How Tech Will Transform San Diego Real Estate

Technology has slowly been creeping into every aspect of our lives. It’s shocking to think that we can accomplish nearly everything from the comfort of our homes or even on the go with our smartphones. Grocery shopping, paying bills, and even searching for a new car are all just a few clicks away…so why hasn’t the real estate industry caught up?

It was only recently that the real estate market was given a serious look by VCs, investors, and tech startups after they recognized its staying power — and money. Consider that housing alone contributes 15–18% to GDP. It seems a bit outlandish until you realize that the housing market was valued at $31.8 trillion last year, according to a report compiled by Zillow.

So how can the industry continue to grow its wealth and economic impact? By revamping the home buying and closing processes with tech.

First, Get Buyers Comfortable With Tech

A majority of the population is comfortable with using technology because of its accessibility and affordability (aside from some expensive smartphone handsets). After all, almost 80% of Americans own smartphones. This always-on network has created a need for instant gratification, where consumers want immediate access to everything.

Unfortunately for the real estate market, most of their systems have yet to make it online. A majority of the processes are antiquated, and only now are we seeing search platforms and mobile apps come to fruition. Therefore, the industry as a whole needs to get buyers more comfortable using tech for the searching, purchasing, and financing parts of buying a home.

Buying a home is a big deal, and many individuals (especially baby boomers) are not as willing to make big purchases online, so it will take some coaxing and education before the industry can streamline the closing process online.

Next, Move Everything Online

After getting customers comfortable with PropTech, real estate technology that’s transforming the industry and home buying process, the next big step to moving the industry forward is to get everything online. From search platforms to mortgage calculators to virtual tours, online pre-approvals to virtual e-closings, everything must live and breathe online. 44% of home buyers are already looking online at properties for sale, so the whole industry needs to make an effort to meet them there.

This isn’t a move that will happen overnight, given that the industry has worked for this long off of physical files, documents, and even in-person meetings (gasp!). However, introducing online portals and buyer dashboards can help to mitigate the pain of transitioning to a totally online process.

Through the use of an online portal, buyers will possess all of their tools in one place. They will be able to search for homes, calculate potential costs, and even view local real estate agents who specialize in their area. Everything will be centralized for ease of use.

With a dashboard, buyers will be able to personalize their searches, save their preferences, and consolidate their communications with you, their realtor. This dashboard will also act as a way for your clients to make an offer with your guidance and negotiation skills. Their offer, signed documentation, payment transfer, and title exchange will all be handled in their dashboard thanks to secure cloud storage and applications that are integrated with the lender’s digital mortgage platform. No longer will you be required to act as the mediator — instead, you’ll be the navigator.

Lastly, Expedite the Closing Process

Research from the National Association of Realtors shows that nearly 40% of home buyers rank understanding the closing process and the related paperwork as the top challenge. But what if this process could be quickened to cut down on costs, both in terms of time and money?

Moving the whole process online is beneficial for streamlined communication, seamless document exchange, syncing with financial institutions, pulling credit, choosing loan product and pricing and even effortless payment. Yet all of this needs to be completed with regulations and compliance in mind, which ultimately could bring everything to a grinding halt.

Unfortunately, overcoming regulation and compliance issues has yet to be achieved in PropTech. Although there are multiple PropTech ventures on the market that use AI, machine learning, and other data processing techniques, these solutions all solve niche problems. While helpful, the overarching problem has yet to be solved and expedited.

There are some things that buyers can do on their end to smooth out the process: go through the pre-approval process with a lender to obtain a preapproval letter, possess a solid credit history, have money ready for the purchase, and have your real estate team run a title check before finalizing. Yet even with these precautions, the average time to close is still 50 days.

Missed deadlines, a lack of accountability, and unforeseen issues always arise, but these are only minor speedbumps. There are more major things keeping the closing process from moving more rapidly. For instance, there are too many professionals involved in the closing process — appraisers, agents, loan officers, escrow officers, title officers, underwriters, processors, closers, attorneys, etc. — causing communication errors and disjointed processes. Also, documentation isn’t uniform: files, faxes, and emails make it difficult to get everything in one place.

To minimize the total time required, the industry needs to adopt technology across the board and use secure, compliant solutions to decrease the time to purchase. The person or company who solves this will be the next billionaire.

Even though the world of real estate is one of the last industries to be disrupted by technology, it is carrying weight moving forward. Consider that VC funding of real estate tech was over $12 billion in 2017 alone. If this is any indication of the future of PropTech, then it’s important to get on board now before the train leaves full steam ahead.