As we move through the 2020s, one thing has become clear: the future is uncertain. From geopolitical change to new technologies – it is hard to imagine what our world will be like in 10 years. Those working in the IT field have a new mantra: resilience. Ease of implementation, onboarding, integration, and training of new solutions and applications has driven an explosion of demand for cloud-based SaaS products. Similarly, technology disruption in the Real Estate and Title industries has also occurred – based on new sources of ease and efficiency in the market that will also usher in a new era of resilience and streamlining of routine processes that are part of these industries.
The past year saw a record increase in real estate valuations. Based on this CNN article, Home prices in 2021 rose 16.9%, the highest on record, a record 6.12 million homes were sold, up 8.5% from the year before. Not only did prices increase, but so too did volume. Part of what drove this higher level of activity is a new form of buyer. Specifically, an iBuyer, or an Instant Buyer.
1. The iBuyer
According to ibuyer.com, an iBuyer can be defined as an automated purchasing model that uses artificial intelligence (AI) to derive home value. Using data about your property and mathematical algorithms, the iBuyer generates an automated valuation model (AVM) that gives you an instant all-cash offer. The iBuyer then makes any repairs, markets the house, and re-sells it.
Homeowners sold 27,244 homes totaling $10.6 billion through iBuying services in just the third quarter of 2021, according to Zillow’s iBuyer report, which evaluated the four largest: Opendoor, Zillow Offers, Offerpad, and RedfinNow (source). This equated to 1.9% of the total volume, yet its impact was significant. Zillow has since pulled back its effort. As of December 2021, the company announced it will be selling half of its iBought homes. But that is often how technology disruption occurs. A few early adopters pave the way. These first movers will get some things right, but not everything. Then, soon after, others will follow as the new model proves itself out.
What is important to realize is that the data surrounding home purchases has become increasingly more public. This shift is now simplifying how valuations are calculated to improve efficiency and speed. This shift has impacted the entire Real Estate industry. Appraisal, title search, and loan approval processes must now be done faster and with greater accuracy. As a consequence, companies operating in these fields are now investing in automation and other technologies, such as Artificial Intelligence and machine learning. The management teams that neglect to complete this transformation are at risk of placing their organizations behind the competition by the end of this decade.
Learn more by reading this case study, A Business Case for Smart Data Extraction.
2. Artificial Intelligence / AI
Much has been written about the ways that AI is changing how companies operate. Once delegated to simple processes such as suggesting complementary product purchases, the use of AI has expanded significantly. As of December 2021, according to Venture Beat, worldwide investment in AI companies has increased by 115% since 2020, marking the largest year-on-year growth in AI investment for at least two decades. Total AI investment reached $77.5 billion in 2021, a substantial increase from the previous record set last year of $36 billion. Technology disruption is now occurring as a direct result.
With this much investment occurring, it is an easy prediction to assume AI will become part of virtually every business process in every industry. The Real Estate and Title industries will be no different. The greater importance now placed on collecting and analyzing Real Estate transaction data is a fertile ground for AI investments to yield future process automation and efficiency. By reducing any friction points in Real Estate transactions, costs will go down and overall market volume and profitability will increase. It is unreasonable to believe that the industry will reverse this current course.
A “ChatBot” is an automated assistant that can appear at the bottom of a webpage, inquiring if you have any questions or would like to speak with anyone. These automated assistants began appearing in 2016 when big tech firms like Facebook, Microsoft, and Google launched their ChatBots. Five years later, this technology is starting to mature and offering new ways for Real Estate and Title companies to improve the level of automated service that can be provided to their customers.
There are several use cases where this technology disruption can help improve customer service while increasing the automation of a wide variety of processes that previously were manual or labor-intensive processes. AI is helping to usher in this new era of automation, which is having a permanent impact on how Real Estate transactions are conducted.
Companies seeking to take advantage of the performance improvements possible by deploying ChatBots must have an IT systems infrastructure that can accommodate this type of Intelligent Process Automation. Siloed IT applications will be a bottleneck to streamlining automated responses to such questions as “What is my next payment due date?” or “What is the best interest rate you could offer me on my property?”.
Technology Disruption Leading the Way
By now you should see a theme that is driving future technology investments in Real Estate and Title companies – improving and streamlining the purchase process. With intelligent process automation comes greater productivity, higher customer satisfaction, and most importantly, a higher number of completed transactions. Each of these attributes contributes to a healthier bottom line, so expect these investments to only accelerate over time.
Looking to streamline and increase the productivity of how your IT systems operate? Consider Axis Technical Group as your IT and automation partner to align a new path to growth.