Whether it’s leads or listings, automation or integration, new technologies are always promising to change the way real estate professionals do business.
From the physical multiple listing service (MLS) to the digital, from handwritten signatures to electronic ones — the practice of real estate is shaped by advancements in technology and how society adapts to them.
The real estate industry has already incorporated several generations of technological progress that alters the way transactions are processed. Increasingly, real estate agents rely on new technologies to remain competitive.
That need for agents is especially true when assisting younger homebuyers such as Millennials. This highly educated, tech-savvy demographic will blossom into a dynamic participant in California’s real estate market once home prices match their long-awaited incomes around 2025 with the housing market and jobs recovery. [See RPI e-book Real Estate Economics Factor 15: First time homebuyers]
Boomers retire and California trembles
But which emerging technologies are poised to improve the agency and homebuyer experiences in 2022 and beyond? To understand, let’s look at where tech and real estate intersect today.
Today’s tech and tomorrow’s innovations
A 2021 survey identified the most valuable technology tools for active real estate agents as:
- electronic signatures;
- local MLS apps and technology; and
- social media.
In the same survey, agents reported they expect the most impactful emerging technologies to affect the real estate profession within two years to be:
- cyber security;
- virtual reality (VR);
- artificial intelligence (AI); and
- augmented reality (AR).
Drones are used in real estate to take aerial images of a property. Doing so helps listings stand apart. They heighten photos and present unique perspectives of the property. However, agents operating drones need to hold a remote pilot certificate by passing an aeronautical knowledge test from a testing center approved by the Federal Aviation Administration (FAA). The certification needs to be renewed every two years.
Cyber security, the practice of protecting critical systems and sensitive information from digital attacks, becomes increasingly important as scammers look for new ways to exploit weaknesses in consumer security measures. A cybersecurity system prevents data breaches by encrypting data when it is stored or sent. This way, only the appropriate authorized users can access sensitive information.
Drones and cyber security aren’t entirely new, but are poised to become commonplace — even necessary — for real estate professionals to remain competitive and secure. Yet it’s the technological alphabet soup of 5G, VR, AI and AR that has tech-savvy agents buzzing.
Real estate agents take to the skies with new drone guidelines
5G sets the scene
5G, the fifth generation of cellular technology, delivers more bandwidth and faster speeds than today’s 4G standard. 5G also supports connectivity for the ever-expanding Internet of Things (IoT) — thermostats, doorbells, lightbulbs, home security systems, self-driving cars and a host of other clever innovations across industries. To support this growth, 5G networks are estimated to serve at least 1.7 billion users worldwide by 2025, as forecasted in a GSMA Intelligence report.
The single family residential (SFR) market stands to benefit from 5G through its support for:
- smart home technology, which allows greater connectivity for multiple devices;
- remote brokerage offices, thanks to faster speeds for transferring documents and programs to the cloud — especially useful for agents managing transactions remotely;
- advancements in AI that will lead to new efficient tools like AI-generated property reports;
- AR and VR, which requires a fast connection to deliver data-heavy experiences like immersive, digital home tours; and
- greater flexibility to work remotely, thanks to ongoing efforts by the Federal Communications Commission (FCC) to build out America’s 5G capabilities in rural areas.
5G provides opportunities for nearly every industry to innovate and adapt. The public’s reliance and expectations surrounding this technology may soon shift their demands when it comes to homebuying — and choosing their real estate agent.
Tech Corner: Virtual reality in the real estate marketplace — fad or future?
At home in the metaverse
Virtual reality and augmented reality are a revolutionary type of immersive digital technology with monumental implications for real estate’s future. Like the advent of the computer and smartphone, new technologies have the potential to expand — and even create — markets.
VR immerses the viewer in a virtual world with the use of a headset. AR overlays digital information onto the physical world while using a smartphone, tablet, or soon, digital glasses. Both technologies allow users to experience virtual environments in fine detail, giving the user a greater sense of intimacy and familiarity with, say, a home, without actually traveling there.
The visceral, emotional reaction of being in a new home can render the details of a sales transaction mere afterthoughts. In fact, emotions are twice more likely to sway buyers into making purchasing decisions rather than rational cognition, according to a Journal of Advertising Research study. Thus, VR and AR are useful tools for telling a compelling and emotional story to the homebuyer, one which shows them just what it feels like to live in their new home.
With the ability to elicit such strong emotion, VR and AR technology isn’t just for video games anymore. These technologies will be worth an estimated $80 billion by 2025 — with $2.6 billion of that coming from the real estate industry, according to a Goldman Sachs report.
VR and AR may be used in real estate to help buyers, renters and builders visualize the potential of a house or building, even before construction begins. Through virtual tours and virtual staging, buyers no longer need to travel to a property’s physical location to get a sense of it, thus saving them time and better informing their selection of properties.
Tech corner: Sellers save money with virtual staging
Artificial Intelligence in real estate
AI refers to machines or systems that mimic human intelligence in performing tasks, and continuously improve based on collected data. AI “learns” from and responds to user inputs.
In real estate, AI may be used for home sales in a variety of ways, including:
- analyzing the value of similar properties in an area and adjusting an offer based on those calculations;
- guiding virtual tours; and
- producing an automated property report, according to Shore Agents.
AI is also an efficient way to manage interactions with clients and other agents. AI accomplishes virtual communication support through:
- automated responses to queries;
- chatbots or other online help features that produce responses;
- templates for offers and other specific replies; and
- confirming the validity of data and content submitted by others.
AI also helps improve organization, making data and information easier to find and use. A more organized library of forms, documents, contact details and client information saves agents time and effort, while limiting manual inputs on their part and collecting scattered data.
Though AI may handle tedious, repetitive tasks tirelessly, it is only as good as its inputs. Zillow Offers, which boasts instant offers on homes, lost $420 million over three months in 2021 by relying on faulty algorithms to estimate home values. Thus, the output of AI-based machines is limited by its designer’s own knowledge, creativity, and biases.
Proptech: the accelerator of change for real estate
Big possibilities, bigger expectations
The next wave of technological innovation will introduce new frontiers of exploration and development. It has the potential to radically transform the way we view and interact with our neighborhoods.
Consequently, homebuyers — especially Millennials and Gen Z — will have new expectations when they engage with various industries. That includes how they expect to buy and sell their homes, view property listings and find and communicate with agents.
These emerging innovations all interconnect. The widespread availability of 5G bolsters VR, AR and AI developments.
Real estate professionals who see the tides of change coming may better prepare for their clients’ future expectations by familiarizing themselves with this technology now. And that future may arrive sooner than you might think.
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Want to learn more about the preferences and habits of younger homebuyers and how they relate to the real estate market? Click the image below to download the RPI book cited in this article.