A few years ago, if you wanted to buy or rent a home, you would scour classified ads in newspapers, circle the interesting properties and contact the owner or real estate agency by phone. This search has changed drastically since PropTech entered the real estate sector. With the Canadian real estate market reaching new records in the last few years, real estate agents and consumers alike are wondering: what is PropTech and how can it help the home-buying process?
Read on to learn what PropTech is, the advantages of using these technologies, and the ways they can be used by SMEs in the commercial real estate industry.
What is PropTech?
PropTech is a term that refers to property technology, and consists of many real estate technology solutions. PropTech tools include technologies for a wide variety of functions, and emerging trends have shown up in the finance, virtual reality, virtual tour software and Big Data areas.
With the real estate market in a historic boom, interactions with home buyers and sellers have become a paramount part of operations. Not only can PropTech provide positive customer experiences, but can also streamline accounting and internal tasks.
What solutions does PropTech offer?
With the definition of PropTech established, here are some examples of real estate technology solutions that fall under this umbrella.
Marketplace and peer-to-peer platforms
Real estate listing portals such as Zillow or Trulia have become common places to search for property. These websites, known as marketplaces, are increasingly implementing PropTech tools to facilitate business relations between tenants and landlords as well as real estate agencies by enabling functions such as sending messages from these platforms, making reservations or visiting properties virtually.
In the case of peer-to-peer platforms, these tools allow direct contact between owner and landlord or buyer through instant messaging tools, thus eliminating intermediaries. The best-known company using this type of technology is Airbnb. Some platforms may even employ a conversational user interface to be sure that potential customers are never left without information.
One of the trendiest tools the real estate sector has implemented are virtual tours that allow users to tour properties from their computer or device. Some of these tools can include a 3D model of a property that integrates 360º photographs, in which the user can visit and virtually view properties from many perspectives. As the pandemic restricted travel and physical contact, in-person visits became limited, and virtual tour technology stepped in as a solution.
There are several tools for creating 3D models of homes. They enable the creation of a virtual model of the property using photographs taken in 360º, which then become enhanced and simulated with graphics.
As well as 3D modelling, some businesses are implementing virtual reality software in order to offer home-buyers a unique experience. The user can visit the property without leaving home, either through their smartphone or by using virtual reality glasses. It is even possible to view predictive imagery of buildings for which construction has not started yet and make an investment decision based on what the future property will look like.
Using Big Data for data analysis
There are several Big Data tools available that enable the full potential of both client and consumer data to be harnessed for real estate agencies. Big Data uses access to a large amount of information to compile and analyze the behaviour of certain segments of the population. The data supplied comes from the information we share with digital companies whose services we use on a daily basis.
This information is extremely useful when analyzing future scenarios and identifying potential opportunities before competitors. Information extracted from Big Data can help identify new customers, or areas of town in popular demand by groups of different customers, for example. It can also show the decrease or increase in home-buying and selling activity in a particular location and identify more profitable locations.
Platforms for financing and financial transactions
Efficient financial management is essential in any business. To this end, there are tools for financial management that have become essential aids for any SME. In addition to these types of digital tools for financial oversight and forecasting, PropTech introduces other very useful tools for other financial aspects of homebuying.
Traditionally, the way to obtain financing has been through banks. Real estate PropTech allows the use of microfinancing tools known as crowdfunding, which enables access to a network of investors ranging from individuals to larger companies.
PropTech makes it possible to carry out financial transactions by enlisting existing features borrowed from financial technology, known as FinTech. The main advantage of these technologies is the reduction in expenses compared to relying on traditional banking for financial operations. Since there is no need for manual, in-person operations with FinTech, this enables the use of alternative payment systems such as cryptocurrencies.
The main advantages of PropTech real estate
After discovering what PropTech is and the solutions it offers, you may be wondering if it is really worth implementing these types of tools in your company.
These are the main advantages of using PropTech:
- It enables you to add value, speed, and efficiency to real estate services provided and offers benefits for both the user and the company.
- With the boom in the use of technology in all industries, investing in real estate PropTech tools is vital to stand apart from competition.
- It facilitates contact between seller and buyer. Using instant messaging capabilities, intermediaries are eliminated, which improves communication between landlord and tenant.
- Enabling virtual tours of the property via internet is a great advantage, especially during the COVID-19 pandemic, since face-to-face visits are reduced and the time spent by agents planning visits is also minimized.
- With Big Data tools, valuable information can be gathered and analyzed to research and create profiles for future buyers. Such data also enables the refinement of the pool of potential clients based on criteria such as income level, age, and more.
PropTech is here to stay, and is being implemented worldwide. Each year, there are more companies offering real estate technology solutions and more functions are being found. The fact is that investing in these tools has gone from being an option to being a necessity for all companies in the real estate sector.