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Webinar Recap: Transformative Tech: The Future of Real Estate Technology

 

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We have all seen the headlines about a technological tectonic shift coming to the real estate landscape.  Digitization, blockchain, cloud computing, AI, machine learning… they’re all coming right around the corner and will change everything tomorrow… right?

Well, not exactly.

These technologies ARE coming and will change the industry, but which ones will come tomorrow and which ones are longer term projects?

We invited Ryan Abbe, Managing Director at JMP Securities will go beyond the tech headlines with an in-depth review of the residential real estate technology landscape.  So what did he have to say?

Background:

Residential real estate technology has developed tremendously since the 1990s, but growth has been slow.  The specialized process heavy nature of the mortgage and title industry is the main reason for this. But the fact that the consumer isn’t demanding change is another.  With the average person buying a home once a decade, the rush to change things on the consumer side just isn’t there. And for many years, the supplier side didn’t have that sense of urgency either.

And then the market crash of 2009 happened.

With new regulations, loan production costs soared, while productivity slowed.  At $8500 per loan and a 40 day turntime, something had to be done. While outsourcing is a wonderful option, if we say so ourselves, a company doesn’t want to outsource everything they do.  And that’s why this investment boom has occurred in real estate tech.

Companies have attracted over $10 billion of capital in 2017 alone for residential real estate technology solutions!  So where is that money going?

What areas are getting that money?

Most of the money has gone to companies that enable and improve the current home lending/buying experience.  According to Ryan, “They are guiding real estate agents into the digital age and arming buyers and sellers with the tools to become savvy consumers.”  CRM and lead management tools, marketing software, virtual appraisals and tours – these are the systems that are upgrading the current market and its stakeholders.

A smaller but more altering segment of providers are called tech disruptors.  This includes technology like blockchain, AI, iBuying, digital mortgages and online lenders.  Once implemented, these can completely change the game in the entire real estate sphere. That begs the question…

How close are we to a complete overhaul?

The companies behind these technologies today are on the front lines of this innovation, but they are still focused on the upfront work to get the industry appropriately positioned.  Efficient customer interactions, better data, leveraging data, efficient processes, transaction collaboration, digital mortgage and transaction documents, etc. are all examples of the front-end innovation these companies are currently focused on.  Many of the buzzwords you hear around technology innovation (AI, machine learning, even blockchain) require the groundwork that the current tech innovators are laying in order to be actionable. As Ryan put it, “We are in the early innings of tech innovation, and AI and blockchain only start to become relevant after the 7th inning stretch.”

Many companies are just starting to explore using machine learning to improve processes and decision-making.   Blockchain has the potential to make a major impact on the residential real estate industry, but we are still many years away because:

  • With thousands of counties in the US and fragmentation of title agents, digitization of all of these documents will come slowly
  • Many different stakeholders will need to be on board, and, to be frank…
  • The status quo is good for A LOT of constituents

If you’d like to watch this webinar or check out the slides, you can view them here and here.