Compared to other industries, there aren’t many tools on the market to help buy, sell or rent property. Take the automotive industry, there are hundreds of apps, platforms and startups vying for the same market. Perhaps it’s because a home is the largest purchase for many people, or because of how much of buying and selling process requires government documentation.
But that’s changing, and the landscape of that PropTech change is exciting not only for buyers, but for agents, sellers and everyone in real estate. There are monumental changes that need to be made, but things are well on their way. Last years I spent looked at over 2,450 properties on Craigslist, viewed 30 in person and selected one after 3 solid months. It was like having a second job. It was terrible.
Since then, and since I live in Silicon Valley, I’ve been naturally drawn to any technology advances in real estate. If you do a bit of digging, you can see that there’s a lot of innovation around listing the property. But that doesn’t help anyone actually make a transaction or organize the massive chore of buying a new home.
So, I reached out to Sergey Ponomarenko who runs a tech real estate platform in San Francisco. He shared insight about where the market is going and how PropTech will look in the future. As it turns out, the future is very exciting.
How much of the real estate industry is focused on tech right now?
Sergey: Right now the market is outdated. Most of the tech in the industry is around listing websites like Zillow or Compass. These websites let you post an advertisement and find a buyer or a tenant. Right now, brokers and agents have the major part of the offline market. Very few deals happen without the agent.
There are 2 ways the market can develop with technology.
- Services that can make deals without agents. This includes closing a deal, working with a county title office and all the paperwork in between.
- Services for the agents and brokers that simplify their process for transactions. For example, the transaction coordinator’s work is a simple process that isn’t automated right now. This will be automated in the future and make agents and brokers lives easier.
What are the best tools in the market right now for buyers, sellers and agents?
Sergey: These are split into several groups.
Listing Websites – Trulia, Craigslist, Zillow
Online Brokers – Redfin or forsalebuyowner.com
The online broker platforms are making deals without agents now. There are also some new business models like Opendoor that buy properties and flip them. Then there are plenty of services for agencies like Zipforms or Sky Slope, which are CRMs for the real estate industry.
What new technologies will make real estate better for the buyer in the future?
Sergey: There are a lot of commission fees, fraud and other bad things happening in the market. When you sell your house for $1m you pay 60-80k in commission. This gets split between agents, escrow companies, title insurance companies and so on. You also pay only for extra documentation checks and controls.
Real Estate Technology: A Look Into The Future
Blockchain is one area we see as a large innovation opportunity. If you use blockchain, you don’t need extra checks and balances, because the tech is something everyone can trust. Once county governments move to blockchain it will eliminate fraud and take away all fees and commissions.
What are some of the main areas of real estate that are outdated?
Sergey: Agents are doing a good job right now, because the transaction is very intricate and difficult. That’s why there’s so much opportunity to innovate.
For example, transaction coordinators is a manual job right now that keeps all of the meetings, filings and logistics moving on time. In the future all of the checks and balances, the middle man, and the red tape will be taken away completely. Just like taxis, just like a lot of hotels.
Do you think any of the big PropTech players (Zillow, Compass) will integrate to form a more complete solutions for the industry?
Sergey: I think they should, but they’ll need to build another business model. Now agents are paying money to them and they earn a lot of money that way. They’re interested in keeping things this way for a long time. They’re not interested in eliminating agents from the market.
Other players like Facebook and Google are interested in moving into the real estate market. If they start to work with landlords or owners, they can earn commissions on their own without agents, if the tech allows deals to be closed 100% online.
What government challenges lay ahead?
Sergey: The main innovation for government is to eliminate bureaucracy, and make the government services more available to the citizens. They should eliminate extra fees or commissions and make data housing and communications more secure to help fight fraud. Blockchain is an answer for these types of challenges.
How do you think the buyer market will change in the future buying real estate?
Sergey: Now you go to an agency, look through listings, choose ones that look good, go to the open house and then start the process of buying. You’ll do this 10-20 times because it’s a big purchase. PropTech can eliminate all of these trips if we make the tools available and provide enough information about the homes.
Think about doing an open house in VR or AR without being there physically. You get to interact with the home, and get a feel for the place. You’ll do this with 4-5 homes and you may find one you want to make an offer on. With a complete solution, you’ll be able to do the entire transaction virtually.
Overall, the buying process will move to online. People will travel less and do more on the websites.
What can early adopters do for the PropTech industry?
Sergey: They can use the technology out there. They can early adopt anything that helps make the buying process faster, and they can vote officials into office that are technology friendly. The government will play a big role in the real estate tech of the future.
CEO at BuyTheWhale. A serial entrepreneur with a decade of experience in successfully growing startups to scale. Sergey helps people make one of the biggest purchases of their lives in a simple, easy to understand format.