Opinion

It's Now Inevitable: Tech Is Going to Transform the $11 Trillion Housing Industry

Phillip King, vice president and principal product manager at ServiceLink, unpacks real estate's race for digital transformation and why machine learning and an omnichannel retail strategy are two ways the sector could look to innovate.

 Phillip King
Phillip King
Jun 30, 2021
It's Now Inevitable: Tech Is Going to Transform the $11 Trillion Housing Industry
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The last 15 months have seen tech investors and software players alike flock toward solving the world’s pandemic-driven dilemmas with technology. Telemedicine, fintech, edtech, retail and govtech have captured the lion's share of the attention, but one huge opportunity has been hiding in plain sight—real estate tech.

Even though the residential and commercial real estate market contributes more than $2.7 trillion annually to the U.S. economy and is valued at $11 trillion overall, the industry has lagged in its digital advancements compared to other sectors. Now, it’s at the beginning of a complete tech transformation that’s become inevitable due to the pandemic, particularly for residential real estate, as companies have adapted their product offerings for today’s digital-first home seeker.

Nevertheless, millions have been or are being vaccinated, and the federal government wants to have 70% of Americans vaccinated by July. Due to that progress, the economy is starting to reopen, and homebuyers are attending open houses again. Still, many of the pandemic-based changes in how people shop for homes are here to stay. These include pre-recorded video presentations (some in 3D), real-time tours via Zoom and FaceTime, and virtual closings. All of these new capabilities contribute to more transparent and convenient experiences for buyers.

Yet, there’s still so much progress to be made. Here are two opportunities that technologists and investors should seize upon as the momentum around residential real estate’s digital transformation seems impossible to stop.

Machine-learning-powered video

Machine learning, which uses algorithms and reams of data to help digital products get continuously smarter, is a growing force in all of tech. For real estate sales, ML is poised to play a big role in making the user experience (UX) smarter for everyone involved. And video is perhaps the greatest example with implications for the near future and beyond.

Machine learning significantly lessens distortion in video, and ML-powered video is on the verge of becoming a common tool for identifying a property’s quality, condition, floorplan and amenities. All of that will dramatically cut down on time spent by appraisers and home inspectors who are often independent contractors and get paid by job completions rather than hourly. Their ability to conduct appraisals and inspections virtually will become a coveted part of their toolkit, saving them hours of travel time, increasing the number of jobs they’re able to take on, and allowing them to focus on home valuations instead of logistics. Suddenly, their laptop can virtually transport them to the same homes or apartments.

Mortgage lenders will relish the impact of ML-powered video, too, as they want to speed up the processes and paperwork to get their customers to closing day as quickly as possible. And while home sellers and buyers likely won’t know that ML is quickening the steps toward their transaction, they’ll appreciate their months-long journey getting shortened by even a few days.

What’s more, mortgage companies can now offer ML-powered video to borrowers or approved property contacts for conducting self-service home inspections using their mobile device. This capability eliminates the need for entering the home and saves the consumer the burden of coordinating an inspection appointment.

An omnichannel experience for real estate

According to one researcher, 45% of home shoppers were buying sight unseen last year, underscoring the progress made in recent years that lets homebuyers shop for a new abode in an automated or self-service fashion. Three-dimensional video tours can now replace open houses for homebuyers who live far away, realtor chatbots can supplant rudimentary phone calls, and tedious, repetitive paperwork can be switched out for e-signing apps.

During the pandemic, automated and contactless features have been invaluable because the real estate industry has needed them to simply continue operating. With some aspects of the homebuying process starting to revert to in-person, real estate tech platforms will need to create incredibly efficient user experiences that complement high-value, in-person interactions.

Technology should help everyone involved in the real estate purchase journey online and offline, no matter where they are in the process. It should be an easy-to-use omnichannel experience akin to what Bonobos offers in which the customer never has to start all over again in their purchase path. The direct-to-consumer clothier lets customers start and finish purchases on any channel—in-store, mobile app, phone call, live chat, etc. So, if you try on a shirt in a Bonobos store but don’t purchase it, a phone or live chat rep will know already about your preferred styles and sizes based on your cross-platform data.

Homebuyers should be able to opt in to a similar experience where their own research data—a property’s listing history, expenses like maintenance costs, etc.—should not only be at their fingertips but also available to real estate agents and lenders. If real estate agents and lenders had such data to keep track of homebuyers at an individual level, they could stay organized the way business-to-business (B2B) sales pros do with Salesforce. And that way, real estate conversations for everyone can stay fluid and current.

Real estate tech of the future should look more like the best that Bonobos (homebuyer CX) and Salesforce (B2B CX) have to offer. And it is early days—KPMG found that only 58% of real estate companies have a digital strategy in place—which means technologists and investors can lead the charge toward such innovation and prosper.

The last 15 months have seen tech investors and software players alike flock toward solving the world’s pandemic-driven dilemmas with technology. Telemedicine, fintech, edtech, retail and govtech have captured the lion's share of the attention, but one huge opportunity has been hiding in plain sight—real estate tech.

Even though the residential and commercial real estate market contributes more than $2.7 trillion annually to the U.S. economy and is valued at $11 trillion overall, the industry has lagged in its digital advancements compared to other sectors. Now, it’s at the beginning of a complete tech transformation that’s become inevitable due to the pandemic, particularly for residential real estate, as companies have adapted their product offerings for today’s digital-first home seeker.

Nevertheless, millions have been or are being vaccinated, and the federal government wants to have 70% of Americans vaccinated by July. Due to that progress, the economy is starting to reopen, and homebuyers are attending open houses again. Still, many of the pandemic-based changes in how people shop for homes are here to stay. These include pre-recorded video presentations (some in 3D), real-time tours via Zoom and FaceTime, and virtual closings. All of these new capabilities contribute to more transparent and convenient experiences for buyers.

Yet, there’s still so much progress to be made. Here are two opportunities that technologists and investors should seize upon as the momentum around residential real estate’s digital transformation seems impossible to stop.

Machine-learning-powered video

Machine learning, which uses algorithms and reams of data to help digital products get continuously smarter, is a growing force in all of tech. For real estate sales, ML is poised to play a big role in making the user experience (UX) smarter for everyone involved. And video is perhaps the greatest example with implications for the near future and beyond.

Machine learning significantly lessens distortion in video, and ML-powered video is on the verge of becoming a common tool for identifying a property’s quality, condition, floorplan and amenities. All of that will dramatically cut down on time spent by appraisers and home inspectors who are often independent contractors and get paid by job completions rather than hourly. Their ability to conduct appraisals and inspections virtually will become a coveted part of their toolkit, saving them hours of travel time, increasing the number of jobs they’re able to take on, and allowing them to focus on home valuations instead of logistics. Suddenly, their laptop can virtually transport them to the same homes or apartments.

Mortgage lenders will relish the impact of ML-powered video, too, as they want to speed up the processes and paperwork to get their customers to closing day as quickly as possible. And while home sellers and buyers likely won’t know that ML is quickening the steps toward their transaction, they’ll appreciate their months-long journey getting shortened by even a few days.

What’s more, mortgage companies can now offer ML-powered video to borrowers or approved property contacts for conducting self-service home inspections using their mobile device. This capability eliminates the need for entering the home and saves the consumer the burden of coordinating an inspection appointment.

An omnichannel experience for real estate

According to one researcher, 45% of home shoppers were buying sight unseen last year, underscoring the progress made in recent years that lets homebuyers shop for a new abode in an automated or self-service fashion. Three-dimensional video tours can now replace open houses for homebuyers who live far away, realtor chatbots can supplant rudimentary phone calls, and tedious, repetitive paperwork can be switched out for e-signing apps.

During the pandemic, automated and contactless features have been invaluable because the real estate industry has needed them to simply continue operating. With some aspects of the homebuying process starting to revert to in-person, real estate tech platforms will need to create incredibly efficient user experiences that complement high-value, in-person interactions.

Technology should help everyone involved in the real estate purchase journey online and offline, no matter where they are in the process. It should be an easy-to-use omnichannel experience akin to what Bonobos offers in which the customer never has to start all over again in their purchase path. The direct-to-consumer clothier lets customers start and finish purchases on any channel—in-store, mobile app, phone call, live chat, etc. So, if you try on a shirt in a Bonobos store but don’t purchase it, a phone or live chat rep will know already about your preferred styles and sizes based on your cross-platform data.

Homebuyers should be able to opt in to a similar experience where their own research data—a property’s listing history, expenses like maintenance costs, etc.—should not only be at their fingertips but also available to real estate agents and lenders. If real estate agents and lenders had such data to keep track of homebuyers at an individual level, they could stay organized the way business-to-business (B2B) sales pros do with Salesforce. And that way, real estate conversations for everyone can stay fluid and current.

Real estate tech of the future should look more like the best that Bonobos (homebuyer CX) and Salesforce (B2B CX) have to offer. And it is early days—KPMG found that only 58% of real estate companies have a digital strategy in place—which means technologists and investors can lead the charge toward such innovation and prosper.

It's Now Inevitable: Tech Is Going to Transform the $11 Trillion Housing Industry

Phillip King

Phillip King is the Vice President, Principal Product Manager, ServiceLink. Phillip has been in the appraisal management industry for more than 20 years. He has been with ServiceLink since 2009 in several operational management positions. In his current role, he is the subject matter expert for EXOS Valuations, responsible for developing the product strategy and digital roadmap for EXOS Valuations. As a key technology leader of EXOS, ServiceLink’s digital mortgage services platform, his primary focus is on continuous improvement of the EXOS Valuations technology to meet and exceed customer expectations for a seamless digital mortgage experience.

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