With tech taking over the world, real estate sector seemed relatively safe so far. Both construction and real estate sectors are ranked low in digitalization indexes1. This is because real estate is a multi-tiered industry with many stakeholders, ranging from builders to financial institutions, from realtors to government agencies. It is a heavily regulated industry that requires local expertise, human touch and physical presence.
Examining the impacts of tech on all these players would be too challenging for a single post. We had to choose one, and we choose the agents who glue interact with all parties in Turkey: the realtors. A landmark 2013 Oxford2 study on automation predicts an 86% likelihood that realtors will be replaced by robots. Should this ring the alarm for you? For the most, yes. But for some, this trend is an opportunity.
Problems for Realtors in Turkey
It is important to outline the key problems realtors are facing today to understand how technology may help and/or disrupt the sector.
Many realtors cite the major problem to be the lack of trust and the negative public image of the profession in the country. Due to lack of regulations, everyone could become a realtor, or at least act like one. While the official numbers point to ~60,000 realtors, it is estimated that there are 350,000 people acting as a realtor in some capacity.
From the outside, the job may seem easy to perform and earn high commissions. Overlooking the people skills, the discipline and the hustle required to be a successful realtor, some opportunists are attracted to the profession. Instead of building long term relationships and trust, they tried to get rich quickly by maximizing short term profits. This led to bad business practices or fraudulent activities.
The other key issue is lack of a Multiple Listing Service (MLS) in Turkey. MLSs provide transparency and trust to both homebuyers and realtors. They also ensure realtors get properly compensated for their services. Lack of trust by homeowners, lack of regulation by government, and lack of organization by realtors prevented establishing an MLS so far.
Aside from the challenging landscape, realtors also have a crucial problem many of us face nowadays: Lack of time. They are expected to perform a lot of activities and are mostly mobile. Also, they get calls all the time. While dealing with this high volume of tasks, it becomes challenging to provide quality service to all potential customers.
Global Real Estate Technology Trends
We will continue with the global digitalization trends affecting the real estate sector. Lastly, we will combine them with the problems in the Turkish market.
Realtors historically relied on listings as the main channel. Started with newspaper ads, listings were disrupted by online platforms, which continue to be the main channel of reaching potential customers. In 20183, 44% of US homebuyers looked at an online website as the first step, and 93% visited one during the whole process. Website channel is dominated by mobile (vs. desktop). For example, 80% of millennials used mobile during their search.
While it is essential to have a presence on listings websites, realtors have to keep up with new channels to differentiate. These new channels leverage technology and data to enable a more personalized outreach. We are talking about social marketing, personalized mass marketing and instant messaging.
The above study found that the best quality leads come from social (47%), followed by listings (32%). Facebook was the most popular, followed by LinkedIn, then Instagram.
Personalized mass outreach via email and instant messaging is another emerging trend. This is enabled by customer data collected in CRMs. With a single click, realtors are able to segment their customers and send relevant portfolio with a personalized language. This allows realtors to strengthen their relationships and perform targeted outreach with a relevantly little effort.
Lastly, instant messaging platforms such as WhatsApp and Messenger enable quick multimedia and document sharing. It allows realtors to be connected to customers all the time. This channel starts to challenge phone conversations.
These new marketing channels offer great opportunities; however, would be useless without great listings. The top 5 most useful aspects of a great listing are found to be photos (87%), detailed property info (85%), floor plans (52%), virtual tours (46%) and realtor contact info (42%). Results of this survey reveals 2 critical facts:
Even though the customer needs are clear, majority of listings fail to provide great photos and accurate details.
Demand for virtual tours and other visual assets are high and they will only continue to increase.
Advancements in visualization technologies such as virtual tours, 3D modeling via LIDAR, 360 videos and drones enable great differentiation opportunities. With relatively small investments, realtors can ensure their listings stand out, and deals close much faster.
Real estate transactions have many steps and different parties involved. Managing the whole process and paperwork continues to be a major part of realtors’ responsibilities.
Legalization of digital signatures, improvements in money transfers and developments in blockchain are key trends disrupting real estate transaction management. Technology now allows to have a fully digital transaction. This means that involved parties are not required to be physically present, even for cross border transactions. Theoretically, a buyer can view a property online and contact the realtor. Realtor can digitally verify the identity of the buyer. The buyer can make a digitally signed, legally binding offer. If the seller agrees, following a digitally signed purchase agreement, the funds are transferred via the buyer’s bank and the deed is transferred. These can all be made on blockchain as well.
We emphasize the word “theoretically”, because while the technology is there, such exchange requires collaboration of many parties and considerable behavioral change. While this future is inevitable, disruption happens slowly. Currently, use of digital signatures can streamline paperwork and allow for secure archiving. Digitalization of the transaction and transfer of funds would ensure every party is properly compensated.
Big Data and Innovations in Fintech
While these trends will surely disrupt the real estate, their impact on realtors’ daily work is somewhat limited.
Big data, aggregated by improvements in IoT devices and location services, will enable more informed buying decisions, easier accurate pricing and data driven competitor analysis.
Lastly, innovations in fintech will lead to new project and transaction financing such as crowdfunding, partial asset ownership and tokenization of real estate.
Leaps in artificial intelligence and machine learning would impact every sector. Real estate is no exception. Every digital workflow can be improved or fully handled by artificial intelligence. These can range from sending transactional emails to personalized recommendations, from valuing a property to conversing with customers via chatbots.
The robots we mentioned at the beginning of this post refers to AI. They will indeed replace the repetitive, easy to perform tasks of realtors. They are great at processing numerical and transactional data. But what about the relationships, the empathy, the selling, the ‘human touch’?
Bringing It All Together
It is inevitable that above mentioned trends will replace some responsibilities of realtors. Probably sooner than we all think. The number of realtors will decrease; however, realtors will never be obsolete. It is because buying or renting property is a big deal for everyone, whether it is for residing or investment. The size, nature and the complexity of the transaction makes it an emotional one. Customers require that human touch, at least at some parts of the process.
We believe that realtors should focus on fostering trust, building relationships, and position themselves as true “consultants”. Areas such as listing management, lead generation, data entry and transaction management will mostly be automated. And this can be a good thing for realtors who position themselves accordingly.
In Turkey’s case, it is possible to re-instill trust in the profession, encourage collaboration between realtors and save them time through use of technology. This would allow realtors to focus on long-term relationships and offer differentiating advice. In short, value added services rather than busy-work.
We closely monitor this industry and have exciting solutions under development. Our intention is to improve the overall quality of the sector and the experience for all parties involved. Stay tuned for more information. You can follow us at facebook.com/maydanozapp or instagram.com/maydanozapp.