That phone you’re looking at changed everything. After decades of staunch resistance, technology is transforming real estate. It was inevitable as the internet, personal computers and cell phones exploded. Zillow, the original and true disruptor, pulverized the real estate wall of secrecy; the genie is out of the bottle. This tech boom serves the public as much as it does the industry, never before has so much been available to so many. Oddly, the majority of info is provided freely by the public; social media is a literal bottomless pit for data miners. Data is available to anyone…any property, any info, at any time…consider what this means. Every “new job” or “new baby” post is picked up by a bot. Good, bad or otherwise, the impact of the internet and technology on both real estate and real estate customers is felt across a wide spectrum. It’s common for buyers and sellers to Google each other, ostensibly out of curiosity but if a negotiation edge can be had… A few key areas where change is rapid –
Gone are the days where a trip to the county courthouse was required to get information. Now it’s just a matter of a quick Google search, finding any number of public records portals and getting to work. Purchase price and date, mortgage(s), foreclosure notices, listing history…a few clicks away. Sellers routinely Google buyers as well, they can find similar information. Both sides can quickly scan social media for other “background” info. The more that’s posted, the better the results. The programs and data continues to get better and more accurate over time.
Automated Valuation Models
Every time you hit “what’s my home worth” you contribute data. Zillow remains the most recognized real estate tech influencer and will remain so. While “Zestimates” are routinely mocked and criticized, the technology behind the algorithms used to estimate value continue to improve. Their latest incarnation uses photos from the MLS, Google and other sources to evaluate a home, area and curbside appearance. Atlanta is one of their largest markets; over 34K zestimates with 85.6% within 5% of sale price, 96% within 10% and 99% within 20%. These algorithms are constantly being worked on and while there’s a limit to their accuracy, in most cases they are perfectly suitable for a broad estimate of value.
iBuyers – Sell Fast for Cash
The ibuyer is a good example of how technology is transforming real estate. This isn’t a “new thing”; this is an old thing that’s morphed due to technology. OpenDoor, OfferPad, Knock, Zillow…will gladly buy homes from sellers at significant discount. There are many stipulations of course, age, price point, condition, location are just a few. And for the privilege of selling fast and under market, sellers will routinely pay an additional 8-14% when all is said and done. Same for the “if we don’t sell it, we’ll buy it” pitch tossed by some real estate firms. Offers prices are 60-70% of market and the home will often be “flipped” right at closing to an investor or the contract assigned; the broker is merely a middle man. The seller is paid their nominal fee, the broker makes a fast 10-15%, the investor then marks it up another 10-15% and flips it to the final buyer. iBuyers are often a losing bet for sellers.
Predictive Analytics – “They” are Watching
In the “me” age, there’s a compulsion to post everything and that means personal data. Posts on Facebook, Instagram, LinkedIn and more are combed by bots, data collected and analytics used to find likely home sellers. Changes in marital and family status, employment and overt “we’re thinking of moving” are combined with mortgage payoffs, credit, work and education history and time in residence. This data is then compared to medians for the area, usually by zip, and lists of potential sellers are formulated – and sent to subscribing agents. These agents then send “thinking of selling?” touches out and the games begin. The data is out there, easy to find and posted freely by the public. Here’s a short video example.
Misleading Listing Photos
Simple photo apps transformed real estate listings, not always in a good way. The “it doesn’t look anything like it did in the photos” is a common refrain; photo manipulation is on steroids now. Virtual staging, major photo edits, color changes, lighting changes, wide angle lens and of course selective photography can seriously misrepresent a home. It’s to the point now that many firms require statements explaining any modifications (esp virtual staging and color modifications) and that photos were not manipulated to misrepresent the listing. It’s critical to have a careful eye when viewing listing photos, look for anomalies. Google and Bing Maps are great assets; if you don’t check the bird’s eye views you won’t see those power lines to the rear or landfill around the corner.
Push Marketing by Vendors
Digital footprints are left on every site visited; cookies are the “friendly” way to disclose that. Every public real estate site tracks activity, consolidates the data, then sells “leads” to real estate agents; that is a major source of income for them. Stopping by just to browse can result in ad tracking; those side bar ads that seamlessly show up. Any submissions or questions become “hot” leads; agents will be in touch to “help”. This continues after a transaction as well. Mortgage companies frequently send “updates” in an effort to stay top of mind looking for business. Marketing companies make billions keeping businesses “top of mind”.
Appraisers have always been ahead of the sales side from a data stand point, the emotional component is removed in favor of the facts. There’s a movement to eliminate appraisals on some purchases if certain criteria is met; instead relying on value ranges derived through algorithms. A very recent push is toward bifurcated appraisals; a hybrid version where data is collected in the field and/or from public records, then a desktop opinion is provided by an appraiser. This is being met with resistance as the person inspecting the home isn’t preparing the appraisal, the opportunity for disaster looms large and it’s unclear how this turns out. That it’s being pushed is telling; relaxing the standards for borrowing may be reason.
What it All Means
The last decade transformed the real estate industry; that acceleration is not stopping. However, real estate isn’t a widget bought on Amazon; no two homes are alike, every single property is unique. Other variables always influence a transaction; every seller, every buyer, market conditions, market trends, local conditions, national conditions and more influence every deal. Then add agents; experienced or part time? Are there agents involved? How are other known and unknown issues that pop up handled?
Having all of this data available is great, as is having all of the ingredients for Beef Wellington laid out in the kitchen. None of that matters however, if the components aren’t properly assembled, interpreted and applied. Mistakes with real estate can bring massive headaches and financial pain; mistakes with a Beef Wellington might get a rip by Chef Ramsay. Work only with experienced agents, even with all of this technology and transparency, unexpected issues will pop up…and make sure the beef is properly cooked.