How the Internet is Turning Real Estate on its Head
The rise of the internet is traumatizing the classic profession of real estate and its only going to get worse. Real Estate professionals should all be looking over their shoudlers as trends rapidly evolve. Apps are popping up at unbelievable rates, each with ideas more fascinating their predecessors with innovative ideas to turn the profession on its head.
Recession Breeds Innovation
From the early 2000s until mid-2008, the economy was propelled into the stratosphere by an explosion in the real estate market. Much of the investment was driven by speculation that current asset prices would continue to appreciate. This fervor turned many into overnight millionaires; real estate assets were turned into commercial investment vessels from the previously conventional view that homes were long term personal assets. Homes no longer represented the once-stable American Dream — they were an evolving asset meant for quick profit.
The system of buying and selling real estate was broken, and the public deserved a better solution.
From the evolving housing market, the secondary markets also ramped up their ability to cope with the influx of money pouring in. Exotic new investment products emerged among larger institutional investors. Packaging and reselling existing home mortgages as a Commercial Mortgage Backed Security became the norm — a favorite of investors worldwide. Things were great, until they weren’t. The rest is history and not the point of this post.
As the world recovered from the aftermath of the real estate bust between 2008 and 201o, innovators began to enter the work force and address problems in the real estate world that became painfully apparent in the preceding years. The system of buying and selling real estate was broken, and the public deserved a better solution. In response, the industry is being confronted by minds emerging from Silicon Valley and the like. Solutions that revolutionized the internet with the likes of Google, Facebook, and Twitter are being applied to the archaic industry and forcing it to reflect on some painful truths previously kept quiet.
New Kids on the Block
Many of today’s brightest entrepreneurs were coming of age during the systemic failure of the banking industry. As these firms reconsolidated, pulling themselves back from the brink, a new landscape emerged with them. Information became king on all fronts — sharing, collaboration, thought were the new keywords. The internet was more accessible than ever and with that new found freedom, the most basic component of the real estate industry became inextricably altered.
From failure emerged success, from darkness emerged a light.
When you search for property now, the most likely first responder in your call to action will be Zillow. This comprehensive repository of information can give you access to the most basic information possible including historical analyses. That is truly an amazing progression. Before, searching for this information meant a lengthy trip through the local court databases and public appraiser’s website. Now, its as simple as scrolling through an app on your phone. A quick search of a neighborhood in my hometown yielded some phenomenally detailed results, useful for consumer and investor alike.
On the residential side, the trend is moving away from utilizing a real estate professional to begin your home search. Much of the information can be found without ever contacting a person including features included in the home. A newcomer to the block is a firm out of California named RealScout who is actually reversing this trend by putting cutting-edge technology back into the control of your Realtor. Realscout combines natural language technology, in-depth analytics, and local MLS scanning software to provide a fantastic experience for both Realtor and end-use alike. Consumers can enter information such as: “I want a pool, near a certain school, with brick pavers up front, and no more than 15 minutes from a train station I use to get to work.” Realscout leverages tools on behalf of the Realtor, keeping their customers engaged with them instead of redirecting them to bigger search portals that often list inaccurate information. The personal touch of a Realtor isn’t replicable, and firms like these will continue to grow as the market becomes even leaner and smarter.
Future Possibilities
Theres are many possibilities in the future of Real Estate, many of which haven’t even come to the surface yet. Fifteen years ago the existence of Zillow must have seemed like a long shot. Its possible that buying and selling real estate could transform to entirely new platforms without the involvement of humans at all; think eBay meets the auctionhouse for homes. The possibilities are endless as a generation of quick-thinking problemsolvers are leading the charge.
The key to predicting the future of real estate is using other industries as a guideline. Most notably, look at the banking industry. Mentioned before, the banking crisis of 2008–2010 produced some very unhappy consumers. Startups emerged to combat the problem of high fees and poor customer service while embracing the rise of the mobile device. A beloved banking firm gained great success: welcome, Simple. By partnering with a national firm, Bancorp, they were able to build a user-friendly model that utilized the power of the smartphone as its primary banking platform. No branches, tellers, drive-throughs; they essentially scrapped the entire banking model in favor of user-friendly platform. Result: no fees for the happy consumer.
A revolution in the banking industry gave consumers greater access to information, a wide variety of choices, and freedom. Real estate is headed in the same direction as new applications like Zillow, RealScout, and Trulia are all giving consumers access to information never before seen in the market.
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Comment below with the platforms you have used in your search for a home.
