5 Reasons PropTech Will Change the Real Estate Industry
The age of disruption is thriving. Time-honored business models in every aspect of life – from transportation to grocery shopping – are getting crushed under the sheer weight and power of technology. One of the biggest results of these changes is the ushering in of easier, more efficient ways of doing business.
Real estate is certainly part of the disruption frenzy. After all, if something as simple as ordering a taxi inspires a multibillion-dollar business, then something as complex as real estate is also ripe for an overhaul.
Enter property technology, or PropTech. By stripping away the extra twists and turns in the renting and buying processes, PropTech is bound to revolutionize real estate. Here are five reasons why.
Real estate processes are becoming more efficient.
The days of publishing a property listing in the local newspaper are long gone. But PropTech’s efficiency enhancement goes way deeper than that.
Various PropTech firms and platforms already allow you to schedule viewings via the web – or even virtually walk through properties online. You can also pay bills, store contract details and, of course, publish property listings that can be seen by anyone in the world, not just people who happen to look at Section C, Page 15 of the local newspaper.
This leads us to the next reason…
Everyone involved with real estate will become
more efficient, too.
In the same way that taxi services and hotel chains are being forced to reexamine how they operate in the Uber-Airbnb era, those in real estate also need to streamline processes – or get rid of them altogether – in order to stay competitive.
From replacing in-person consultations with cloud-based interactions, to using algorithms to find the best matches between people and properties, there are a million ways that actual human workers in real estate could become marginalized. The only way to avoid this fate is to work hand-in-hand with technology, and become incredibly efficient, as well.
Funding will never be the same.
Alternative lending platforms like Property Partners and Crowdlords are going to disrupt, if not destroy, traditional models of funding. High-interest loans from faceless financial entities will be replaced by crowd-sourced, social partnerships.
Maybe that means 20 people with moderate bankrolls (and a sense of adventure) could combine forces to buy a property that, a few years ago, would have only been available to enormous financial groups. Or maybe it means that groups of algorithmically-selected first-time home owners can avoid taking out huge mortgages by merging their debt obligations.
Whatever the future of real estate financing looks like in five years, it will not look like it does today.
Data will become more important than ever.
As algorithms flex their muscles, the cold, hard data will play an even bigger role in real estate.
The efficiency we talked about earlier means fewer people reading bank records, and more software scanning bank records. It means less reliance on gut instinct, and more reliance on probabilistic outcomes.
Digitalization will cause a data arms race in real estate. Surviving in the PropTech era will require embracing and leveraging data like never before. Only companies which successfully build their core data and find a way to make use out of it for data driven decision-making will stay ahead of the game.
Genuine expertise will still be required.
As the processes related to real estate go digital, amateurs will be facing decisions that they would have never faced in the past.
PropTech, for example, will enable someone in London to find, scout and purchase real estate in Vancouver without ever having to make the nine-hour flight. But does the buyer know anything about Canadian real estate laws?
PropTech will also enable access to low-interest loans simply by logging into the banking app on your phone. That is great, but people will still have questions about how that loan will look in 10, 20 or 30 years. And they probably will not want to ask the app.
FinTech did not make financial experts irrelevant. AdTech did not make marketers irrelevant. And HealthTech will never make doctors irrelevant. Instead, the tech-driven revolutions taking place in these sectors make certain processes irrelevant. This drives experts to really, truly, honestly provide value.