When the Internet became publicly accessible in 1989, the world was a different place — the Berlin Wall was still standing, “uber” was only a synonym for “very German,” and Barack Obama was under 30.
Although many might characterize the real estate industry today as slow-moving, it looked a lot different in 1989.
“Twenty years ago, you’d pitch a broker on using our technology, and it was a tough sell to make because most principals were barely using the computer,” Rich Boyle, the former CEO of commercial real estate marketplace LoopNet, said. “Now, the drivers and decision-makers of the real estate industry are comfortable with technology and, as we’re seeing, are beginning to embrace it.”
As the Internet grew in popularity, the real estate industry slowly began to accept the presence of technology, but rarely, if ever, were they leaders in it.
Today, the industry includes social media-savvy real estate agents, data mining and predictive trend analytics, paperless transactions and online investment via crowdfunding. The real estate industry seems incredibly tech-friendly in comparison.
Rent payments are being collected via smartphone using PayPal and Venmo; Matterport allows for virtual walk-throughs; and more and more deals are being made via email.
And, there is no sign that the increasing presence of technology in real estate will slow anytime soon.
The impact of real estate technology (RETech) on homebuyers and sellers
According to Properties Online Inc., whether researching properties and markets via MLS, Trulia and Zillow or searching for an agent via LinkedIn, the majority of homebuyers (over 90 percent) use the Internet in their housing search.
Accordingly, almost half of agents and their associates want their brokerages to offer more technology-enabled tools as the buying and renting processes have continued to move online.
The rise of real estate technology also changes the way with which buyers, sellers and their intermediaries communicate with each other. In fact, response times are ranked among the top priorities for buyers and sellers when picking their agents. Especially concerning response time, 49 percent of agents believe that technology gives them a competitive advantage.
Furthermore, advances in analysis, reporting capabilities and speeds have impacted the quality and volume of information available to consumers — and their ability to access it online. On the agent side, brokerages can understand more about consumer preferences and directly target potential customers.
Real estate tech meets real estate finance and investment
In real estate technology, advances don’t stop with homebuyers, sellers and agents.
Those who look to invest in high-yielding real estate, as well as developers and sponsors looking to fund real estate projects, now have unparalleled access to each other via the Internet and online real estate marketplaces.
Although advances in this space often fall under the “FinTech” movement, we’d like to think emerging real estate tech trends play a role as well.
What does this mean?
The $3.5 billion acquisition of Trulia by Zillow last summer, along with a number of other high-profile acquisitions, signals that real estate tech is here to stay. According to a recent TechCrunch piece, venture funding of real estate technology startups peaked in the fourth quarter of 2014, with 32 companies raising nearly $300 million. In total, funds invested $605 million in RETech in 2014 versus $241 million the year before, year-over-year growth of more than 250 percent.
The real estate industry is (almost) wholeheartedly embracing the need for technology and implementing large-scale innovations to keep up. It’s an exciting time for the space — stay tuned to see how the industry will evolve and change.
Benjamin Miller is co-founder and CEO of Fundrise, the leading real estate crowdfunding platform. The first company to successfully crowdfund real estate, Fundrise brings world-class real estate investments to institutional, high net worth and retail investors throughout the U.S. Ben has more than 15 years of experience in real estate and finance. As managing partner of WestMill Capital Partners and president of Western Development Corp., Ben was responsible for acquiring, developing and financing more than $500 million worth of property.