Digitalization in Real Estate — Panic for Survival or a Chance to Succeed?
What is digitalization?
Digitization (converting physical information into digital) becomes digitalization when it’s done for business development and profit maximization. We are used to digitalization in different fields, for example:
- Waiting for your monthly payments in your company’s cashier and leaving the building with cash seems unimaginable.
- We are used to digitally spread news and information — what happens in the Middle East or in the USA, will reach us in just a few moments.
- When talking to our friends or relatives, their geographical distance from us is irrelevant. It doesn’t matter whether we’re in the same building, in different cities, or if one of us is, for instance, travelling in Japan.
Digitalization has accelerated changes and has made our everyday life more convenient.
But why is digitalization “the thing”?
As mentioned above, people are not just used to digital solutions; they expect them. In terms of digitalization, real estate has been a bit left behind compared to communication, financial services, and logistics. For many years, technology companies have used the term Fintech to refer to startups that provide financial services. For the last few years, we have heard much more about Proptech — property technology — companies. I believe that the impellers of changes don’t always have to be daring and brave startup companies, but also existing companies in the sector. I’ll bring out three easy examples of how to do that:
1. Sales and marketing
My job is to do marketing in a digital product development company, so I will start with how digitalization can be a game-changer in marketing, and therefore, be a great help in sales.
Augmented reality can make finding new properties for the client faster, more comfortable and playful. With augmented reality, we can visualize the 3D model of a building, before the construction has even started. It’s a great way to get an overview of how the building is going to look and fit into the milieu. Also, when walking in your favourite neighbourhood, you can explore whether there’s something for sale. Just move your smartphone over the buildings, and when something is up for selling, you’ll see the price, number of rooms etc. on your screen. Check out Realtor.com’s solution that helps in discovering new properties with augmented reality: https://www.youtube.com/watch?v=4jDlTypfWgs
2. Service design and customer experience
After we have figured out what we want, and the process of renting or buying has started, things tend to get complicated. After asking my friends and colleagues about their experience in purchasing or leasing a property, 8 out of 10 found problems in customer experience:
- The real estate agent didn’t show up or showed a lack of interest.
- Arranging a meeting to see the property was too time-consuming.
- The actual state of the apartment was different than shown on the pictures and description.
- Problematic payment terms.
- Interior-related difficulties (kitchen furniture delivery time too long etc.).
- Issues with a contract in case of outright transaction.
Are those problems avoidable? Yes, definitely. We are somewhat used to bad service, so there’s plenty of room for improvement. Is it fixable? Absolutely. When the sector does not change itself, startups with their digital solutions will do it themselves.
So, how to improve service design and customer experience? I suggest to keep your eye on the following services:
- Virtual visits
- Web-based shared calendars and booking systems
- Different financial services for peer-to-peer transactions
- Web-based juridical consultation and contracts made by artificial intelligence
3. Real estate management
Real estate management is unavoidable for most homeowners. Sometimes, it is organized by apartment associations. Often, management companies take care of it. Before writing this post, I asked people about real estate management, and I found out the following:
- Owners want to increase the perceived value of the property to increase the return on investment.
- Management companies and apartment associations try to offer this service as efficient as possible.
- People value services that provide quick solutions and physical comfort.
Those are the same aspects we kept in mind while developing an app for Peach Property — a German company focused on real estate development and investment. Although the app was meant for tenants, it had the desired effect for all the three parties:
- Tenants received information about the events and services in the neighbourhood and were able to communicate with their neighbours. That, in turn, made them appreciate the area more than before.
- The digital channel was created as a platform for notifying about problems. It became the fastest way to give feedback to the tenants and increase customer satisfaction. When tenants reported some problem, they were able to share a photo, which helped to solve the problem. Also, the app allowed the company to decrease customer support and save money.
- Residents were given digital access to manage everything involved with their living space.
Although startups have previously led digitalization, it doesn’t have to continue the same way. By implementing service design methods, there is room for innovation for all market players. If the first step has already been taken, digital services give the option to collect data about customer behaviour, easily measure your goals and KPIs, and further develop your services.
Real estate companies have the best understanding of the trends inside the sector. Cooperation with design and technology companies will add cross-cutting knowledge to achieve the desired goals.