The real estate sector has been slow to adopt technology; this is primarily due to the fact that the sector has produced solid returns on investment with the existing tools. As such, there is no rush to change the ways things are done. Of course, technology has integrated into the real estate industry; there are very few real estate agents who do not list their properties on- line using simple databases. However, it is now starting to be recognized that there are a great many opportunities to embrace technology and potentially increase sales whilst making the life of a realtor a little easier.
Priming the Market
The real estate market remains the biggest asset class in the United States. In December 2014 the value of the real estate market was approximately $40 trillion! This figure can be broken down into the key segments:
- Residential housing is worth approximately $23 trillion
- Commercial real estate is approximately $15 trillion
- Other assets cover just $2 trillion; still a significant sum.
The majority of homeowners and commercial developers need finance to fund their purchases; this makes the lending market huge. It is already estimated that the residential lending market issues 1.1 trillion of finance every year. There are a huge amount of funds and properties changing hands every year!
Surveys suggest that there are approximately three million real estate professionals in the United States. The obvious way in which technology will be able to help these professionals is in organizing and structuring client data; in order to promote and sell all manner of products and services.
The majority of the technological development that has taken place so far is related to the residential sector. The majority of this development is simply listing properties for sale. Commercially there has been very little technological development; there are just a few companies who are providing listing software.
The economic may have served to slow the development of technology, however, as the market is now gathering momentum it is opening the way for a vast array of technological advancements, again, promoting products and services; all of which are fuelled by the growth in the market:
- Properties are generally worth more; this has increased competition between real estate agents. In order to secure an advantage these agents are now prepared to invest funds in technological advancements; anything that will help them gain the upper hand and win business.
- Every transaction of property will involve several different firms, real estate agents, lawyers, mortgage lenders, etc. All of these firms want a slice of the profit. Technology can be used to both limit the amount of firms which need to be involved and control the profit share.
- The market systems are old! New systems will save time and money, once they start to be integrated the process will quickly gather speed.
New York is a key hub in the commercial real estate world. It is now also becoming the centre of technological businesses which focus on the real estate market. It makes sense for the businesses to be in the same vicinity. Many have committed to the area and others are following; showing how strong the belief is that these two market sectors are on a collision course. This is also a reflection that the real estate market has become global, and many have already started to buy overseas property in Turkey and in other countries too.
The following are the obvious starting points for the investment in technology; however, this is only a starting point:
- Property Management: there are already some players in this part of the market. The software being offered helps property owners and management companies track their properties, wherever they are in the world.
- Purchasing a commercial property is a big investment and usually means weeks of studying data to assess the likelihood of success and commercial viability. Technology can assist by crunching this data quickly and providing the desired results to examine.
- Listing service in the residential market focus on providing a free service and gain funds from advertising. In the commercial sector there is scope to create similar listing services, but these services could be funded by the buyers and sellers, the listing service would be the marketplace.
- The majority of real estate professionals are mobile lost of the time. The introduction of apps to help monitor the market, property searches and provide updates on current properties would place any real estate agent at a considerable advantage.
By Michael Clark and PropertyTurkey.com