For decades, nothing about buying or selling a home has been simple or easy. Even as retail, grocery and financial services have gone digital, the real estate transaction has remained mostly offline.
Years ago, fintech emerged to digitally transform everything from how you get your credit score to how you trade stocks. Similarly, the phrase “property technology” or “proptech” has been coined as a way to categorize the countless startups that have tried to modernize various parts of the homebuying and selling transaction.
From new ways to sell your home to new tools to finance a home purchase, there’s been inspiring progress. As a result, consumers now have more choice throughout various parts of the homebuying and selling journey.
Yet, it took a global pandemic for the industry to make innovation a priority and for consumers to more widely adopt digital solutions — from virtual and self-guided tours to e-closings on homes.
What we’re seeing now is a new wave of innovation that has the opportunity to lead to massive transformation and an entirely better experience for consumers long after the pandemic ends.
Real estate innovation hits the gas
When COVID-19 hit, the housing market effectively came to a pause. Homesellers didn’t want dozens of people inside their homes, and buyers wanted to avoid crowded open houses.
But despite social distancing mandates and safety concerns, people still need to move. They want to downsize homes, find a home with more space, escape crowded cities or relocate for a new job.
Agents and real estate brands had to figure out how to quickly adapt — some more than others. Because of this, the innovation that was already happening has accelerated and become more mainstream.
Now, amidst the pandemic, virtual and 3D tour options have become a widely accepted way for shoppers to see homes. The National Association of Realtors (NAR) reported in a May survey that 35 percent of Realtors are seeing sellers use virtual tours to showcase their homes.
And Realtor.com data shows that since shelter-in-place orders began, the growth rate of visits to listings with virtual tours has been twice as high as those without. Beyond 3D touring, e-notaries and virtual home assessments are making some home transactions entirely contact-free.
Consumers are clearly adapting to the new realities of selling and buying homes during a pandemic, and as a result, there’s been a more limited impact on the housing market than expected.
Historically low interest rates are drawing buyers in, while the ability to make a profit is enticing sellers. Home prices continue to rise, with the median national home listing price growing by 5.1 percent year over year.
The best is yet to come
I believe the changes we’ve seen in how consumers are shopping for homes will last long past this pandemic. Emerging data backs this up. In a survey from Realtor.com and Toluna Insights, 21 percent of people said that COVID-19 has made them more than likely to move into a home without stepping foot in it first.
That’s a major shift in how people will buy homes, and it’s just the beginning of a new wave of innovation. Here are the three additional big changes I anticipate will come out of the coronavirus pandemic:
1. More automation
Just like most people now prefer to chat with a customer support agent online, COVID-19 will create a lasting change in how people want to connect throughout the homebuying and selling process.
I predict more people will prefer to conduct most aspects of the transaction online, with fewer in-person interactions. That means major parts of the transaction from home loans to title and escrow will move online.
2. A less fragmented experience
Today, homebuyers typically start their home search online or with the help of an agent, work with a lender once they find a home they love, tap into a title and escrow company for closing, and contact a variety of different vendors to get their house ready to move into.
The entire transaction is disjointed from start to finish, and it still happens mostly offline. I believe we’ll see true online real estate marketplaces emerge to streamline the entire process from end to end.
3. Lower costs for the consumer
From machine learning models that provide more transparent access to accurate home values to virtual staging solutions that help buyers visualize their next home, moving more of the real estate transaction online will make the homebuying and selling process significantly more efficient.
As we’ve seen in other industries, that will ultimately lower costs for the consumer, opening up new opportunities for people to move when they want to, not just when they have to.
While the effects of the coronavirus pandemic have been devastating in many ways, one bright spot is the innovative products and services that have become more mainstream in its wake.
Just like people have become more comfortable dialing into a Zoom meeting or ordering groceries online, more people will be comfortable starting and ending their homebuying and selling journey online, too.
Tom Willerer is a chief product officer with Opendoor in San Francisco, California. Connect with him on Twitter.
