Proptech wave coming in real estate
MAIN IMAGE: Ted Frazer, Seeff marketing manager, Ian Bayne, proptech executive e4; Richard Gray, CEO Harcourts South Africa; David Hutchison, sales manager Property Inspect.
The Covid-19 pandemic has fast-tracked more extensive use of proptech in the real estate sector. Going forward being tech-savvy will be a must for all estate agents.
Pre-Covid, most estate agencies made use of technology to some extent whether to reduce paperwork or to make it easier for agents to deliver a faster and more efficient service. Traditionally seen as a tech-resistant sector, the top players have been incorporating a more tech-savvy business model as all over the world the internet was fast becoming most people’s first port of call for almost anything, including searching for and selling a home, and they expected fast results, also from their estate agents.
Then came Covid-19 and global lockdowns and no-one in the real estate industry was left with a choice about adapting a more digital approach. “If there were agents in the sector that were previously not digitally savvy, the advent of Covid-19 saw a case of “sink or swim” in terms of the adoption of tech to engage with clients. Even as lockdown restrictions have relaxed, many of these digital platforms are remaining as a part of the so-called “new normal” of real estate,” says Ted Frazer, national marketing manager Seeff.
During lockdown the only way to market a property was online as physical viewings were impossible and even going forward are not advised until absolutely necessary. Video and virtual tours have become a necessity. “The pandemic highlighted the need for a potential buyer to view a home virtually, without physically being there. The use of 3D videos, virtual reality, and augmented reality have seen them become essential tools for an agent when marketing a property,” says Richard Gray, CEO Harcourts South Africa. In line with the growing virtual trend, Pam Golding Properties recently held their first online property auction.
The other way that proptech became important was in connecting with sellers, buyers, landlords and tenants. Gray says this included a far stronger need to tap into databases of previous clients, giving great advice and guidance through digital platforms, as well as having a strong social media presence. Finally, new tools e.g. electronic signatures saw a far higher adoption, especially during the hard lockdown.
The remote working trend is another driver in favour of a more tech-savvy approach to real estate and the lockdown certainly gave a further boost towards this as many estate agents continue to work from home rather from an office. National franchises like Pam Golding already indicated going forward they are scaling down on office space. There are already online-based agencies in South Africa and this week eXp Realty, a cloud-based brokerage from the US, announced they are also expanding to South Africa.
This greater acceptance of proptech is hailed generally as beneficial. According to Ian Bayne, proptech executive at fintech specialist company e4, the real estate sector is well-suited to leverage digital and innovative property technologies. Bayne has no doubt about the continued and expanding impact of proptech on the real estate business. “It is clear that this is a digital transformation wave and we believe that its impact will last for several years, ultimately evolving one of the world’s oldest industries,” he says.
Going forward Bayne says the six key technologies to watch are: big data, artificial technologies (AI), machine learning (ML), internet of things (IoT), upcoming tech that includes virtual and augmented reality as well as 5G and drones.
Also read: Proptech and the real estate industry
It’s about learning a new language
Terms like machine learning (ML) and internet of things (IoT) may sound high tech to most of us who don’t work with these terms every day. However, simply put these proptech tools are eventually all about “the use of technology to develop new ways of doing things in the property industry, often increasing efficiency, access, diversity and impact” as explained on the website saproptech.co.za. For example, Property Inspect’s new online tools made remote inspection and maintenance possible for rental agents during the lockdown. As stated by their sales manager, David Hutchison, their goal is to develop tools that solve problems, save time and reduce disputes.
Simply put, big data, IoT and ML can be defined as the following:
Big data: large data sets that are collated and analysed to provide insights into trends and patterns.
The internet of things (IoT): a system of interrelated, internet-connected objects (sensors) that are able to collect and transfer data over a wireless network without human intervention.
Machine learning refers to the use of a type of artificial intelligence whereby machines are able to collect data and learn from it without human intervention.
Technologies like big data, ML and IoT are often used in combination for the collection and analysis of valuable information for people or businesses. “Proptech businesses are using different combinations of these technologies in slithers within the property sector, like at Flow – big data and ML are fundamental technologies we deploy to better target and match tenants and landlords, buyers and sellers,” explains Gil Sperling, CEO of proptech platform Flow.
Other businesses have been much faster in their acceptance of the use of these technologies, but, according to John Murray, chief technology officer of online agency Leadhome, when it comes to real estate the use of ML and Ai are still in its infancy which means that there is still lots of room for innovative applications. The pandemic and the need for social distancing has already seen new proptech developments like the Property Inspect app that enables rental agents to conduct property inspections remotely.
Need estate agents be worried?
Estate agents are needed agrees property experts, both from traditional agencies and online agencies. Samuel Seeff, chairman Seeff Property group, says what the lockdown showed is that despite the significant advances in proptech, very few deals were concluded online. “Buyers still want to physically view despite the tech advances and ability to view 360-degree virtual tours, the physical interaction of agents remained vital and it was only once agents were able to again show houses and that deals were once again concluded in a significant way,” he explains.
According to Seeff well over 90% of all transactions in SA are concluded by estate agents with less than 5% online. It is also a fact that many local disruptors who had initially entered the market as digital/online agencies are now employing agents. Murray agrees with the latter. He says “estate agencies that exist purely online have not gained great traction anywhere in the world, and the reasons for this are well-known. Agents play a critical part in any real estate transaction – they offer context, informed advice and guidance, and bring two parties together to conclude a transaction that is high-value and personal, and therefore emotional”.
However, that being said, most agree that technology will play a bigger role going forward. “In property, agents who have the relationships and who have built trust, will remain but they will need to embrace the proptech revolution out of necessity as buyers and tenants use technology in all aspects of everyday life, and are starting to demand the same in property transactions,” says Sperling. Adopting more technology into the real estate business model that enables clients to do more tasks for themselves such as booking a viewing online, could eventually lead to a drop in the need for estate agents says Murray. “The agents who will survive are the ones who can properly use technology to their advantage and who excel at the parts of real estate that require a human providing informed advice and negotiating successful transactions,” Murray adds.
Even traditional property leaders acknowledge that technology will eventually impact every aspect of listing and selling a home. Andrew Golding, chief executive of Pam Golding Property group, says he foresees “that in the not too distant future it is likely that almost every aspect of the buying and selling of a home will be influenced by AI – for example, it is already playing a role in refining recommendations provided to prospective buyers based on their search and preference browsing history”. AI can also be used to turn data into leads, whereby propensity to buy or sell can be modelled, by cross-referencing databases with internet search and other data.
Seeff says the real gamechanger will come when the full transaction can be completed online, i.e. from digital signatures to bond applications and the actual registration of the transaction and transfer. “That will also provide more accurate and up to date data rather than the current situation where data is about 6-months old in some instances, hence trends are often only reported on after they have occurred,” he explains.
The fact is that technology has become an integral part of our everyday lives. South Africans are increasingly comfortable with using online tools for doing everything from shopping for groceries to buying or selling property. “Buyers these days are really savvy and well-informed about market conditions, property prices and like, thanks to information freely available on various property portals, and this is a good thing,” says Bruce Swain, CEO Leapfrog. He explains this makes for a far more dynamic property transaction, which ultimately makes the market more robust and competitive.
“Proptech is there to help estate agents offer a better, faster and more dynamic service to customers, but does not replace the estate agent. Proptech has great potential to help make our industry more effective, more agile and allows us – importantly – to stay up-to-date with consumer preferences and needs, Swain ends.