The Transformation of Real Estate: What is Technology's Role?
Technology has made information gathering and management easier and faster. But it is also transforming the way we all transact business. As automation gains hold -- in terms of collecting rent, tracking transactions, guaranteeing payment, and keeping records, there will be huge changes in the world of real estate, particularly for landlords and investors. What does the future look like?
Nothing Like Today
Predicting the future has always been iffy, but the element of risk is also what makes it exciting in many ways. Thinking ahead may be disconcerting as well. A recent article on the future that might be in store for today's real estate agents sheds a sobering spotlight on the prospect of more tasks becoming automated, more deals being made through technology and the virtual disappearance of today's familiar real estate agent.
A recent assessment puts the timing of this drastic view sooner rather than later, perhaps even within a decade. And the reason? All technology.
A 2013 British study of the effects of computerization on existing jobs points to the growth of "big data" and the ways in which it will revolutionize all of modern life. It's a sobering view and one that deserves discussion on many fronts.
Just as we know the industrial revolution changed history, this is an age in which technology is changing lives daily in fields as diverse as medical diagnostics, legal services, automobile production, public transportation, and real estate selling. Instant data imaging affects the way companies produce faucets, the manner in which professors teach college classes, and the methods nations use to solve disputes.
How can we think that advances in technology won't affect the real estate industry?
Here are just a sampling of the changes on the horizon:
- Setting rents by auction on specific properties or individual units: Landlords set a minimum and take bids to find the actual "real market rate." The procedure was introduced and is already in operation by a South African startup, so it's a trend that bears watching.
- Flat-fee online brokerage houses: Who can doubt that this practice will become more common in coming years? Although such services do not necessarily mean the disappearance of the traditional agent, the growth of flat fee commissions will no doubt have the effect of diminishing returns for most agents.
- Virtual reality can make buying "sight unseen" a reality: If you can see a property in real-time, open doors and climb stairs, "remake" a space to your own liking via computer screen, and explore by drone flight or by donning a set of goggles, why bother with a real person? So goes the reasoning. And it's not that far-fetched. Google is, of course, the leader (think Google maps of the world and know that interior maps are on the way through the Tango project) , but other companies are also entering the "playground."
- Property management cutbacks may also on the way, according to some forecasters: With online access, a feature of almost all property management today for reporting problems, scheduling repairs, tracking rent payments and communicating with owners, the need for onsite personnel has diminished. Enter automatic rent payment through salary deduction. It's coming, and it's viewed as a way to eliminate risk for owners as well as a way to simplify procedures for renters.
- Blockchain technology: A study by BrickVest looks to this method of new technology to be the norm within four years. More than 50 percent of investors view it favorably. If you don't yet know what it is, specifically, you're not alone. Only two percent of respondents reported being "very familiar" with blockchain.
Suffice it to say that these five advances in technology may well be just the tip of the iceberg, so to speak. The future is unfolding. And there is little doubt that it will look little like the present.