Amit Haller is the Co-Founder & CEO of Reali, a high-tech, high-touch real estate company founded in 2016.
Before the pandemic, what defined the modern era more than digital transformation? The thinking goes that as more of life goes online, the more people and businesses benefit. But for one of the world’s biggest asset class – residential real estate – the digital transformation had been sluggish at best. At worst, defiant. After all, while fee structures in other industries have gone down thanks to increased technology – and reduced overhead – 6% listing fees are still prevalent in real estate.
Then Covid-19 hit, and overnight agents needed to figure out virtual and digital solutions for everything. Open houses disappeared. Buyers couldn’t figure out how to visit a house before placing an offer. Sellers didn’t want home buyers trekking through their front doors.
Out of sheer survival, companies adopted digital tools quickly: Keller Williams put together an entire playbook on how to handle Covid-19 and go virtual, as did many other brokerages. Without a doubt, the pandemic has created the biggest technology pressure most organizations have ever experienced. As with all innovations borne of necessity, the old way of doing things is not fully coming back.
While the pandemic forced a change in the way we find a new home, has anything changed with the way we actually buy them? If not, what’s the holdup?
As an inhabitant of the modern world – not just as CEO of a real estate and fintech company – it seems natural that technology should help solve everyday problems. Hasn’t it always? Through my years in the business, I’ve seen the enormous opportunities better technology platforms and tools have to build in transparency and efficiency for buyers, sellers and real estate agents.
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In real estate, property technology – proptech – companies are leading that digital transformation. Nearly $70 billion has been invested in proptech since 2017, according to Crunchbase, and yet there is still much work to do in our space.
Those tens of billions of investment dollars are going to startups looking to disrupt every aspect of the real estate business, from discovery to financing to closing. However, not all proptech companies are equal or work with the best interests of the consumer in mind, but fortunately, those that save the consumer time and money are expected to thrive.
Here are some key opportunities for digital transformation in real estate today that prioritize customers’ needs:
Go beyond discovery and remove digital pain points for buyers. For buyers, the discovery process is far more digital than ever before, thanks in large part to what Zillow has done in gamifying the process. For many, this has turned house hunting on the site into a pastime, while still managing to provide value to the subset visitors who are actually looking to buy a home. But once you move past the fun of discovery, buyers remain stuck in the non-digital past.
Remove ambiguity for home sellers – and add transparency for buyers. Thanks to iBuyer companies like Opendoor, Zillow and Offerpad, sellers can now get an offer with the press of a button. Digitization has removed some of the friction in this scenario. But rather than the seller benefiting from that technology breakthrough, the value accrues to the company. In a recent iBuyer report, data shows the fees collectively charged by iBuyers to sellers is 8 percent.
There is still much to improve when it comes to the current offer and listing process. Today, the offer process is still more of an art than a science, though we have troves of data available to change that. For sellers who want to make the best decision financially and emotionally, the stress of selecting the wrong offer is real. Given the low inventories in most markets, what offers a seller receives should be far more transparent. This is one area that can be significantly improved by leveraging a seamless digital process and harnessing past sales data.
Agents pay a price for technology
For real estate agents, identifying qualified buyers and sellers – not just bringing them into the pipeline – is a vital part of the real estate lifecycle. Yet technology hasn’t solved this pain point completely. Agents are looking for ways to keep their pipeline full while managing their current transactions. Digital transformation should be helping them do it all effortlessly. There are dozens of lead generation companies for real estate agents that all claim to deliver quality leads, the most prominent – and a company I use – being Zillow. As more people use Zillow out of curiosity to search for homes and look up home values, many leads are not serious buyers or sellers.
Agents are starting to ask themselves if paying for Zillow leads is worth the cost, especially since a lot of time is spent nurturing the leads while the agent manages their current pipeline of transactions. If we could free up more of the tasks that real estate agents have to do that are not directly connected to helping people buy or sell homes, the average agent can increase the number of customers they can nurture. This is an approach I work toward at my own company, Reali, with in-house sales and market teams that qualify buyers and sellers for agents.
As an industry, we can do more to advance the digital transformation of an industry that is often too stubborn, opaque and bureaucratic for its own good. If we digitally transform critical areas of the process to streamline even 80% of the transaction, we can use that remaining 20% through person-to-person connection to do what we do best: focus on the consumer while delivering a simple, stress-free and affordable experience.