Impatience, frustration and a fear of the unknown are the human behaviours speeding up changes in real estate — and there is big money behind the changes, pushing them forward, according to real estate futurist Brad Inman.
Mr Inman acknowledged that some agents have become obsessed with technology and the speed of change, pushing back against it. But his advice is to embrace the change (and the technology) instead, especially those parts that solve the current problems in the system.
Here are three of his key tech insights driving change.
1. Fast and furious: Wall Street versus Main Street
Wall Street played a significant role in the sub-prime mortgage crisis, and as it did so, it inadvertently set off the current tech boom sweeping through real estate.
When the sub-prime leverage levels thrust the US economy into recession, in typical Wall Street style, undeterred, the US government quickly took advantage of collapsing real estate prices to buy up property as part of spreading its portfolio risk.
“But when they did that, they found out what a long and convoluted process buying real estate can be,” Mr Inman said.
“So, they got a bunch of Silicon Valley entrepreneurs and they’ve been throwing money at fixing that process ever since.”
The outcome are well-funded venture capital funds actively identifying ways to speed up buying and selling property, and make it easier and less stressful for all customers.
“Wall Street is not interested in a process that takes months — they want to transact with the click of a button, instantaneously, and they are very invested in achieving that,” Mr Inman said.
“So, unless you can out-fund Wall Street, you need to stop fighting it and work out how to embrace it, and the way to do that is put yourself in the mindset of the consumer.”
Examples of this include the rise of iBuyers that are now offering to buy property up front, depositing the cash into your bank account within just a few days and allowing you to rent the property back until you find somewhere new.
“Now, sure, there may be criticisms that the price paid for that property might be lower than what the seller would get if they put it on the market, but think about the benefits,” Mr Inman said.
“You don’t have to go through the process of selling — which can literally take months. You don’t have to pay for marketing, or have people tramping through your home for open for inspections, or deal with the legals and finance. You just get the money and you move on. That is very appealing for some people.”
2. Big data says you are who you say you are
Authentication of your identity is a major trend now driving change in real estate, Mr Inman said, allowing more convenience to both consumers and agents, peace of mind and flexibility.
“In the US, open viewings are typically for four hours on a Sunday, and during that time, a whole bunch of strangers tramp through your house and look through your stuff,” the futurist said.
“It’s inconvenient to consumers, it’s scary for home owners and it’s risky for realtors because we’ve even had realtors murdered.”
But biometric authentication dramatically changes that because by supplying passport or authorised ID and having it checked against criminal records and matched with your fingerprint or even eye scan, potential buyers become known quantities.
Mr Inman added that companies such as Trust Stamp and Clear are now conducting this kind of information assembling, allowing authenticated individuals the option to inspect a property whenever they want (even without an agent present) through fingerprint-coded locks.
The end result could speed up the back-end transaction, especially if identity checks are married with credit information. And team this change up with paperless transactions and digital signatures, key pain points in so many property transactions start to dissolve quickly.
“We need to get rid of filing cabinets,” Mr Inman said.
3. Technology is changing the expectations of agents about their franchises
With technology making life significantly easier and frictionless for consumers, agents themselves are now expecting the tech they use will make their lives easier.
This is a significant challenge for franchise groups with legacy technology and is calling into question the old franchise model.
“Agents are now personally benefiting from technology more than ever before, as it’s allowing them to deliver better-quality service to more people when it’s done right,” Mr Inman said.
“The realtor groups that are trying to force their people to stick to old models of doing things are struggling and that is raising the questions of how should franchise groups define themselves. Are they technology companies? Are they listing businesses? What is the value that the franchise groups bring to their agents? No one has the answer, but it’s a hell of a question.”
Mr Inman said that the technological disruption was being paired with a behavioural disruption, encouraged by a new generation of agents coming into the picture – Millennials.
“Leadership has always been from the bottom up and what we see in real estate is that top-down models are now being displaced by a generation of people who are used to working in teams,” Mr Inman said.
“Millennials like experts, they like teams, they like to collaborate, but they want to use expertise. So, in real estate, they like using an agent because they value expertise, but as realtors, they expect a certain fearlessness from their leaders.”
Mr Inman said that a major study that Inman Connect has just completed identified that realtors want their leaders to confront disruption, be more responsive and take a position on issues of importance.
“We need to change the leadership equation,” the futurist said.
“The job of a leader is to serve — that’s something that many of today’s leaders find a challenge. As an industry, we are wrestling with a new paradigm for leadership, one that is about embracing innovation, not fighting it.”
Mr Inman’s Inman Connect conferences are held each year in both San Francisco and New York. They are considered to be the most influential in the world and have a reputation for intersecting property and technology.
Mr Inman was in Australia for the first time recently. He visited the CoreLogic Sydney offices to take part in a real estate roundtable with some of the industry’s top executives and thought leaders.