There’s a huge amount of money being thrown around in the proptech industry. Just this past September, upwards of $2.7 billion was spent on proptech, according to a report by RE:Tech. But this shouldn’t come as a surprise, considering that the real estate world possesses a huge amount of money, corners a massive share of advertising and contributes to the GDP — in 2017, real estate construction contributed $1.34 trillion to the nation’s economic output and today it equates to 15-18 percent of GDP.
These are only some of the reasons investors are pinpointing real estate as the new industry to be disrupted.
Mobile apps, search platforms, cost calculators, machine learning, blockchain and even artificial intelligence (AI) are all finding their place in the real estate world — and these tools aren’t limited to only real estate agents. Now, the new age buyer is getting their hands on more tools, software platforms and review sites to supplement and strengthen the homebuying process.
Here’s how these digital tools have empowered today’s buyer.
1. Buyers are more knowledgeable
Buyers want everything at their fingertips, and whether this is due to the ubiquity of smartphones or a cultural shift toward a push-button society is anyone’s guess. Regardless, buyers are now more in tune and up to date with what is happening in the real estate industry because of mobile-friendly responsive websites and self-service tools filling up the market.
Mortgage calculators, virtual tours, digital search platforms and even house flipping apps are saturating the real estate market. With all of these tech platforms at their disposal, buyers are presented with more data than ever before. Traditional platforms like the multiple listing service (MLS) are no longer the secret tools of the trade — so today’s real estate agent will have to work harder to impress potential buyers.
The new age buyer will challenge agents for insights they can’t find on a mobile app or website. They’ll also be more tech-savvy and will want to communicate via messaging platforms with in-app messages or even text messaging. Their increased market knowledge will present agents with new challenges that will push them to become a more educated and well-rounded professional.
2. Buyers have higher expectations
Because of their extensive knowledge of the field thanks to digital tools, buyers’ expectations have shifted. No longer are buyers immediately contacting a real estate agent to help them search, find and purchase a home. In fact, according to the 2017 Profile of Home Buyers and Sellers distributed by the National Association of Realtors, only 17 percent of buyers first contacted a real estate agent when they started the homebuying process.
Buyers will now want you to help them sort through the data and successfully guide them through the transaction. Instead of being the captain of the ship, your role will change to that of a navigator. Buyers will be collecting data on market fluctuations, mortgage costs, neighborhood ratings and more, and you’ll be responsible for helping them process and navigate it all.
The successful proptech companies of the future will also have to focus on the client experience and creating systems to best help the buyer navigate the process step-by-step with radical transparency and efficiency. Today’s buyer’s expectations and standards are very high and will become increasingly more so in the future. Agents must step up, utilize and embrace technology in order to help meet those standards.
Buyers will also expect their real estate and mortgage company to be just as (if not more) tech-savvy as they are. Because they use and work with technology during their research, agents and loan officers will have to be adept at utilizing search and messaging platforms.
If they are using DIY tools, they’ll want their broker to be using the same ones — and more. In fact, a new report found that 36 percent of consumers want their real estate agent to take a more proactive, tech-savvy approach to the homebuying process.
One way to address these customer expectations head-on is by providing the emotional aspect, which will be crucial for the future of the agent in the real estate industry. Customers will have the data, but that data and the AI won’t understand their hesitations, roadblocks and emotional ties.
They will need someone who can empathize with their feelings: the excitement, anxiety and nerves that surface during the transaction.
3. Buyers want added value
The housing market has been slowly regaining strength since it crashed with the economy in 2008. This growth means that housing prices are climbing too. At present, Zillow estimates that the median price of homes currently listed in San Diego is $685,000. This hefty price tag, in addition to closing costs and other fees, is causing buyers to seek out more value.
Whether it’s money back, or even something as simple as extra services, buyers want added value from their real estate agents. It’s no longer enough for agents and lenders to meet the basic requirements: New age buyers want more return for their time, energy and money.
Part of this shift is because of new pricing models and fee structures in the real estate market. There are now services that charge only a fraction of the fees typically associated with real estate agents and closing costs — think Redfin on the buyer side and Purplebricks and HomeBay on the seller side.
There are also services that are more pricey, yet offer an incredible, easy user experience. The number of buyers who use these services proves that customers are content with “pay to play” if the service is user-friendly, all-inclusive and expedited like Zillow, Instant Offers and Opendoor.
One way to win over buyers is through offering a rebate of some kind, which can be in the form of money back or even covering their first month’s mortgage payment. But value doesn’t have to be solely money-oriented: Agents can showcase your individual value through your experience, niche expertise, negotiation skills and other valuable personal assets.
Looking forward, the list of new proptech tools is endless and will continue to empower buyers (especially first-time homebuyers) to make better, more informed decisions. But this tech won’t replace agents and loan officers; instead, it will supplement their role. Professionals can be there to assist, navigate and offer valuable insight to buyers every step of the way, especially when those buyers get lost all the data they find.
Bill Lyons is the founder and CEO of San Diego, California-based Griffin Funding. Connect with him on LinkedIn or follow him on Twitter.
