The U.S. real estate market is ever-changing, especially due to the COVID-19 pandemic. House flipping and residential real estate investments increased after things came to a screeching halt in March 2020.
The significant rise in remote work changed the types of houses people want to buy. For example, many people would enjoy purchasing a large, spacious home, especially those with dedicated office space, in a low-cost area. That way, they can enjoy more things at home and have room for various activities, including lots of outdoor space.
Like many other industries, real estate is becoming more technologically advanced than ever, fueling growth in proptech, short for property technology. What is proptech, and how is it impacting the modern real estate market? Here’s everything to know about this innovation and what it means for the industry.
Proptech is the term to describe the intersection of the real estate industry and various technologies. Other similar phrases, such as fintech, legaltech, medtech, and insurtech, describe tech that assists financial institutions, law firms, medical facilities, and insurance groups, respectively.
Proptech is in high demand, and the market is predicted to reach $86.5 billion in 2032. These solutions allow real estate agencies to keep costs down, customers to take advantage of digital or virtual services, and agents to work on the go. Proptech is taking off for two primary reasons: to improve productivity and increase profits in the real estate market.
Below are five key examples of proptech and how they’re transforming the real estate industry.
Underwriting is a key element of real estate, but it’s also a time-consuming process. Lenders must spend time analyzing a buyer’s assets, income, debt, and property details before issuing approval of loans. However, AI-powered underwriting solutions are an example of proptech making underwriting more efficient.
The most important benefit of AI underwriting software is that it allows financial institutions to process documents faster and more accurately than doing so manually. However, some critics believe automated underwriting perpetuates existing inequalities in the real estate industry.
Why travel to a new town, city or state to take house tours when you can do it from your phone or laptop? Advancements in virtual reality (VR) allow real estate agents to showcase properties to prospective buyers in any location.
Agents also have different responsibilities using this technology. For example, they have to keep their properties clean, organized and polished before giving tours. They’re also responsible for staging, as staged homes can receive up to 5% higher offers from potential buyers.
One technology with major growth during the pandemic is e-signatures. E-signing important documents helps speed up many processes in the real estate industry.
Digital signature companies such as DocuSign, Adobe Sign and HelloSign are leading the industry and helping more than just real estate agents and their clients. More apps and software might offer e-signature integrations to drive adoption and make digital signatures mainstream.
Today’s homebuyers are tech-savvy, and modern smart homes are a top trend in real estate these days. Some essential smart home devices include:
- Kitchen appliances
Smart homes often have higher property values than standard houses and tend to attract the new generation of homebuyers. Real estate agents must be aware of their clients’ preferences and whether or not they want to purchase a smart home.
iBuyers, also referred to as internet buyers, have also changed the real estate market. Companies described as iBuyers use advanced algorithms and technologies to buy and resell several properties quickly. Some sellers might receive offers for their properties in as little as 24 hours.
The biggest iBuyers are Opendoor and Offerpad due to their real estate transaction volumes. Other examples include Keller Offers, Zillow Offers and Redfin Now.
One Forbes article suggests proptech will become an outdated term because these technologies will become so ingrained in the industry, essentially becoming a critical piece of the real estate puzzle. However, you can expect to see other types of proptech on the horizon in the near future.
Here are some potential innovations in the proptech market:
- Hybrid, digital-offline models for appraisals
- LiDAR technology to measure properties
- Internet of Things (IoT) to lower operational costs
- Blockchain technology to exchange and verify data
The proptech market will continue on its path of growth, but not all property management groups are willing to adopt these innovative solutions. Cost and integration processes can often hinder the adoption of any new technology, but over time, costs decrease and companies can access user-friendly solutions to make tech integration easier.
The proptech market is still relatively new and will likely see dramatic growth in the next few years. Keeping up with real estate is challenging, but these innovations will help make it easier and provide other benefits to agencies, buyers and sellers. Keep an eye out for new proptech in the future to see how it continues to change real estate for the better.
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Last Updated on July 5, 2023.