How Technology Will Change Real Estate for the Better
At NAR's iOi Summit, technologists from both inside and outside real estate explored innovations that will change the industry in the coming years.
August 30, 2018
At the inaugural Innovation, Opportunity & Investment Summit, the National Association of REALTORS® brought together brokers, agents, venture capitalists, startup founders, vendors, and others to discuss the many ways in which technology is challenging the status quo. The conference, held Aug. 29 and 30 in San Francisco, featured dozens of expert speakers, as well as a hackathon, where participants sought to use artificial intelligence and machine learning to improve real estate, and a pitch battle, where tech startups demonstrated how their companies are seeking to transform various elements of the industry.
While some conversations revolved around the disruptive nature of technology, speakers and attendees alike found more reasons to cheer on innovation than to disparage it. Here are a few ways real estate professionals can take advantage of new tools and processes to improve the industry today and in the near future.
Saving Marketing Dollars
Real estate is all about creating connections between people, but that doesn’t mean technology can’t help agents and brokers in their matchmaking efforts. Avi Gupta, president and CEO of SmartZip Analytics, Inc. in Pleasanton, Calif. told real estate agents in the audience they can use analytics to avoid the urge to blanket their entire market with “just listed” postcards every time they acquire a new listing. “You’ve got to make sure that you are using those marketing dollars in a smart way,” he said. “Focusing on the best prospects can save you time and money.”
Gupta’s company combines a wide range of data to figure out who’s the most likely to list in the near future, and allows real estate pros to send “targeted messages to the right person at the right time.” He noted that important differentiators are present even within a single prospecting segment. For example, the way you'd approach a move-up buyer is very different from the way you'd target someone who’s looking to downsize.
SmartZip was part of NAR’s REach® technology accelerator program in 2014.
Gupta predicted that real estate marketing efforts could someday rival the complexity of powerhouses such as Amazon and Spotify, companies that use algorithms to become tastemakers and help consumers find their next favorite items through recommendation technology. “The next frontier is prescriptive analytics,” he said. “Don’t just stop at predicting. Figure out how you can help [clients] move.”
Avoiding the Next Crash
Ginger Wilcox may be the senior vice president of marketing at San Francisco-based Capsilon Corp, a company that provides digital platforms to help mortgage providers modernize their processes. But as a former agent, she saw first-hand how the slowdown in lending after the recession impacted the real estate industry. Because of the increased regulation instituted in response to the financial crisis, Wilcox told iOi attendees, getting a mortgage is now a longer and more costly process. It can require as much as four times the staff size to write the same numbers of loans.
“I don’t believe we need more disclosures. I don’t believe we need more documents. We need more data. Accurate data,” Wilcox told attendees. “It’s time for the next-gen operating model.” She said bringing the mortgage process online and allowing programs and algorithms to enter and verify data, scan documents, and identify issues has the opportunity to transform an industry where 57 percent of loan applications are currently taken in person or over the phone.
Wilcox says Capsilon’s data-driven process has already led to a 30 percent decrease in underwriting time, but she estimated this will decrease even more dramatically as more lenders change their approach. Not only can this make the process smoother for agents and consumers alike, Wilcox said, but it can make lending fairer and less prone to human error and fraud. “Ultimately that helps expand credit [and will] open up homeownership to new pools of people,” she told attendees. “It also allows underwriters to focus on the loans that need the most scrutiny.”
Capturing and Marketing Home Data
Two REach® graduates were on hand at iOi to share ideas for using listing data to sell homes for more money. Cynthia Adams, CEO of Pearl National Home Certification, a 2017 REach® partner based in Vienna, Va., noted the frustration of homeowners when they realize all the efforts they engaged in to improve their homes’ efficiency don’t generally get captured in the sales price. “When you put your house on the market, you’re not going to get credit for those features,” she told attendees. “If it’s not on the MLS, it basically doesn’t exist.” But working with NAR, the Appraisal Institute, and others in the real estate space in 2017, Pearl has been able to get their data on residential efficiency into more listing materials. Adams referenced a recent study that found homes they've certified sell for an average of 5 percent more than average.
Also a member of the 2017 REach® class, San Francisco-based Centriq Technology Inc. helps link home buyers with user manuals and maintenance materials related to the appliances in their new homes. The company’s co-founder and CEO, James Sheppard, told attendees that agents can use this “digital assistant for the home” to market their listings. “They’re all struggling with ‘how do I add more value?’” he said. Noting that the company has integrated their service into some MLSs, he added: “When they are fancy, really expensive [appliances], you can brag about that in the listing.”
Bringing Communication Back to the Human Level
An admonishment over how online communications are damaging our relationships might be the last thing you’d expect to hear at a conference filled with tech innovators. Ethan Beute—vice president of marketing at video software company BombBomb, based in Colorado Springs, Colo.—brought attendees’ attention to a 2015 New York Times opinion piece that predicted the impersonal nature of the internet may lead to a “flight back to the face” as humans yearn for more personal connections. Yet Beute pointed out that as consumers look for human interaction, agents and brokers are just as limited by time and space as they’ve always been, and it’s not becoming any easier to get face-to-face with prospects. That’s why he emphasized non-professional, off-the-cuff videos as a sort of middle ground. “Any two people—or more—who have an internet connection with a camera can get face to face,” he said. “I send [a video] when it’s convenient for me, and you experience it when it's convenient for you.”
Beute asked attendees to look at their communications strategy and ask themselves if any given message would have been better received in video form. He said his company’s research has found real estate pros not only obtain better lead conversion through video messages, but these communications also seem to promote stronger bonds between the sender and recipient. “You’re psychologically closer to me as a consequence of experiencing me through video,” he said. “If we haven’t met, you’re going to feel like you’ve already met me.”