Technology

Look for new companies to keep shaking things up in 2014 with more partnerships, conversations and interactions

Real estate industry insights, hopes and predictions for the year ahead: Part 3

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Editor’s note: This is the final installment of a three-part series in which real estate industry leaders share their insights, hopes and predictions for the year ahead. Part 1 focused on issues affecting multiple listing services, Realtor associations and real estate brokerages. Part 2 provided insights about the outlook for real estate in 2014 from economists and consultants, and executives with top franchisors and listing portals. In Part 3, below, leaders of tech companies and brokerages talk about how the industry will continue to evolve.

Adam Spencer, co-founder and CEO of StreetAdvisor

Adam Spencer

Adam Spencer

What are the top items on your real estate wish list for 2014?

  • A better alignment of customer service, brand and technology in the industry. A lot of brokerages have amazing branding and customer service, but their technology is not up to speed.
  • More amazing real estate startups in the real estate space! I love seeing the new companies shake things up — it’s always very inspirational.

What are your top New Year’s resolutions for real estate in 2014?

  • Sweating the small stuff with customers. What is a very small thing for us is huge for others. I think everyone can do more in this area.
  • More partnerships, more conversations, more interaction. Real estate is a people-driven business — you can sometimes forget that sitting behind a desk.

What do you expect to be the top trends and hottest issues in real estate in 2014?

  • Beautiful design on more real estate websites. Consumers are developing an almost subconscious eye for things that look good. If it looks good, they trust the brand. Real estate in many ways is stuck in ’90s design, but we are seeing some brokerages lead the pack. I expect to see more design-focused brands emerge in 2014.
  • Simplification of user experiences. More options/buttons/data doesn’t necessary mean better; in fact, it often confuses people. I think we are going to see companies using the “less is more” approach.

Jilliene Helman, CEO of RealtyMogul

Jilliene Helman

Jilliene Helman

What are the top items on your real estate wish list for 2014?

  • Increasing investors’ awareness as to how crowdfunding sites can not only increase their real estate investment options but also empower them with increased investment transparency, as opposed to REITs or other “blind pool” investments.
  • Continuing to prove to project sponsors that crowdfunding is an increasingly important part of their projects, both as an additional source of funds and as a marketing tool for their brand to become more widely known.

What are your top New Year’s resolutions for real estate in 2014?

Educating more investors to understand the advantages of real estate investments, including the ability to write off depreciation from their taxes, after a year in which the focus has largely been on stocks.

In view of what we believe is a still-shaky economy, finding defensive investment opportunities in the following categories:

A) Niche opportunities that tend to perform well in slow economies and recessions, or short-term opportunities that offer particularly good risk-reward ratios;

B) Strategically located properties enjoying high traffic counts or above-average household incomes in their market area; and

C) Properties serving “necessities,” which again will offer some safety in a slow economy or recession.

What do you expect to be the top trends and hottest issues in real estate in 2014?

Crowdfunding and online finance will be an increasingly important player in real estate, both for individual investors and for investment advisers who can use crowdfunding sites to get their clients into opportunities they wouldn’t otherwise have had access to.

More generally, interest rates will eventually head up, and it’ll be interesting to see how that trend affects the market and how soon that happens depending on actions by the Fed.

Chris Toppino, co-founder of RentShare

Christopher Toppino

Christopher Toppino

What are the top items on your real estate wish list for 2014?

  • Lessening of crowdfunding restrictions via further implementation of the Jobs Act.
  • Buying/renting with Bitcoin!

What are your top New Year’s resolutions for real estate in 2014?

  • Focus RentShare product development on mobile functionality.
  • Go beyond providing payment solutions to just landlords. Brokers and agents need love too!
  • Expand the New York City Real Estate Technology Meetup to reach even more industry experts and enthusiasts.

What do you expect to be the top trends and hottest issues in real estate in 2014?

  • Digital 3-D models (powered by cutting-edge services like Floored) will start to seriously chip away at market share traditionally held by video tour and virtual tour services.
  • Crowd investing.
  • Boom in products and services for small landlords.

Paul Gallagher, vice president of marketing and product management, Maponics

Paul Gallagher

Paul Gallagher

What are the top items on your real estate wish list for 2014?

We want to see real estate companies continue to bring new types of data to homebuyers. We’re beyond the point where it’s enough to show homebuyers data about school districts and property lines; we want to see homeowners getting access to easy-to-understand weather scores and crime scores — data that is highly relevant but that wasn’t possible to deliver accurately until now. Information is really liberating homebuyers to make good decisions.

What are your top New Year’s resolutions for real estate in 2014?

Top New Year’s resolution: Democratize location data so that homebuyers know everything possible about what is likely to be the biggest single investment of their lives. We want to make that an easier decision for them.

What do you expect to be the top trends and hottest issues in real estate in 2014?

The biggest trend will continue to be: what is the next type of crucial data that you can bring to the real estate space? Every year there is new and better data that is coming to consumers, and 2014 is going to be very interesting in this regard. Brokerages will work harder and more efficiently to mitigate further loss of traffic to aggregators, and users will demand higher-quality information; woe to those who deploy “decent”-quality data because it’s cheap.

Scott Petronis, chief product officer at Onboard Informatics

Scott Petronis

Scott Petronis

What are the top items on your real estate wish list for 2014?

The top of my wish list for 2014 is to see the market focus much more attention on the customer experience. For that to happen, I’d like to see:

  • Companies looking outside real estate for inspiration. For example, learn from Amazon and others who have mastered customer experience.
  • Broader adoption of data and technology standards. Too much time is spent just making things work, so it’s hard to be outstanding. How can we make things simpler for everyone’s benefit?
  • Better use of data capture and management for personalization. Right information, right message, right approach, right timing.

What are your top New Year’s resolutions for real estate in 2014?

  • To practice what I preach and find better ways to deliver on a better experience.
  • Look for little changes that can have a big impact, and rediscover the small things that offer great rewards.
  • Focus on simplifying things so our clients can spend more time on what’s most important: their clients.

What do you expect to be the top trends and hottest issues in real estate in 2014?

Mobile will continue to be top of mind, but I believe more organizations will realize that it’s not about any single channel but the overall consistency of the experience. I believe the leaders will further hone their Web, mobile, social and offline experiences to better represent their brands.

I also see customer relationship management (CRM) having a more central role not for simply managing contacts, but for building lasting and beneficial relationships. I believe lead nurturing will also grow significantly in importance.

Lastly, I expect we’ll start hearing less about the “buzz” of technology and more about the benefits and the “so what.” Measurement is going to take a front seat.

Marshall Saunders, broker-owner, Re/Max Results (Minneapolis, Minn.)

Marshall Saunders

Marshall Saunders

What are the top items on your real estate wish list for 2014?

My real estate wish list for 2014 can be said in one word: stability. I don’t want a boom, I don’t want a bust. Slow and steady wins the race. Rates will go up, inventory will increase, buyer demand and qualification will increase likewise. It looks like we are heading in that direction and that makes me happy.

What are your top New Year’s resolutions for real estate in 2014?

Always be looking for the cutting-edge technology and training for my sales executives.

What do you expect to be the top trends and hottest issues in real estate in 2014?

Groups of brokerages will band together and try to centralize the syndication of their listing information. I think their intentions are to monetize this data and maintain a higher level of control over which sites can show the information. This will have a dramatic effect on the real estate market. I also predict that a large nationwide real estate brokerage will create a single site by which consumers can view their listings and will likewise pull their listings from all other sites. This will, in effect, put the real estate industry back 30-plus years.

Matt Lerner, chief technology officer, Walk Score

matt lerner

Matt Lerner

What are the top items on your real estate wish list for 2014?

I wish that real estate sites would do a better job of recommending similar properties based on the wealth of location data we now have. Most real estate sites are recommending similar properties based on price and bedrooms. How about using commute times, walkability, architecture, public transit, crime rates, and other neighborhood data to make a recommendation?

What are your top New Year’s resolutions for real estate in 2014?

My resolution is to do fewer things better — which is hard in our age of multitasking! One of the things I’d like to do better is to help people make better decisions about location. For example, helping people to factor in transportation costs when they are thinking about the cost of housing.

What do you expect to be the top trends and hottest issues in real estate in 2014?

The trend of people wanting to live near the people and places they love is going to continue to grow in importance. The decline of car ownership, especially among millennials, means that more people are going to want to access their city by walking, taking public transit, with car shares, or by bike. People will continue to be willing to trade off square footage for better, more walkable locations. The average American spends about $9,000 per year on their car, which is about $135,000 in mortgage buying power. Wouldn’t we rather have them spending that money on housing?!

Phil Faranda, broker-owner, J. Philip Faranda Real Estate (Briarcliff Manor, N.Y.)

J. Philip Faranda

J. Philip Faranda

What are the top items on your real estate wish list for 2014? 

  • A more sane policy by lenders to use only appraisers and brokers whose primary market is within 30 minutes of the subject property. This would eradicate the inept, out-of-market nomads who lack local knowledge and routinely tank transactions, especially short sales.
  • For NAR to focus on the Realtor brand as being necessary for the consumer. All too often, the message is diluted. A Realtor should be the industry standard for performance, advocacy and expertise.
  • Speaking of Realtors, for Move Inc. to abandon real estate, turn over operation of realtor.com to NAR, and get into the moving, cart and freight business. Or flowers. Or sheepherding.
  • A client relationship manager solution that is the scale and budget of a growing brokerage. The choices now are either team solutions or pricey systems designed for larger brokerages. Whoever develops this will make a mint.
  • A mobile broker MLS solution that rocks the tablet and phone as well as the desktop. Our MLS should have this up and running by June 2014.

 What are your top New Year’s resolutions for real estate in 2014?

  • To educate consumers better on what my value as broker is for them, to tell them what they need to hear as opposed to what they want to hear, and to overall be a better advocate.
  • In light of the safety problems agents face, to ensure my agents work to minimize their exposure to any risk of harm.
  • To work only with prequalified buyers.
  • To work only with motivated, realistic sellers.
  • To hire only those agents willing to buy into the company mission and philosophy.

 What do you expect to be the top trends and hottest issues in real estate in 2014?

  • Mobile EVERYTHING. Brokerages who provide mobile solutions will flourish, while those who don’t adapt will decline and lose market share.
  • The resurgence of the blog as a means of brokerage branding, recruiting and marketing differentiator — and not just as a prospecting tool.
  • Detente between brokerages and the syndication sites (Zillow, Trulia, etc.) as licencees realize that ZTR are here to stay and want to be king makers for agents, not agent disintermediators.
  • Sadly, a return of many agents from hibernation as the market improves, putting less competent agents into complex transactions as consumers who fail to properly vet their agent suffer.
  • Gen Y consumers will be the first generation to place more weight on online reviews and other agent-vetting vehicles to ensure that they are not represented by a less competent agent.

Daren Blomquist, vice president, RealtyTrac

Daren Blomquist

Daren Blomquist

 What are your top New Year’s resolutions for real estate in 2014?

At RealtyTrac we’re resolving to make premium real estate data more easily accessible to everyone so that all parties involved in a real estate transaction can make rational decisions. That is both an exciting and somewhat daunting resolution given that we have just begun to scratch the surface when it comes to making the majority of real estate data we collect available to end-users.

Here are some examples of how making rational decisions about real estate might play out in 2014 for the different parties involved, with the understanding that there are myriad other individual situations in addition to the limited list given below.

1. Potential first-time homebuyers: Decide if home prices are already out of reach in their market whether they should continue on as renters until the next market correction, or if affordability and other factors such as neighborhood quality mean they should purchase and start building wealth with real estate in 2014.

2. Owner-occupants: Decide whether they have gained or regained enough equity that it makes sense to sell in 2014, and, if so, whether it also makes sense to buy another home and become a “move-up” buyer or transition into renting.

3. Investors (both buy-and-hold and flippers): Decide if the market they are operating in — geographically, price level, or otherwise — is still the best option available to them, or whether they should move to another market or back out completely.

4. Agents: Decide which property owners in their market are most likely to list in 2014 based on equity and other factors, and then reach out to those owners to “create inventory.”

5. Brokers: Decide what information they can provide in their local markets to help consumers view them as a trusted and transparent source.

 What do you expect to be the top trends and hottest issues in real estate in 2014?

Foreclosures will continue to decline in 2014, as they have been for the last three years since the robo-signing controversy hit in late 2010. Based on the current trajectory, U.S. foreclosure activity will be back to what we consider normal levels (at or below the monthly levels in 2005 and the first three quarters of 2006) by the first quarter of 2015.

That said, there will still be some foreclosure flare-ups regionally and locally as foreclosure activity delayed by legislation and litigation finally makes its way through the pipeline in some markets. We saw this trend play out in places like Florida, New York, New Jersey and Maryland in 2013, and expect it to hit a few different markets in 2014 — some that might surprise many market observers.

A prime example of such a surprise foreclosure flare-up in 2014 will be California, where RealtyTrac expects to see a mini surge in foreclosures delayed by the Homeowner Bill of Rights that took effect in January 2013. In other states with similar legislation, the pattern is an immediate slowdown in foreclosure activity, which we’ve certainly seen in California this year, followed by a “catch-up” period where foreclosure activity spikes from the previous year as lenders work through those delayed by the legislation. Sometimes the slowdown in activity can last one to two years (take, for example, Maryland, which is seeing 200 percent increases in foreclosure activity now after 23 months of declining foreclosure activity following a foreclosure prevention law that took effect there back in August 2010).

Home price appreciation in 2014 will moderate in some of the hottest markets of 2013. We’re already seeing that happen — albeit slowly — in bellwether markets like Phoenix, where annual appreciation topped out in April 2013 at 30 percent and was down to 24 percent in November, and Las Vegas, where annual appreciation topped out at 28 percent in June 2013 and was down to 20 percent in November. This moderation comes as institutional investors slow down their acquisition of single-family homes for rentals in these markets. Conversely, as these institutional investors move into other markets we will see home price appreciation accelerate in those markets in 2014. Some markets likely to see accelerating home price appreciation in 2014 thanks to institutional investors include Greenville, S.C., Chicago and Texas metros.

On the financing side, we expect to see more creative financing to purchase properties used in 2014 as traditional lending stays tight. We’re not talking creative in the sense of the subprime loans that started the whole housing crisis a few years ago, but more homegrown financing such as seller financing or self-directed IRAs to get around the stricter conventional loan requirements from the CFPB taking effect in January.

David Drake, founder of The Soho Loft, chairman of LDJ Capital

David Drake

David Drake

What are the top items on your real estate wish list for 2014?

To see a dozen real estate funds work with The Soho Loft to build realty crowdfunding strategies with media and accredited investor channels.

What are your top New Year’s resolutions for real estate in 2014?

To launch an Italian realty crowdfunding platform as we find the realty in Italy undervalued. I’m finishing a book called “Investors of Italy,” and we work with family offices in Italy that also seek to place funds in the U.S.

What do you expect to be the top trends and hottest issues in real estate in 2014?

How do you scale this business is the main issue. You are technically streamlining one investor at a time to execute on investments online without necessarily calling their lawyer or faxing a document. Training while finding the right deals.

The liability is something the platforms are facing in case there are deals going sour or class-action lawsuits are initiated. We will monitor this closely. Regulatory changes may enhance viability of some of these platforms, but the leadership will make the platform successful.

The transparency is what realty crowdfunding offers. Imagine seeing in a cam constructing a building that you just bought and daily see the work progress in real time while showing all receipts daily on expenses? This is being done.

We are a media and strategy firm with investors relations and investor events globally so we are helping these and future platforms with succeeding in this space. At the same time we worked with institutional investors and family offices globally in real estate for a decade and aim to bring these investors in in 2014.