Real estate is notoriously illiquid. Once you buy a property, your money is usually tied up in it for a long time.
This has several reasons: most properties trade on a private market called the multiple listing service (MLS), there are high capital barriers to entry, transactions are not only large but slow, and there are a lot of legalities and paperwork involved.
And yet, we are seeing digital technology start to streamline a lot of these processes. From virtual reality (VR) tours to mobile property search apps to smart contract management systems, several areas of real estate are undergoing significant change for the better.
Though it’s behind the digital transformation of other industries like banking and healthcare, the real estate industry is slowly catching up.
One of the forces behind real estate’s digital transformation is COVID-19. Think about it. Many people stopped moving. They were stuck in their homes. Occupancy rates started to drop.
So, realtors needed a way to make home-buying easier. They started focusing more on their online presence. They developed user-friendly mobile apps to make real estate shopping easier and more accessible.
On top of that, the real estate industry started streamlining routine operations like signing lease agreements and finding new investment properties through more efficient digital systems.
All this marks a pivotal shift in a traditionally rigid market.
The Benefits of Digital Transformation in Real Estate
By adopting digital solutions, you can collect more robust data for analytics. For example, if you digitize occupancy and market rental rates, you can more easily set your rent where you will get the highest ROI.
Digital transformations also allow you to streamline traditional bottlenecks. For example, if you use electronic signatures for rental contracts, you can reduce document turnaround times by 80% to save landlords and renters time and money.
You’ll also benefit from better record keeping. From lease agreements to deeds and titles, real estate involves stacks and stacks of documents. By going paperless, you can not only save on buying and printing paper, but you can help the environment, too.
Finally, digital solutions provide more visibility across business partners, employees, and other stakeholders. Sharing important documents can be done with the click of a button instead of through snail mail. Easily collaborate on important work through centralized systems like property management software.
Technologies That Are Transforming Real Estate
So let’s take a deep dive into the different technologies transforming the real estate landscape.
Every day, software developers are finding new ways to optimize real estate operations. For example, there are plenty of apartment match apps that allow lay users to quickly access property listings. By logging on to a simple portal, they can find property results that match their search requirements on the go.
The same sharing economy that inspired Uber and AirBbB allows people to share office space as remote work and flexible work schedules continue to grow. This movement was heralded by companies like WeWork and marks an important shift in allowing people to take advantage of flexible office space arrangements.
Homebuyers now also have access to online mortgage calculators and countless contactless solutions for home loans, payments, insurance services. All of these help people find better deals and make better home-buying decisions.
On the property owner side, new property management platforms help landlords better manage rent collection, maintenance orders, and more. Now, landlords no longer need to worry about keeping track of everything manually. They can see everything on a centralized dashboard.
Of course, by digitizing more information, you also have more data for running advanced analytics. For example, you can segment your target audience with artificial intelligence (AI) and machine learning (ML) to find better leads and retain customers. The more data you have, the better your analytics for driving results.
Another technology disrupting real estate is building information modeling (BIM). BIM allows you to generate 3D models when designing properties to streamline the building process. Cut down on construction time by engineering highly detailed models for approval.
Though it’s used in the gaming industry most, virtual reality (VR) is disrupting how realtors do home showings. By meticulously mapping the inside and outside of a property, owners can now offer virtual home tours. VR goggles can provide immersive walkthroughs like never before to help accelerate property sales. For example, the leading property website in Singapore PropertyGuru already offers VR tours for most of its listings.
Drones, aka unmanned aerial vehicles (UAVs), are being used in real estate marketing and construction. They can take high-quality aerial photos of homes to show them from unique and stunning angles. In fact, studies of the multiple listing service (MLS) show that properties with aerial imagery are 68% more likely to sell. On top of that, drones can help map construction sites before building a house and provide valuable inspection data after it’s finished.
The internet of things (IoT) allows homeowners to take advantage of automated lighting, temperature control, entertainment, sound, and security systems. Together, these create a smart home solution that makes life more secure and enjoyable while increasing the value of a property.
Finally, one technology that’s just barely starting to transform real estate is blockchain. When you hear blockchain, you probably think of cryptocurrencies like bitcoin and etherium. But blockchain is really just the technology behind these currencies. It’s a distributed ledger technology that allows transactions to happen without an intermediary.
In real estate, blockchain can speed up large transactions through something called smart contracts. Smart contracts allow you to complete an agreement once certain predetermined conditions are met. This gets rid of the need for middlemen like brokers and banks that slow down the process. Though it certainly needs to be developed further, blockchain not only has the potential to streamline real estate transactions but real estate investing through tokenized property shares.
The Future of the Real Estate Industry
The real estate industry is changing for good. There’s no way to reverse the transformations already underway.
To keep up, industry players need to adapt. Before long, it will be out with the old and in with the new. Evolve with the changes and you’ll profit in the long run. Don’t and you’ll get left behind.