TRADITIONAL REAL ESTATE EXPERIENCING HUGE CHANGES IN 2018
2018 is the year of change for the real estate industry. According to many recent Forbes real estate posts, home prices will start to slow in most areas of the country, and more people are going to enter the market to look for a new house or sell their existing property. This is going to create a flywheel effect for innovation: as more people enter the housing market, more companies are going to create products and services to help make home buying and selling easier.
And the time is right — the industry is ripe for disruption. It’s been more than a decade since home information and value estimations were brought online, providing consumers with instant access to details on homes right at their fingertips. In the ensuing years, there have been incremental changes, but we will soon see an upswing in new innovations. This is going to be a pivotal year for real estate, with fundamental shifts in how people access all aspects of the housing industry, and I see major changes happening in four key areas.
1. Consolidation Among Brands. It’s not only smaller real estate companies that are merging with similar brands, it is beginning to happen at the top of the funnel as well. HomeServices of America, an affiliate of Berkshire Hathaway, has been on a buying spree, snapping up smaller brokerages to increase its footprint across the US. And this is not unusual; smaller real estate firms have followed the traditional model of providing hyper-local services. Speed and convenience focused companies like OfferPad have also been emerging with a heavy footprint, providing consumers with an almost-instant offer on their home, and cutting the time to close on a house by more than half. In an age where everything is available on the Internet, these companies are having a hard time keeping up with client demands. Some are looking to acquisition, and some are looking to partner with technology companies to help boost their offering. By the end of the year, I believe the market, and consumers, will experience a significant shift.
2. Transparency in the Market. The upcoming quarters will bring further democratization to the real estate industry. The key to transparency is data. Like all sales businesses, we want to transition the customer from awareness to action quickly, and the key to that is quantifying real-time performance data, historical property data, and analytics that help to make the real estate decision process faster and more relatable to the home shopper and seller.
3. On-Demand Offerings. Today’s consumers don’t want to wait. Mobile devices and the on-demand service industry have conditioned people to expect everything — from package delivery to food service — to happen with the push of a button or tap on a screen. This is creating a conundrum for an industry that is not known for fast transactions. But this is changing as technology is infiltrating real estate — TechCrunch reported in 2017 that 108 real estate startups in North America secured more than $400 million in seed and early stage rounds. Many of these companies focus on bringing on-demand tech to the industry, including agents at your fingertips and being able to schedule and tour the home of your dreams, right when you want to see it.
4. Rise of the iBuyer. Yet another technological innovation, direct home buying is harnessing the power of the internet, combined with the consumer’s desire for an on-demand transaction, to provide for an easier, faster and more convenient way for people to buy and sell homes. Moreover, this model is helping agents and homebuilders move inventory faster, fundamentally changing the turnover rate for house sales and reducing friction in the industry. Consumers are becoming more comfortable with the idea of an online real estate transaction because they are now used to doing most of their transactions online.
We are in the midst of the peak buying and selling season, and real estate technology companies have already upped their game to provide new offerings and further disrupt the industry as we know it. Alongside that, the consumerization of everything – including how we buy and sell our homes – is on the rise, so it’s a sure bet that we’ll see exciting developments geared towards convenience.
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