Buying a house is a highly personal decision. It is probably the biggest purchase most people will make in their lifetime. Regardless of the market, there will always be demand for single-family homes. But, these last few years have been particularly trying for buyers, and home prices are expected to remain high, even if demand is lower.
Real estate technology has played an increasingly significant role in the real estate market, and was one reason why home sales remained so strong during the peak of the 2020 pandemic. With many subsets of real estate technology, from prop-tech platforms to smart devices to cloud-based software, technology will shape real estate trends for property agents, managers, and owners. Read on to see what could be different in 2023.
More homes purchased sight unseen
Millennials account for the majority of first-time home buyers. Millennials are expected to account for about 55% of the real estate market in 2022, and that number is expected to remain consistent in 2023.
It’s no surprise that millennials prefer doing their research online. They want to see lots of photos, videos, and even take virtual tours. Up to 44% of new homeowners use the internet as their first housing resource, as 73% of buyers use their phones or tablets to research homes.
And while it’s not as common, some millennials are buying their homes without ever seeing them in person. Typically, the potential buyer will have an opportunity to do a virtual tour with a realtor before saying yes.
According to research from Redfin, a surprising 63% of people who purchased a home in 2020 made an offer on a property that they hadn’t viewed in person. Of course, the market is a bit different now, but buying sight-unseen will still be a viable option for some, especially if they are buying out of state.
The biggest positive here is that buyers may get their dream home for a bit less because they avoid a bidding war. Furthermore, if the home is in another city or state, the prospective buyer doesn’t have to spend money traveling.
But, with a sight-unseen offer, buyers can’t see the little things. They can’t know what stairs squeak or how the toilet flushes, and not being able to have that kind of information is a deal breaker for some. There is great risk in failing to see defects that exist, especially if the buyer chooses not to have the home professionally inspected. Buyers who are bold enough to purchase a home without seeing it should take as many precautionary steps as they can to ensure they aren’t missing any major problems with the home that the realtor or seller has not disclosed.
Better communication between developers, community leaders, and owners
Good communication is always in. But it’s also one of the biggest challenges for anyone who is working with another party. Is it better to use email? Make phone calls? Talk in person? How much information does the recipient expect? Should it be in writing? Was everything clear? All of these factors can complicate real estate transactions.
It’s not just correspondence between agents and buyers/sellers either. In HOAs, when the developer gives the owners control of the association, the process can be very messy if communication has been scant. Conversely, good transitions are the result of clear communication and teamwork.
The good news is that most people who belong to the real estate industry are embracing electronic communication. According to the National Association of Realtors, 90% of agents communicate via text, 94% of agents use emails, and only 36% of agents communicate with clients via instant messaging. Most millennials prefer texts. Phone calls are usually reserved for urgent matters.
Property management software is also being used by developers so that the transition process becomes more streamlined. Condo Control is one noteworthy platform that helps developers and managers get on the same page. The developer can use this platform to upload all association documents (CC&Rs), contracts, blueprints, etc. digitally. They can also create messages for all new owners, or just those who are becoming board members. Messages can be delivered via email, or even through text. When the developer is finished with the community. The new board members have everything they need on the property management platform. It makes for a much more pleasant experience, and the developer is able to build a favorable reputation when they help set the community up for success.
Less pressure to hurry up and sell
Buying a home is incredibly stressful. But if you already own a home, you also have to sell your current place. Most people can’t afford to pay two mortgages, so they do what they can to sell their homes as quickly as possible.
iBuying aims to alleviate some of that stress and pressure. An iBuyer is a company that uses technology to make an instant offer on your home. iBuyers offer sellers a simpler, more convenient alternative to the traditional process of selling a home. How the iBuyer operates varies depending on the company, but the general idea is that it makes an estimate of the value of a home and makes an offer. If the seller accepts, the company takes on the burden of owning, marketing, and reselling the home. The seller may receive cash which is very helpful to people purchasing a new property.
Opendoor is one of the leading iBuyer platforms. It makes near-instant cash offers on qualifying homes. If a home fits the company’s criteria, the seller will receive a preliminary offer within a day. That’s really fast! In some cases, the entire sale process can be completed in two weeks.
Opendoor also sells to interested buyers. They can make offers instantly, and the company will back the offer with cash. This may give prospective buyers an edge over others. If, after making the purchase, the buyer is not happy with the home, Opendoor will even buy it back from them within 90 days. Currently, the company only serves select U.S. states, including Atlanta, Houston, Tampa, and Tucson.
iBuyers cut out the need for a realtor or agent. But sellers who use this service will likely get less money on the sale than if they took the traditional route.
Smart Homes still turn heads
A smart home is usually defined by automation and convenience. While many owners don’t want their homes to have complete control, they do like it when the temperature can be automatically tuned down at a certain time or when they can control appliances from their smartphones. Smart homes are usually focused on augmenting security, but can also give owners greater control over their environment as well. Buyers may be more inclined to invest in a smart home, especially if the system is ready to go.
Smart homes can either operate wirelessly, through hardwired systems, or both. Wireless systems are easier to install, but they are also more susceptible to hacking. They also need strong wifi coverage throughout the entire house. And if the wifi goes out, then the IoT technology becomes rather useless.
Hardwired systems are considered more reliable and are typically more difficult to hack. A hardwired system can increase the resale value of a home more than a wireless system can. It’s also easier to scale hardwired smart home systems, making it the default method when new homes are being built. The drawback is that these smart systems are expensive. They are still seen as luxury features and can cost tens of thousands of dollars.
A smart home’s devices may be connected through one system, or they may be controlled through separate platforms. Televisions, thermostats, home monitors, refrigerators, cameras, lights, garages, and even door locks can be controlled through one home automation system. It would not be a surprise to see more smart homes going up, especially considering how comfortable younger home buyers are with technology.
Agents who are showing homes can integrate these technologies into their marketing plans. Not only do they offer owners more safety, but they can help reduce energy costs or give you peace of mind when you have to be away from your home for an extended period of time.
Technology has infiltrated the real estate market, and is eliminating barriers for buyers, sellers, and agents. While some say the technology has disrupted the market, others would say the hardware, software, and platforms are long overdue.
Tools like virtual reality and augmented reality will make the online search and home buying experience more exciting and accessible. Though this could make the market more competitive, it will also give buyers more possibilities to consider.
Realtors can create virtual tours of properties that potential buyers can experience from their couches, and they can even virtually stage a property by digitally adding furniture and accessories to interior photos. Not only does that save realtors a ton of time, but it’s a lot more cost-effective too.
Communication tools will allow people to create stronger working relationships during a time when trust and transparency matter most. Texting seems to be a more acceptable communication option now.
Finally, IoT technology will give buyers more control over their most valuable assets. While hard-wired systems are still expensive and considered a luxury, they will become less rare. Furthermore, machines that include smart sensors can alert owners to potential problems and even allow for predictive maintenance. That means no more unexpected furnace shutdowns in the middle of winter. In the future, buyers may even be able to download comprehensive history of a home’s maintenance through smart devices so that they have a very clear picture of the condition of a house.