Technological advancement, a new generation of homebuyers, and the ongoing pandemic have altered the landscape in which real estate agents, buyers, and sellers operate. Many steps in the buying and selling process for residential real estate have changed drastically in the last year and beyond – take a glimpse over the previous 40 years to see how far it’s come.
The collective term to describe many of these changes is called PropTech. Put simply; it’s a combination of Artificial Intelligence (AI) and Machine Learning (ML). Other advancements in technology that can be used in real estate, combined with AI and ML, bring the industry into a new futuristic homebuying process. Yet, according to a survey conducted by KPMG before the pandemic, only 30% of traditional real estate organizations said they were currently investing or planning to invest in PropTech start-ups.
Millennials and Gen X Drive PropTech Forward
Although some companies aren’t prepared, Millennials are. Their generation is the one to thank for this push in a slightly behind-the-times industry. A recent Zillow survey gave insight into the fact that 60% of Millennial homebuyers would be comfortable making an offer on a home they’d only toured virtually. Additionally, the National Association of Realtors (NAR) found that 90% of homebuyers began their process online, signaling that online technology is here to stay for homebuyers.
Beyond the growing popularity of smart home tech and utilizing online listing websites, Millenials and Gen Xers could also contribute to the industry’s adaptation to virtual tours, iBuying, virtual staging, drones, and other forms of PropTech. These tools and marketing strategies are cohesively bringing the real estate industry into the future and expediting the process for a new generation of tech-savvy homebuyers.
A Push for Virtual Tours
Virtual tours aren’t entirely new to the industry. With social media, many real estate agents have already been conducting “virtual tours” by capturing videos and posting them on YouTube, Instagram, Facebook, and other platforms. These videos grab homebuyer attention – not to mention the fact that they can view a listing in-depth from the comfort of their living room.
Additionally, real estate agents can conduct showings over simple video calling services already built into their phone’s apps – Facebook, FaceTime, Whatsapp, Skype, etc. This strategy allowed for a quick transition during the pandemic without having to learn new technology.
The pandemic’s many limitations have only multiplied those efforts, making videos and virtual tours the new norm. It works too. Zillow reported that homes that included a 3D home tour sold 10% faster than listings without one. Even having a simple Youtube video is a quick way to appease homebuyers as it is the most used video platform in homebuyer research.
New technology like the 3D tours from Zillow and other companies allows virtual tours to be more than just a video. Viewers can move through various rooms in the house and go back to a room to see it once more. Tack on 3D technology and the views are as if the buyer was standing there in the room itself. This tech is also beneficial for new construction projects where the homebuyer may otherwise have difficulty visualizing the final product. They’re able to compare different design options and customize them to fit their preferences.
Top Companies for Virtual Tours:
iBuying, the Uber of Real Estate
iBuying is a term that has only been circulating in the last few years as companies pop up. Still, recent announcements like Redfin’s expansion of RedfinNow into new markets show that this seller’s option is gaining traction. Opendoor’s recent survey also revealed that 71% of sellers would likely consider selling to an iBuyer.
The reason for its popularity is pretty simple – traditional real estate transactions are complicated, often take longer than expected, and cause a lot of stress for all parties involved. iBuying is an alternative to these issues where a technology company utilizes their data and technology to make an offer on a home – usually an all-cash one.
While every company operates differently, there are a few standard perks of utilizing iBuying services. The company handles the marketing of a listing, takes care of the repairs, and the seller ultimately has control over when they close. This allows sellers ample preparation to settle into a new space in this hectic market.
With iBuying, the companies charge a percentage of the sale price as their version of the commission, marketed as a “fee.” The fees range from 4%-10%, which compares to those of a traditional real estate agent, but the seller avoids the hassle of selling a home. It’s a small price to pay to avoid the stress of negotiations, waiting during the inspection, the possibility for a deal to fall through, and a buyer’s financing hitting roadblocks or being denied altogether.
Top iBuying Companies:
Saving Money With Virtual Staging
With a home that has been cleared of all its belongings, professional staging is the traditional path to a successful sale. In today’s world, digital staging has become a new option for a real estate agent and costs a fraction of conventional staging.
Virtual staging can be as affordable as $200 for a smaller home than monthly rental fees between $500 and $1000 for staged furniture. Virtual staging has also proven to be a successful tactic as BoxBrownie reported that 83% of staged properties sell for the asking price or higher.
Virtual staging is simply taking pre-captured photos of a home and adding digital design elements to them in the form of furniture. It’s a more detailed process than simply adding in overlaying images because the photos need to stay authentic to the home – or at least as much as possible.
It’s a simpler method to stage a home, but it isn’t necessarily free of risk. Some states still haven’t accepted the practice, and therefore, agents need to be cautious when using it and make it very obvious to the viewer that virtual staging is a part of the photos. Every provider operates similarly, but the cost and quality of the final results can vary between companies.
Top Names in Virtual Staging:
- VRX Staging
- Virtually Staging Properties
- Virtual Staging Solutions
- Visual Stager
A Bird’s Eye View
Over the last few years, there has been an increased use of drones for capturing photos of a home and its surroundings. The photography results showcase a property in a unique way that sets a listing apart from the others. So much so that 83% of home sellers prefer an agent who includes a drone in their marketing efforts.
Drone photography makes sense for many homes, especially those on larger pieces of land with multiple structures. It also emphasizes a property’s “location, location, location” by showing where the property sits concerning significant interest points.
The main hangup for real estate agents using this form of PropTech is the cost and learning how to fly a drone. Drones are pricey, and there is a learning curve to successfully employ them – although there are many companies available to take photos for an agent. Here are some big names in the aerial photography space.
Aerial Photography Professionals:
Artificial Intelligence Provides Genuine Insights
One of two central points in real estate technology, Artificial Intelligence, is helping carve a smoother path for homebuyers. There are many uses for this type of technology, but the gist of it relates to making intelligent predictions for consumers as they search for a home.
One use of it relates to Zillow and their “Zestimate” or estimated valuation of a home. While the service has been running since 2006, it hasn’t gained as much traction as the company had hoped. However, Zillow has invested in the technology to improve its accuracy. The AI uses a compilation of data related to listings in the area, an analysis of the home’s features based on listing photos, and of course, core details like square footage, age, and more.
Another feature of AI is helping to improve the search results on listing sites as a homebuyer browses. The data collected from a homebuyer’s search history, applied filters, and “saved” or “favorited” listings are used to make more robust predictions about the type of home they’re looking to buy. This helps filter out unwanted properties and moves them closer to the end result.
There are many other notable trends in PropTech that the real estate industry, title agents, and other professionals will need to embrace to stay successful with the new wave of homebuyers. While many of these trends are in their infancy, some have already been in use for some time. Each year brings more improvements and stronger applications of the technology to existing platforms. Homebuyers are now accustomed to many of these technologies and will be pleased to see them used in the homebuying process. They’re here to stay.