Real Estate is Getting an Upgrade — Technology State of the Market in 2020

Published in

Originate

8 min readApr 29, 2020

The real estate market is full of legacy systems, untapped data, and outdated processes from every angle. Whether it’s commercial, residential, B2B or B2C, all up and down the supply chain there are innovators tackling ReTech problems. The market is prime for technology acceptance and usage. In this article, we’ll examine real estate trends already underway and predictions for what is to come, painting a picture of the landscape for real estate newcomers, and technology insights valuable even for industry veterans.

According to CodeTiburon ReTech is categorized as follows:

Smart buildings/IoT (internet of things)
Smart city sustainability
Marketplace
Crowdfunding
ConTech
3D/VR (virtual reality)
Data and research analytics

The real estate industry in both the commercial and residential sectors are ripe for technology acceptance and usage. Customers are demanding new simpler and easier ways to buy, sell, and interact with companies and agents. Real Estate companies are looking for ways to get ahead of their competition and use new technologies to disrupt the industry. ReTech is even teaming up with FinTech to provide new technology platforms such as blockchain smart contracts for protection of customers and better auditing capabilities.

CBInsights has done a nice job identifying investments made in different categories for both commercial and residential tech startup companies. Listing and Search are the most heavily backed startups in the commercial and residential sectors, leading in seed and Series A funding. Followed by the Data, Valuation, and Analytics category for commercial, and Mortgage Tech for residential.

So what are some market opportunities in real estate?

Smart Homes

One of the more mainstream market opportunities is with smart homes. This opens up an entire can of worms between IoT appliances and connected devices to make homes more intelligent and our lives more convenient. From new security systems to personal assistants. The trick here will be to get more standardization for devices and appliances to be connected to each other. There is also a play here for smart offices where smartphones and connectivity can play a part in the operations of a business, from access to doors, to time clocks entries using wifi signals.

Smart Cities & Communities

Plans and investments are being made to open up a new market for smart cities/communities. Taking smart homes to a new level with smart communities. Microsoft recently made an announcement they are moving into the smart community space with a new community being planned outside of the metro Phoenix, Arizona area. These smart cities will be equipped with technologically advanced infrastructures, IoT everywhere, and organizations and places connected to your home. As an example, the grocery store could already know what you are low on in your fridge and deliver to your house the items that you need. Smart cities are akin to the wild west, we are not even at the tip of the iceberg of what is to come.

Data Management

There is tremendous opportunity for disruption and growth with the use of data management. A prime example of this is the MLS, which has no central, nationwide, system for agents to work off of. CoStar is probably the most prevalent commercial listing service, but commercial agents tend not to update the public sites like Zillow or Loopnet very frequently, which can lead to buyer, seller, and even agent frustration. Agents have to track down brokers and sellers to find out the sales status (active, under contract, in escrow) for a given property and can’t just check a single source of truth. There is endless opportunity for using data management to improve and transform the current process.

Co-Investing

This is a system where outside investors help residential buyers afford their homes by taking equity in the purchase. There are several companies doing this, one example is a company called Unison. The model operates as such: A home buyer can’t afford the down payment or monthly payment on a home they are looking to purchase, they contact a company like Unison to partner with as an equity investor in the purchase. The equity position is shared with the homeowner and the investor and percentages of ownership are decided in the deal. This type of partnership and deal structure has been common in the commercial and development space for years but is just now coming to the residential market, creating new opportunities and deal structures for residential home buyers.

Retech and FinTech Join Forces

One of the most interesting things going on in commercial and residential real estate is the collaboration between ReTech and FinTech. A prime example of this can be seen in the use of blockchain smart contracts for purchasing, and selling of properties. This technology makes vast improvements in the transactions of properties through tracking and audit capabilities.

Now that we examined some of the market opportunities, let’s take a look at what technologies are getting upgraded in the real estate industry.

Blockchain & Smart Contracts

As mentioned previously, ReTech and FinTech are creating new alliances with each other. One of the most intriguing is with the new advancements for smart contracts being built on blockchain technology. Using an audit capable distributed blockchain will help with trust of transactions for purchasing or selling of properties. Companies can use the smart contracts to track the entire purchasing or selling process, who the new owner is, and so on. This also provides tremendous auditing capabilities where three or more auditors can review the same information and not just internal paperwork or internal databases. This equates to more reliable and more accurate accounting and paper trail capabilities. There are now blockchain platforms specifically designed around these use cases, Ethereum being the best known and trusted.

AI and Machine Learning

AI and machine learning are going to play a bigger and bigger role in the real estate industry. Timing the market to buy and sell a new home is always challenging. AI and machine learning can help consumers better understand the right time to sell their existing home and the right time to buy a new one. Software programs can collect, ingest, calculate, and learn, and then train models on a variety of economic models and market factors. Agents could even use these programs to actively market to potential sellers or buyers when the data and insight suggests it’s the “right time.” Another area data can help with is the decision to buy vs lease/rent a property. Real Estate financial advisors try to create fancy financial models for payment, equity, tax deductions, and cost of ownership, but software programs could ingest this type of data and help consumers make better, more informed decisions based on their goals and financial position.

AI and machine learning may also play a role in the legal aspects of real estate, such as contract assessment and proofing, and escrow processes. This would be a potential cost saving over traditional paid legal and escrow services.

3D Printing

Even though 3D printing technically falls under the ConTech (construction tech) bucket, it is an intriguing technology for how homes, offices, or even retail can be constructed. Instead of building structures with wood and steel, 3D printing is being used to construct parts, if not the whole structure. This greatly reduces the cost of building and can decrease the time for building completion. Prefabricated homes could one day completely shift over to 3D printing technology for construction. As this technology becomes more ubiquitous and the cost of the technology decreases so will the cost of this type of construction. This could have a positive impact on profitability for builders and accessibility for buyers. There is also an opportunity for new or existing real estate technology firms to start building the hardware and software to construct 3D printed homes.

3D Mapping of Indoor Spaces

3D mapping for virtual tours of properties is not mainstream yet, but could very well be in the future. Viewing the inside of a house or building and feeling as if you are walking the property will be very appealing to consumers. Entire housing projects and neighborhoods can be modeled, even before completion of construction to increase interest. Match this with a VR headset and you have the feeling of being at the property vs just looking at pictures. As our economy becomes more global, people are looking at buying and purchasing property that might not be in their backyard. 3D mapping of indoor spaces will help consumers or investors to shop for properties and aid in sales.

So what has Originate done?

At Originate, we have had the opportunity to assist many real estate brokerages and technology firms innovate on their products and address new market opportunities. Here are a couple of examples of what we have done in the real estate industry.

Virtual Real Estate Tour Platform

A real estate SaaS provider with a presence across 100 US cities was looking to build a first-of-its-kind digital touring experience. Originate rapidly built and launched the product.

Interactive commercial space tour experience for property brokers, developers, and owners.
Released stable V1 product in 3 months.
1,000+ paying brokers acquired within a year.
Secured a high-profile partnership with a Fortune 500 real estate investment firm.

Real Estate Presentation Platform

One of the fastest-growing commercial real estate firms in the U.S. was looking to increase revenue by improving the production levels of their agents.

Originate revamped their process in half the time other agencies estimated.
Created a workflow automation solution that pulled in data from several 3rd party systems to create client-ready real estate presentations with just a handful of clicks.
Removed a bottleneck in the presentation creation process by enabling agents to customize their presentations with a simple, intuitive interface.

Wrap up

The future is very bright for commercial and residential real estate. There are both new market opportunities and new technologies ripe to disrupt the industry. Well funded startups are pushing the boundaries for what is possible. Medium to large real estate institutions can also capitalize on these new opportunities and technologies, and with the right partner, anything is possible.

If your real estate firm or brokerage is thinking about developing a new product or redefining a current product with a new technology, Originate is here to help you achieve your goals.