Digital transformation has permanently shifted how consumers make purchasing decisions and interact with the business world at large. In order to adapt to those changes and stay relevant to their consumer base, many industries have embraced new technology—and real estate is no exception.
What was once a market driven by local agents and homebuyers has since become a digitized space in which the entire process—from looking at houses to closing the transaction—can be done online. This convenience and mass accessibility could result in as much as an 11 percent increase in new home sales and a 3.7 percent increase in existing home sales for 2020, according to the National Association of Realtors (NAR).
“When tech companies first entered the real estate space, the result was an optimization of the industry’s many processes. Now tech companies have pushed the innovation one step further. They are no longer just optimizing; they are disrupting the industry,” explain experts at Divvy.
Divvy continues, “The real estate landscape has seismically shifted, resulting in a new and exciting ecosystem that benefits prospective buyers. The result of all this innovation will be a drastic improvement in customer experience as these companies apply the immense data they have collected after months of working with the market.”
The question is, what does all this mean for the agents? Here’s what you should know about real estate’s digital transformation in 2020.
iBuyer Websites Automate Home Buying and Selling
An iBuyer is an online platform that uses artificial intelligence to compute an instant cash offer on a house the second it’s listed on the website. The convenience has driven popularity among buyers, with 9.6 percent of homes sold to iBuyers in 2018.
Since iBuyers take the hassle out of selling or buying a house, some Realtors® feel like they need to compete with these websites, but in many cases, it’s a smart idea to partner with iBuyers too. For instance, Opendoor allows real estate agents to earn a commission from offers they request for seller clients or transactions they represent for buyer clients.
In addition, Realtors® can earn a one percent bonus directly from Opendoor when they refer an unrepresented seller to the website.
Equity Finance Tools Simplify Homeowner Investing
It can be difficult for buyers to afford the house they want to purchase and build equity long-term in expensive and competitive housing markets. About one in five homeowners across the United States feel “cash poor” from the cost of a house that exceeds their monthly income, and 73 percent of these individuals need a financing solution that does not create even more debt, according to a 2019 Hometap study.
Co-investor tools and online services allow current owners and prospective buyers to increase their cash flow each month by unlocking access to equity. The co-investor owns a stake of the house’s future appreciation value in exchange for the homeowner’s freedom to use equity as a liquid asset to eliminate debt quicker, handle an unforeseen expense, or fund a home repair issue. As a real estate agent, this trend of equity financing can help your clients afford a down payment, which NerdWallet cites as the main barrier that stands between 44 percent of Americans closing the deal on a home.
Digital Landlords Help Shift from Renting to Owning
In 70 percent of the United States, the average person is unable to afford a house, reports Sarah Min, Chief Investment Officer Journalist at CBS MoneyWatch. As a result, many Americans are left to rent, but that can be a financial burden too. In fact, a 2019 study from RENTCafe revealed that most renters will spend $93,000 in living expenses by the age of 30.
However, 21st century companies, like Divvy, are now acting as “digital landlords” in order to help streamline this transition from rent-to-own within the budget and time constraints of each prospective home buyer.
These platforms consolidate all the steps, from searching for houses and making an offer, to handling the taxes, fees and insurance, to meeting the requirements for a mortgage. Then over time, as the tenants build financial capital, they can affordably shift from renting their house to being the sole owner of it.
In addition, these services often partner with licensed Realtors® like yourself who can enroll and then refer clients, submit offers and coordinate logistics in the closing process.
As a Modern Agent, You Need to Understand the Technology
Technology has steered the real estate market online, but this does not mean that you as an agent are obsolete in this new landscape. You need to be flexible and adaptable to the digital frontier and reshape your business model to accommodate it. Knowing about these tools and platforms that your customers use will be beneficial to your success in 2020. The industry has changed, but you can still be an asset to home buyers—no matter how they choose to purchase a home.