While many industries have stayed current with technology trends and established industry standards, real estate is a notable exception. Perhaps it’s the notable exception when you consider that real estate is the largest commodity in the world, with an estimated $217 trillion valuation.
As someone who has been a real estate investor for more than 20 years, I speak from personal experience when I say that the industry is fragmented and antiquated in numerous ways, with technology being right at the top of that list. Many of the big players are still building and upgrading their proprietary technology solutions. Others are spending a fortune with consultants for customized applications. We’ve all seen this before in other industries — everyone wants to reinvent the wheel. History tells us, however, that wheel reinvention is almost always unnecessary because it creates further fragmentation and ultimately makes industries less competitive.
Time For An Industry-Wide Upgrade
While more technologically mature industries moved away from a restricted-use model a long time ago and embraced an outsourced consumption model (for example, running applications in the cloud via AWS), the real estate industry, for the most part, has not. Among other important reasons, the consumption model is significantly more cost-effective and allows companies to focus on their core businesses and stay ahead of innovation.
Beyond the consumption model and leveraging the cloud, the real estate industry has also been slow to adopt applications that could transform it from slow and inefficient to fast and efficient. The technology is out there, but until now, the desire to migrate from the traditional way of doing things has been sporadic at best.
Here are three technologies that will soon become mainstream in the real estate space:
Virtual reality: One application that is becoming more popular among consumers and businesses and is tailor-made for real estate is virtual reality (VR). Forward-thinking realtors are already moving beyond photos — and even 360-degree video — and offering clients 3D virtual property “tours” right on their devices. There are different levels of 3D aggregators on the market, but they are still in the early days for real estate.
One of the leaders in this category is Matterport, which incorporates photos, videos and VR to allow users to navigate floor plans in a digital manner. The company’s value proposition is making the 3D experience of home tours “immersive.”
The cloud: Another platform with wide-ranging impact takes on the closing process. Anyone who has ever purchased real estate knows what a long, inefficient and frustrating process this is. Now, thanks to the cloud and better data management applications, the entire process can be streamlined for both commercial and residential purchases — right down to electronic signatures. What once took weeks or months can now take just days.
A company that is solving this problem in an innovative way is Private Exchange Australia (PEXA), an online property exchange network. It helps customers like lawyers and financial institutions transfer the required paperwork to the land registries and allow them to complete the financial settlements digitally.
Blockchain: Blockchain gets a lot of attention these days, but a big piece of that is bitcoin and other cryptocurrencies. There’s certainly a place for cryptocurrencies in real estate transactions, but blockchain’s security, transparency and efficiency innovations are what really matter to real estate buyers, sellers and renters. Those are the benefits that will allow the industry to standardize and scale online transactions.
In 2016, the time was right to do something about this innovation gap in the marketplace, so I started ShelterZoom with an experienced real estate professional, Allen Alishahi. There were some other companies in various stages of building blockchain-based solutions in the real estate space, like Imbrex and ATLANT, but we didn’t see anyone attacking the problems the way ShelterZoom now does.
Think about real estate transactions from a buyer or renter perspective: once the offer is made, the process is a mystery. Consumers are not able to transparently track the offer. Many think the sellers/renters or their agents are playing games and being opaque on purpose. That’s troubling when you consider that real estate transactions contain private information like offer terms, Social Security numbers and bank statements.
Is Real Estate Ready For Blockchain?
Of the three technologies mentioned, blockchain is definitely the newest one on the scene. And despite all the hype surrounding it, it’s not the best option for many use cases. This is especially true at the low end of the purchase spectrum: shoes, clothes and everything at Starbucks are not practical use cases for blockchain.
In my experience, at least three criteria out of several should be met for a blockchain use case to make sense:
- Some type of information exchange between multiple parties is required.
- Privacy is a critical concern.
- Tampering by other parties — of facts, evidence, information or terms — is a major issue. This is a common concern in industries that supply high-value items or legal documents like shipping, financial services, legal and government.
- Reducing administrative costs is a requirement.
- Transparency, auditability and/or verification are requirements.
- Data security is paramount.
Real estate fits all of the criteria.
The real estate industry is still in the infancy stage of technology innovation. While we are beginning to see more applications for VR, the cloud and blockchain, these platforms were all just pipe dreams in the real estate world 10 years ago. As the technology continues to become more ubiquitous, you can expect home buying to never be the same again.
This article originally appeared on the Forbes website.
About The Sundance Company
Established in 1976, The Sundance Company has the experience to help you with your commercial real estate needs throughout the Boise Valley. If your requirements include property management, leasing, real estate development, project planning, construction or space planning then look to us. The Sundance Company has more than 1.5 million square feet of office and industrial space available in prime locations in the Boise metropolitan area. More information is available at www.sundanceco.com or 208.322.7300.