Written by Martin Aarestad and Jakob Kolsmyr
Last week we attended the Property Portal Watch conference in Madrid. 400 real estate professionals from around the world came together to share ideas, trends, and best practices around some of the burning issues facing real estate today and in the future.
We also had the opportunity to have insightful conversations with some of our customers, like Paul Wicks (shown), EMEA CTO at JLL, and with a wide range of other real estate experts.
Key themes people were discussing for 2020 included:
- The shift towards a hybrid model
- The focus on iBuyers
- Getting closer to the transaction
Digital Transformation Has Started. A Bumpy Ride for Some
For the last 5-10 years the real estate industry has predicted a digital transformation to cater for the ever-increasing needs of tech-savvy and informed consumers who want to take control over the buying/selling process, instead of relying solely on estate agents.
Startups are disrupting markets globally and are proving that a fully offline experience is no longer viable. These startups don’t have the legacy technology and process issues that established players have to contend with. This means they can deliver a digital customer experience to attract buyers and sellers to their websites and apps, provide all the property information required, and manage viewings — completely online.
But, a fully online experience is not an option either. The woes of purely digital real estate agencies here in the UK, such as Hatched and Emoov are well documented, and even PurpleBricks has seen their share price tumble.
Hybrid Required — Digital and Human
As we heard during the event, the real estate industry is shifting towards a hybrid model. This model uses digital tools combined with human interaction.
Buying or selling a property is a high-value, complex purchase and people want to engage with a human. They need to talk to an agent face-to-face or over the phone, to proceed.
Both buyers and sellers value the trust and safety offered by a human real estate agent. The agencies having the most success are training their agents to be more like consultants. A good example is Swedish startup Norban, as founder Adrian Miller explained during his excellent presentation “How Hybrid Agencies are Disrupting the Traditional Real Estate Industry”.
By working in a closer relationship with agencies, portals will get closer to the transaction. This symbiotic relationship will open the door to a change in their business model and the possibility for portals to offer new additional services to customers.
One way for property portals to get closer to the transaction is to actually purchase properties as an ‘iBuyer’. In many markets around the world, iBuyers are challenging the traditional ways residential properties are bought and sold.
Using extensive data and technology iBuyers value your property and offer to buy it at a date you choose. They offer simpler, more convenient alternatives to traditional home selling.
- Saving time and hassle — no viewings, decorating, repairs at the last minute.
- More control over moving dates — reducing other costs like bridging loans.
The main challenge with this model is that is very cash demanding, since you are buying the properties yourself and turning them over.
iBuyers are taking risk and providing a valuable experience for sellers in return for a greater margin. This market is becoming increasingly competitive and uncertain, with more pressure on margins.
To be fully successful, iBuyers will need access to extensive data on properties, sales, liquidity, demand, and real insights into buyers’ profile, their behaviour and purchase journey. Success requires turning human and digital customer conversations into actionable data to sell properties quickly.
Closer to the Transaction
The common driver of the models listed above is that all real estate players want to get closer to the transaction. They want to offer more value-added services to provide a superior experience and improve their margins. Many real estate portals (marketplaces) may move from a subscription-based model to lead-based, moving closer and closer to managing a part of the transaction.
As new models emerge, they disrupt traditional, established business practices across different markets. Real estate market leaders are being challenged by fast moving startups that are getting closer to the transaction and generating more value for the agencies. The market players offering the clearest value will ultimately have the most control.
Improving the Customer Experience
The digital transformation taking place in the real estate industry is showing parallel trends we are seeing with marketplaces and portals in other industries, such as luxury and automotive. Even though it will be difficult to move to a 100% online transaction, there is plenty of room to improve the overall experience for buyers and sellers.
Over the last 5 years, Freespee customers including some of the most successful real estate services firms have been leading this digital transformation. They have been supporting users throughout the entire buying journey, and providing agencies with full visibility from lead generation and media attribution, through to lead management and actual revenue.
Interested in digital transformation for your real estate services? Get in touch with us.