How Technology Is Changing the Real Estate Profession
July 5, 2018
Kristin E. Rosan
Partner, Madison & Rosan, LLP Attorneys at Law
Technology is changing everything, including the practice of real estate. The last 20 years have brought software, data, and technological changes that have forced the real estate industry to evolve into a global marketplace for both residential and commercial practitioners. First, commercial real estate saw CoStar, a comprehensive internet database of information about commercial real estate organized by sector. The company went public in 1998 and continues to grow by acquiring real estate research firms and compiling public records in a web-based user-friendly experience. Facebook was founded in 2004 and provides marketing resources through social media to publicize real estate and recruit clients. Zillow went public in 2011, and, along with Trulia and realtor.com®, continues to dominate consumer-driven real estate research.
Seemingly unlimited innovation has made it easier for consumers to identify and research real estate, and has extended to how real estate agents service their clients in a transaction. To remain competitive, brokerages have had to adopt transaction management software, such as Dotloop, DocuSign, and BrokerSumo. These programs function in an online paperless office, allowing clients to review and e-sign documents, and aiding brokerages in maintaining and organizing transaction files.
Even brick-and-mortar brokerages are seeing competition from cloud-based brokerages. A cloud brokerage is a network of licensed real estate professionals who practice from home, rather than in a brokerage office, on a platform that is online and paperless. The cloud brokerage offers agents and clients all of the resources and benefits of a traditional brokerage (training, management, and accounting) without the costs associated with a physical location. These savings can then be applied to higher agent commission percentages.
Entrepreneurs recently started discussing the “Uber effect” on the real estate industry. Just as Uber transformed the taxi industry, market leaders are starting to consider like-kind changes to the real estate industry. Just as an agent could not practice years ago without a hard copy of the MLS book, now an agent cannot practice without the internet. With large data companies compiling public records, will appraisers need to physically inspect properties? Will agents take buyers on a virtual reality tour of a home rather than touring it in person? How will the real estate industry make the work of locating, evaluating, inspecting, and closing on real estate more collaborative and convenient for its customers?
Brokerages will have to adapt and utilize these new technologies in order to keep pace with the rapid evolution of consumer preferences and demands. Although change can be painful, helping your real estate practice to embrace new technology may be the singular decision that sustains your business for the next 20 years.