quick closings remotely from anywhere.
If Saturdays are for college football, then Sundays are for open houses. More and more real estate agents are ditching the “cookie scent in a can” for drone house showings. The trend of viewing houses online through virtual walk-throughs may not be entirely new, but the Covid-19 pandemic solidified it. Redfin reported that in 2020, 63% of home buyers bought their homes without seeing them in person. Especially as homes are selling above the asking price and people buy homes out of state, the need for quick and efficient showings is clear.
Getting a mortgage can be a long, complicated process. From picking a mortgage type to picking a lender and getting approved, there are a lot of choices. Now, it’s easier than ever for people, and they expect to get pre-approved with just a few clicks. Easier loan approval means more buyers in the market and more bidding wars. Don’t expect this seller’s market to go away anytime soon.
5. Online Investment
Fintech hasn’t only claimed the mortgage process. Companies are now offering real estate investment vehicles online, too. From an institutional standpoint, Robinhood offers fractional ownership in REITs. Other companies have popped up offering alternative investment options in specific properties. Some require investors to be accredited while others do not.
6. Smart Home Technology
Technology isn’t just changing how you buy a home; it’s also changing what homes look like inside. The IoT (internet of things) is revolutionizing everything about the home experience from smart locks to smart toasters. Real estate developers can follow the trend by integrating smart home technology in their new constructions. Smart thermostats and smart locks are the most common tech to include. Buyers of these new developments can appreciate lower utility costs, and property managers can appreciate the ease of entry and exit to properties without worrying about physical keys.
7. New Rental Avenues
The traditional real estate model was always the same: buy the property and rent it out. The internet has brought about new ways of generating revenue. Airbnb wasn’t first in the short-term rental space, but it certainly dominates it now. The global short-term rental market is estimated at $87 billion (registration required). Especially with Covid-19 restrictions being lifted, that market needs servicing. A lot of servicing. Airbnb CEO Brian Chesky told CNBC his platform will need millions of more hosts in the coming months to meet the demand.
What Does the Future Hold for Real Estate?
I predict virtual showings and online closings will not fade with the pandemic. Instead, expect technology to keep changing the industry. Blockchain technology is one area that has the potential to have massive impacts on real estate. Cryptocurrencies are, at times, already being accepted as payment for homes that could expand in the future. As long as the regulatory agencies or massive lawsuits don’t become a challenge, this technology will transform industries. Blockchain also has the potential to be utilized for documentation software because of its inherent security features. Technology is shaping real estate’s future, so be sure to stay ahead of the curve.
(This article first appeared on forbes )
Giri Devanur founder of reAlpha Tech Corp, a real estate investment firm based in Columbus, Ohio. reAlpha aims to democratize the short-term rental market worth $1.2 Trillion and real estate asset investment around the world.