The mutual relationship between technology and real estate

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The real estate industry is typically used as one of the key barometers for the health of the national economy. When real estate values are appreciating, transactional volume is high, home ownership rates are up, and foreclosures are down, it’s generally a good indicator that the country’s financial situation is under control. When values decline, home sales stall, home ownership rates dip, and foreclosures begin popping up on every street, it’s a sign that the economy is taking a nosedive.

It’s not just the state of the economy that the real estate industry provides direct insights into – it can also give us an idea of the growth, adoption, and advances in technology. Real estate and technology have always shared a deep connection and it looks like this relationship is only growing stronger.

By studying how the real estate industry is changing, we can glean some keen insights into the direction technology is moving. As a result, we’ll be better able to identify tech trends as they’re happening, rather than analyzing them in the rearview mirror.

The Evolution of Home Mortgage Lending

As a buyer, mortgage application and processing is one of the more time-consuming and frustrating aspects of buying a home. Traditionally, it’s taken a lot of manual paperwork, review time, and back and forth between lenders and borrowers. And while it’s still a cumbersome process for many, times are changing.

According to a recent report from the National Association of Realtors (NAR), homeowners under the age of 36-years-old make up the majority of buyers in the United States. Roughly two-thirds of these millennial buyers are purchasing for the first time.

This indicates a shift in purchasing power to millennials, who have been raised on technology and have higher expectations than older, more seasoned homebuyers. In response to this shift, many lenders are sensing a need to provide more efficient loan processing and lending practices. Some are turning to AI and machine learning.

Unisource is one such company. Founded by Michael Cohan, who has a tech-heavy background – the company provides tailored lending solutions for mortgage and real estate agencies.

“As I researched industries that could use more process and automation, it was apparent that title and escrow had a significant void,” Cohan tells Forbes. “Specifically, automated technologies like artificial intelligence and machine learning. I wanted to provide faster, more efficient services using a turnkey solution that would benefit the real estate sector.”

But Unisource isn’t the only company on the block. Guaranteed Rate has long claimed that it created the first all-digital mortgage, though many companies have since followed suit. From the outside looking in, the debate is futile. What matters is that the mortgage lending process will soon take place entirely online – and virtually in real-time.

The Ease and Simplicity of FSBO Transactions

Another interesting shift in the real estate industry has occurred in the home buying and selling niches. While for-sale-by-owner (FSBO) transactions used to represent a very small percent of all transactional volume, the integration of new technology has created some new momentum in this area.

Beycome is an example of a company that has made its mark in the FSBO space. It uses a proprietary online platform that streamlines the FSBO process and gives sellers the opportunity to list, market, and sell their homes 100 percent online. And as one of the fastest-growing FSBO real estate companies in the industry, they’ve also been able to amass large amounts of data to provide people with a better glimpse of the latest FSBO trends and analysis.

As technology continues to make it easier and easier to buy and sell online, without the need for time-consuming and expensive offline methods, will we see a greater shift in online FSBO sales? Don’t bet against it.

Smart Technology For the Sale

Smart home technology has been a sleeping giant for years. Industry insiders have discussed the potential these products have, but they’ve typically only been used in new construction (and generally in high-end real estate or commercial applications). But as home ownership shifts towards millennials and tech companies are able to reach economies of scale, smart home technology has become much more commonplace – especially in existing middle-class homes (which represent the majority of the market).

For homeowners preparing to list their houses, the right smart home technology could increase the perceived value of a property. If nothing else, they really draw younger buyers in.

“Buying a home is an emotional process,” says Sabine Schoenberg, a Connecticut-based home improvement expert. “People need to connect with the house. The features grab you. They say: ‘That seller is up on this, and this is a hip place to live.’”

The most cost-effective investments are a strong internet connection and Wi-Fi network, smart doorbells, smart door locks, smart climate controls/thermostats, and smart lighting.

Virtual and Augmented Reality

Perhaps you’ve seen people testing out virtual reality (VR) or augmented reality (AR) headsets and devices in a shopping mall. Or maybe you’ve even purchased a basic set of your own. Whatever the case may be, most people have gotten over the initial shock factor of VR and AR, which has paved the way for greater adoption in the coming years.

According to Goldman Sachs, VR alone will be an $80 billion industry by 2025. What’s most interesting is that an estimated $2.6 billion of this will come directly from real estate.

“A number of young tech companies are exploring an entirely in-VR experience where you enter search criteria like price, location, and number of rooms and you’re presented a number of homes and you can virtually tour,” real estate professional Matthew Hood explains. “Once that happens, you’ll look back and say, ‘How did we do this before?’”

The Times, They Are a Changing

Study the real estate industry and you’ll get an idea for where technology is headed.

As current trends show, the focus right now is on automation and convenience. People don’t want to get involved in cumbersome processes that require lots of time and energy. Their schedules are too busy for it.   

It’s also clear that people want control, rather than always depending on others. This is perfectly exemplified in the rise of FSBO sales. There’s a DIY mentality among people and technology that empowers and has a place in today’s market.

Experts in the industry have plenty of ways to study technology, but it’s often helpful to look outside the box and view technology in context (rather than always analyzing it on a theoretical basis). The real estate industry establishes a platform where this can happen.

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