Robyn Nasuti, holding a tin bucket of hand sanitizers, and Sean Terrell, real estate agents with Hopkinton-based Real Living Suburban Lifestyle Real Estate, say

How do advancements in technology impact real estate and valuation processes?

I was recently invited to deliver a lecture to students at the Department of Property, University of Auckland Business School on the impact of technology in the real estate process. I thought having delivered the lecture I would share the content of the lecture and the slides as a synopsis of my thinking.

I chose as my title for the lecture this excellent quote I have used many times over the years when talking to real estate agents about the transformative impact of technology in their industry.

Agents will not be replaced by technology …. they will be replaced by agents with technology”

— Peter Williams – CEO of Deloitte Digital (2007)

The principle here, as in other such talks is that the real estate industry is not in imminent danger of being replaced by a single technology solution that completely disintermediates the process and makes the role of the agent obsolete, but rather that the transformations in the industry will be powered and enabled by technology and the winners will be those agents who embrace such technology rather than fight it. In reference to technology the solution for agents is not to be found in the acquisition of hardware per se, but in the adoption of solutions which will largely be software solutions, applications and platforms.

At its core, my premise is that the real estate process can be segmented into five core components; analysing the impact of technology on each individually provides a richer insight into the likely long term impact on the industry overall:

Prospecting – the task of business development largely a referral and profile business requiring individual agents to market themselves and their services as unique and distinct brands in a largely undifferentiated marketplace of such services

Listing appraisal – that task judged to be of primary service delivered by all agents and promoted as a value-add free appraisal as to the market value of a client’s property

Marketing – the creation and promotion of a client’s property as a piece of marketing collateral, promoted across multiple platforms seeking to attract the widest audience of prospective purchasers

Facilitation – the herding and nurturing of those prospective buyers to stimulate interest and intent to make an offer to buy the property, overcoming objections and apathy to maintain interest by these prospective buyers

Negotiation – the capability to close the deal to the satisfaction of both the buyer and the seller such that the sellers expectation of price and conditions of sale can be met by the buyers acceptance to a price and necessary conditions

These five steps are critical in understanding and appreciating where the future vulnerabilities lie for the real estate industry and where the opportunities exist for those in the industry to embrace new technology based solutions that will likely provide greater efficiency or potentially challenge current processes.

In providing a backgrounder for my outline of these technology advancements I took a step back to examine where the industry has come from on the technology path; where it is, at this time here in New Zealand, and how that compares to international trends; and then finally to look forward to where the future might take the industry.

As a timeline I chose to step back to just 10 years ago. A short timeline to some extent but in the context of my lecture it represented a fairly significant period of change. At that time back in 2004 the process of real estate had not changed much for a couple of decades. The tools of the trade were a mobile phone and the executive car.

Agents were gatekeepers of all the data. Accessing that data at the time and place buyers wanted was simply not possible, as the nascent web offerings in NZ were limited to RealENZ offer with a large number of listings which simply amounted to descriptions with a pitifully few photos; and Trade Me with a very limited selection of private sellers. The advertising medium of choice at that time was newspapers and magazines. The print deadlines being the critical deadlines around which the industry pivoted and as a result property buyers as well who had to wait for the weekend paper. Agents were very reluctant to engage by email preferring the phone and person-to-person meetings.

The next ten years witnessed some step change technology introductions that have reinforced the web as the primary platform for real estate information and marketing.

2005 – the introduction of Google Maps was transformative, providing context to all properties in location terms, opening up the access to addresses on almost all properties. As today’s date, of the 41,451 properties for sale 92.5% of them are displayed on the website of http://Realestate.co.nz with an address – that still leaves over 3,000 without an address. However back in 2006 when this first analysis was done only around 36% of properties listed on Where people and property click in New Zealand had a displayed address

2007 – whilst images accompanying property listings did not miraculously start to appear in this year, it was a turning point when agents recognised and responded to the desire by buyers to seek out more listings online and require more images. In 2006 the average number of photos per listing on Where people and property click in New Zealand was less than two by 2007 it had ‘leapt’ to more than four, by 2010 it was 11 and by 2012 closer to 16

2009 – the emergence of social media was a new platform opportunity for agents with the ability to build online profiles and demonstrate domain expertise in their local market with insight and analysis of the property market at the hyper-local level. Where people and property click in New Zealand launched the blogging platform of Agent Voices and thereby enabled many agents to build their social profile, later supplemented by Facebook – naturally!

2010 – video was by then becoming more common although the early versions were somewhat meaningless video montages of the listing photos. The professionalism of videos has improved markedly over time as has the adoption; with many listings now incorporating a variety of video styles

2010 – probably more significant and in my mind more important has been the adoption of floorplans with listings. These really provide a clearer sense of context to complement the photos, just as maps did to the address 5 years before

2010 – whilst the launch of the first smartphone had occurred a few years earlier the first app dedicated to real estate and showing-casing the full portfolio of property listings launched in NZ at the end of 2010. The Where people and property click in New Zealand app quickly became the most popular means of browsing for property with more than 200,000 downloads to date

2011 – the natural evolution of simple classified listings to premium and to super premium listings occurred as agents recognised the value of enhanced profile which drove more exposure and enquiry and naturally became a key part of their marketing platform (well for some)

2012 – the tablet became a core platform and whilst there are various options, for my money the best experience (albeit compromised by limited listings) is still the

NEW ZEALAND LAGGING BEHIND

Whilst all of the above provides a sense of a dynamic advancement of technology in the consumer real estate space, the fact is NZ actually lags woefully behind many markets in terms of innovation in the field of property portals.

The global market of property portals now spans the globe with all major markets covered with competitive players offering rich services and providing rich rewards for the big media owners, shareholders and investors. The top 5 global property portals are now collectively valued in excess of $20 billion and the global market probably accounts for over $100 billion in revenues.

When it comes to platform options for viewing property in this digital age NZ can deliver iOS and Android apps but little else, overseas options now include wearables as well as every possile platform from Google Glass to Kindle.

User Design for many smart online global service offerings has come along way in just the last 3 years, we are used to continuous scrolling, responsive design and full width presentations – not though in New Zealand and not from our two property portals! We are experiencing 2010 technology, it needs a rethink and reinvention.

A simple tech capability somewhat ubiquitous across most of the property portals around the world is the ability to simply draw your own search area – using a digital pen with your mouse, you describe the location of choice selecting which streets to include and that creates a personal search area – far from being constrained by suburb boundaries.

And then of course we come to data – for many property buyers in many countries (particularly our natural partners – Australia, US and UK) access to comprehensive sales data by property with estimated valuations for every property whether for sale or not is the norm. This insight empowers buyers and enables people to have a clearer view of where they can afford to live, unbounded by the views of local agents. For New Zealand we at best have to rely on 3 year old Capital Valuations and at worst fork out hundreds of dollars for information which is actually public, collected for government bodies which are paid for by tax payers.

FUTURE GAZING

Where are the key future developments in the digital transformation of real estate?

The richer more immersive means by which buyers will review properties for sale will come from the likes of Matterport and their excellent full 360 degree viewer allowing unlimited access to the whole property in the palm of your hand. We may go as far as to experience a total immersive experience through the likes ofOculus virtual reality to allow us to sense walking through a property and interacting with it.

The potential for the fully functioned digital transaction could emerge with professionally managed online auctions as is growing in the US with the company Auction.com. This company started out by auctioning distressed inventory of repossessed houses and now facilitates a wide variety of real estate transactions across residential and commercial property – and here’s the clincher, just as in fine art auctions, the buyer pays the commission.

It is likely that the components of real estate could be unbundled so clients choose from an ‘A la carte’ menu of options each priced in clear dollar terms rather than a bundled offering for a commission of selling price. Easy Property has just launched in the UK based on this model, it is currently only offering services to landlords but their intention is to move into property sales.

Those are just some of the future trends, there will be more. One inescapable truth of technology is that the new smart tech you think will change your industry will be overtaken by the tech you have not even seen yet!

So for real estate the best answer as to where the changes will most likely occur is to examine each of the 5 steps of the overall process and examine the likely transformations enabled by technology.

Source: Technology and its impact on the real estate industry

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