We follow trends, anticipate consumer demands, and postulate how new technological industry advances will shape our lives in the years to come. Selling a home in the next decade could look very different from anything we’ve seen so far. Even before last year’s turn to remote work and virtual school in mandate with the worldwide pandemic, the sale of homes was already beginning to shift. The rise of innovative technologies such as Blockchain, iBuyer and expanding platforms like Zillow and Offepad, to name a few, have begun changing the real estate game pretty drastically. Will the comprehensive work of title companies be replaced by blockchain technology which presents the ideal, secure system for public records such as real estate Transactions as well as property, payment and lease histories? Will Zillow take its vertical coverage of the real estate market to a new level by extending its affairs into the buying and selling of homes as well as originating mortgages for buyers? Is this the future of real estate?
Where We Are Now
Let’s take a step back so we can look at the bigger picture. We are on an ever-invigorating mission to expand our knowledge of technology, AI, renewable energy, Space, etc, and we cannot rule out the alteration of any industry, especially one that involves the majority of someone’s life whether they rent, own or invest in real estate. The general shift we have seen over the past couple of years is the transition of more and more affairs online, from the way people search for homes, find realtors, to communicate and sign contracts. Many real estate industry giants and even smaller brokerages each have a fully developed app for customers to use throughout their real estate transactions, whether it be buying or selling. We’ve also seen video showings and virtual 3-D tours become increasingly popular, especially over the past year. Even home staging has morphed into software able to super-impose furniture into pictures and virtual walkthroughs, sometimes even being interchangeable as buyers try to match house fittings to their own. This is just the tip of the iceberg.
New Blockchain Technology
Many will think of Bitcoin when they hear the term blockchain thrown about, and that is essentially what the value is behind Bitcoin- this technology. Blockchain is a way to store, collect and record information that is near impossible to hack or alter. Aside from being incredibly secure, each blockchain is programmable, immutable, anonymous, unanimous, and time stamped, as well as distributed to every participant in the network for complete transparency and authenticity . The ingenuity of blockchain technology makes it the perfect candidate for keeping real estate transaction history while also allowing it to be easily accessed by the public without the risk of hackers or the labor of manual entry and record-keeping. This is not to say title companies won’t have a human aspect or physical address, only a transition of the old to the new in the wake of technological advances.
The Rise of iBuyer
There is always someone who will buy for the right price. Now there is something who will buy, and the price is arguably better without agent commission and closing costs. This is the model of iBuyer, a system to be adopted rapidly by many real estate industry giants such as Zillow, Offerpad, and Keller Williams. A seller may choose to be presented with a pre-listing ‘offer’, which will either be calculated by an algorithm, by processors or by a group of behind-the-scenes investors. The offer will be more in line with what the home is worth (perhaps a little discounted beyond that) and not congruent with what the market shows a buyer is willing to pay. If a seller prefers a quick sale without the hassle of listing their home and waiting out home inspections and appraisals, they might certainly be attracted to accepting the offer. Most companies will be willing to work with a seller on flexible move-out and closing dates. This could prove convenient to a seller who is simultaneously in the process of purchasing a new home and experiencing the setbacks of a closing date. All-in-all a home is still a huge asset and many people will likely still find the largest value in having their home on the market and exposed to buyers willing to pay above and beyond what they could ever hope to expect from one of these automated offers.
The Growing Zillow Industry Giant
Zillow has long been a player in the real estate industry and continues to foresee where the future of real estate might lie. If we take a closer look at Zillow, we can formulate that they are essentially a marketing company that picked real estate as its profitable market. Zillow allows easy access to its website with IDX feeds containing homes for sale almost anywhere in the world, and allows realtors to advertise their services. Zillow is slowly permeating into more aspects of the industry and internet than most consumers are perhaps aware of. It owns Trulia, and has recently purchased Dotloop; a transaction management site which many real estate agents use for just that, as well as compliance, e-signing and file-sharing. Zillow has also recently began pursuing a purchase for ShowingTime, one of the most widely used apps for real estate agents to communicate times for showings on each other’s listings. In addition to its recent acquisitions, Zillow has pioneered its own iBuyer systems called Zillow Offers, which buys and sells homes as well as its own mortgage lending enterprise called Zillow Home Loans. It remains to be seen if this transaction chain Zillow has created will succeed in taking market share and whether or not we will come to view Zillow as a ‘Housing Bank’.
Where should buyers and sellers look to for the most value when it comes to the ease and safety of viewing houses and securing a full cash-out of their home’s equity? Buyers will likely always get the most value from working with a local real estate agent. Local agents will know the market and know how to make an offer look as appealing as possible, even in a bidding war. Sellers can find value in different places depending upon their motivations. Real estate is inherently localized and thus a good agent will always earn their commission through hard work, clever matchmaking and advertising, complete market knowledge and expert negotiation. However, a seller who is looking for a quick, easy sale without the headache of inspection repairs and potential low appraisals, would definitely find a different sort of value through an iBuyer system that makes that kind of sale possible.
Does this mean we are looking at a world without real estate agents, title companies and home stagers? The answer is as speculative as the colonization of Mars. What we know is that the industry is going through a rapid shift, fast-tracked by the shortage of in-person interaction we’ve grown accustomed to throughout the past year. We know that homeowners have increasing options for bypassing real estate agents, lenders, and home stagers. However, have they really side-stepped them or have they hired them by another name or behind a new system? Because that is the essence of innovation and industry advances, they never leave people behind if the people are willing to forefront the wave and pursue the future.