Real estate is local. Real estate is national.
How can real estate firms leverage technology to gain a competitive advantage?
Real estate, like the American dream, is built on ideals. Tech can only be so useful in an industry that’s long attracted buyers looking to make responsible choices, sellers who want returns on investments, and agents and brokers with their own business goals.
The industry, as with many of its financial peers, has drawn injections of venture capital and high-flying ideas in recent years that could have theoretically led to innovation and better outcomes. Sometimes they have. But they haven’t always, especially in an unpredictable market with pandemic-related fluctuations.
Simply put: The real estate industry remains behind other industries when it comes to innovation.
That’s not to say that some organizations aren’t trying to innovate. Compass created a compelling story around “revolutionary tech”—artificial intelligence that current and former agents told New York Magazine did make some grinding tasks of their jobs easier—but the company has seen its stock price drop significantly. It’s now just another brokerage with nice branding and a deficit, and promises that did not translate into more sales.
As Zillow’s iBuying Program showed, tech can’t replace in-person and human aspects of buying a property. Even the best algorithms will struggle to predict the state of the market and accurately forecast data, whether that’s a home estimate or appreciation over a period of time.
After Covid-related bidding wars, the surge is cooling in the wake of spiking mortgage rates, rampant inflation, and the potential of a looming recession. This moment marks yet another turning point for an industry that must straddle national and local interests to be effective while modernizing in key areas to reduce inefficiencies.
As those working in or interacting with real estate stare down another period of change, here are some areas where businesses can look to make sales easier for everyone involved.
Know where tech can and can’t help
In recent years, new players have emerged by packaging traditional tactics in shiny packaging. They entered the market with great promise, unconventional practices, and ambiguous identities that swung between real estate and tech. Now they’re undergoing layoffs and cost-cutting measures. Those newcomers will either consolidate or disappear because their business models don’t make financial sense.
Tech can only shortcut so much when it comes to the experience of buying a home. One positive example is how Modus worked with Realogy Holdings, a global leader in residential real estate, to optimize tools brokers and agents use for quicker growth and better productivity. We were able to innovate around “speed to lead” with the creation and evolution of the LeadRouter platform. The system captures leads from both homebuyers and sellers and forwards them instantly as both voice and text messages to agents' mobile devices, enabling them to access leads on the go.
The key to successful implementation and adoption of tools should correlate to what is good for both agents and consumers. Without the latter, the technology is “cool” but doesn’t really make a difference. Another example is our ongoing work with Houlihan Lawrence ( a part of Berkshire Hathaway Home Services) remaining true to its local origins by partnering with Modus for bespoke content and experiences like North of NYC.
Don’t take the humanity out of home buying
Buying a home is a deeply personal process for people who generally will make that jump once or twice in their lives. Businesses should aim to introduce tech in areas where it eliminates inefficiencies and doesn’t sanitize the process of buying real estate, which even for flippers, can be meaningful.
For instance, most people would want to tour a potential home in person, but they’d also like to save time on the grueling slog of actually closing on the sale, such as saving time on identifying the right title or homeowners insurance. Smart investments in technology in these areas can create an attractive sales pitch for time-stressed buyers.
There’s no one-size-fits-all for real estate markets
No artificial intelligence will be able to generate uniform solutions for vastly different real estate markets no matter how many businesses and brokers wish it could. Brokers, agents, and buyers still need to get to know a place and the qualities that draw people to live there versus parachuting in from a national level.
An algorithmic model for New York City isn’t the same for Las Vegas merely because they are both urban with significant amounts of development and commercial businesses. Some people who live in Michigan simply want to continue living in Michigan for generations and are not interested in national trends.
Using an algorithm to detect trends in a given area and then trying to mirror those results across others comes with considerable downside risk. It’s often best to find and use data points on a smaller scale, as brokers often do within the areas in which they work.
Real estate can benefit from innovation, but mainstays like local brokerages aren’t going away any time soon. They can often sell a local area best, even if they’re borrowing from national models. And the best brokers and agents don’t forget to send a personal congratulatory gift to their buyers and sellers—a lasting memento of the human relationship behind the transaction.