Biggest challenges for the real estate sector and how we solve them
It’s time to say goodbye to some of the traditional aspects of the real estate business such as: real estate offices, cash payments, paper contracts, and time-consuming paperwork. The necessity for digital transformation has eventually reached the property industry, so if you’re a real estate owner, manager, agent, realtor, investor, or developer, you can’t ignore it anymore - you need to use digital tools and think of alternative ways of running the business. How can you deal with the current real estate market challenges? How is Boldare helping real estate companies through this difficult time?
Table of contents
Challenges of the real estate industry
When we think about what’s important for real estate, we think of two factors: location and price. The competition in the real estate industry however is getting another, new dimension: customer experience. And modern customers are using digital technology.
Recently, with the crisis caused by the coronavirus pandemic, people have become used to communicating, solving problems, and managing their daily issues remotely - using various apps, booking platforms, online shops, etc. Therefore, they probably expect to be able to buy a house or rent a flat without the need to go anywhere, meet anyone face-to-face, etc. Innovative real estate companies know how to use technology to make that happen. But it’s a challenge.
Besides, the COVID-19 pandemic has caused a lot more challenges for the real estate sector. Decreasing business and commercial travelers have significantly influenced the situation of hotel owners, and remote working has raised financial problems for office space investors. The crisis has also severely affected commercial tenants’ ability to make lease payments.
Many small businesses, like restaurants, fitness clubs, etc., have found themselves sinking. Many people have lost their jobs and struggle with paying rent. All these factors are having an influence on the real estate industry, creating a long list of high market demands. What are clients expecting?
What’s expected from the real estate sector?
There is a huge need for a digital approach towards customer service and experience. Here are some examples of what’s expected from the real estate market in this field:
- solutions eliminating in-person contacts (i.e. online real estate agencies),
- digital access to booking short-term rentals, and systems for self-managing them,
- virtual access to real estate presentation (i.e. virtual real estate tours, virtual houses),
- solutions enabling remote mortgage operations,
- smart technology in houses and apartments (security apps, digital locks, house lighting control apps, IoT, etc.),
- easy digital access to information about local services (gym, wellness, childcare, restaurants, etc.),
- contact apps with omnichannel communication capabilities (for buyers, sellers, but also for tenants).
There is one more important aspect connected directly with environmental protection and growing the social awareness in this matter. Developers and construction engineers need to put more attention into building sustainable houses which use renewable energy sources (in this area Boldare has successfully cooperated with sonnen; check out this digital transformation case study to find out more). Investors and engineers should also ensure a low environmental impact during the construction processes (logistics, use of materials, use of water, etc.) Let’s not forget a lot of home seekers want to live in green surroundings with trees, parks, and eco-playgrounds for children.
Digital technology can also serve this matter by delivering solutions for landscape architecture. Basically, digital products and services should become a standard across all areas of the real estate industry:
- investing,
- planning,
- constructing,
- selling, buying, renting,
- maintaining,
- managing
The changes must take place within all sectors of the real estate sector, meaning: private, commercial, and industrial. For industrial sectors - especially for storage space owners and investors - the crisis brought not only difficulties but also some opportunities. The growing e-commerce market and increasing popularity of self-service storage facilities (due to the downsizing trend in the U.S.) have created a demand for more storage space. And that further boosts the high demand for customized and easy-to-use digital platforms and apps.
Digitalization of the real estate industry
The real estate industry must be more agile than ever before. It needs to shift quickly from the traditional business model into very demanding territory of the digital world. Many real estate agencies have already taken the necessary steps towards digitalization. But now, it’s not the calm stroll it used to be - now it’s a sprint, and whoever lags behind loses (source: Forbes). What does the digitalization of real estate look like? Let’s look at a few examples:
- real estate companies are moving most of their operations into the virtual world (now, there are more possibilities for cooperation with fee-for-service brokers and virtual realtors),
- digital media branding and marketing are becoming a standard within the real estate industry,
- most real estate agencies in the U.S. are already using virtual tools, such as AR, VR or AI for property showings, sales management, etc.,
- many agencies have digitized the process of signing contracts, and other supporting administrative processes,
- real estate companies have started to use multiple CRM systems and digital lead management tools.
Demands that drive digitalization
At the beginning of the pandemic, plenty of people started working remotely and their needs changed. They don’t have to live close to their workplace anymore, so they often choose to rent or buy a property outside of a big city or in suburbs.
They usually need an additional room for home office, so real estate agents need to take that into consideration while preparing offers. Also, as people spend more time at home, they want access to local facilities, services, and to digital tools that will make their lives easier and safer.
Most modern buildings are equipped with digital entrance systems enabling contactless and easy access for residents, their guests, deliverers, and others. There are apps that assist tenants with making lease/rental payments, processing administrative operations, reporting issues, or alarming danger. Digital products also help residents to book housekeeping or maintenance services, order grocery, or food delivery. In some locations, apps also serve as social media platforms for virtual neighborhood communities.
Boldare supports real estate companies with creating, maintaining, and improving digital products. We have been cooperating with a few real estate businesses and below we share examples of our experiences in this area. Read on to find out what products we have developed so far for the housing industry.
Digitalization in real estate - our case studies
LegalClose - making real estate closing easier
LegalClose is a U.S. real estate company. Its stakeholders, a real estate attorney and a tech entrepreneur, reached us to help build an unique product: a platform that allows customers to generate real estate closing contracts. The goal was to transform their existing service to a digital product, making it less time-consuming and more cost-effective than a traditional process for both sides.
Our dedicated scrum team started the process, delivering a product landing page first. Then, we focused on the heart of the product: a step-by-step contract generator. After researching the initial concept provided by the stakeholders, we agreed on pivoting and changing its mechanics, from a dynamic to a static one. This way we were able to avoid high implementation costs while still delivering the product into the hands of users in the form of an MVP.
The result was a fully responsive web application with a data gathering form, costs calculator, contract generator and admin panel with which stakeholders could manage leads.
The technical stack involved React and Next.js, TypeScript, Redux-toolkit, MaterialUI and AWS Lambda, Lambda@Edge for Next.js, S3, CloudFront, Route53, DynamoDB for the admin panel.
From the business perspective, we achieved all of the agreed stakeholder goals:
- quickly launched an MVP platform that positively validated their business idea of successful digitally transforming the core of their business;
- the product doesn’t generate any extra costs;
- the product helps to increase the number of generated leads;
To see the LegalClose platform in action, visit its website.
TrueRate platform - improved transparency for a multifamily properties investors
Olive Tree Holding is a U.S. real estate investment firm focusing on multifamily properties. Its stakeholders contacted us after a long and exhaustive search, seeking a suitable partner with the right approach and experience. The company needed support with their newest product: TrueRate, a digital platform used to match multifamily building investors or operators with a bank that can offer them a mortgage loan.
The main challenge was that the mortgage process is not transparent for the borrower that seeks funds for the investment. Both sides, investors and banks, need to exchange an extensive amount of legal documents and information. After the traditional process, the investor is able to see only one offer from one bank, and has to start the process again with another bank to meet their offering.
The idea standing behind the TrueRate platform was to simultaneously provide offerings from multiple banks, making the process faster and transparent for the investor.
The TrueRate stakeholders wanted to digitize and automate the sales process and increase operational cost efficiency. After the first series of workshops, we agreed to create a web application using a back-end integration between different data sources and the bank’s API. Within one month, between October and November 2020, we provided an MVP of a web application that enables TrueRate users to receive offerings from multiple sources. The process also included user testing, making the MVP truly user-oriented.
After the successful delivery of the product, Boldare supported Olive Tree Holding by hiring a CTO and building an in-house team of developers for the company.
The tech stack was Python, Django, Django REST framework and Celery. We also suggested and conducted the migration from Azure Cloud to Google Cloud Platform.
What’s the digital future of the real estate industry?
Knowing the latest trends that dominate the real estate industry, it’s not difficult to guess the future. Mortgage credit availability is up and growing (source), so there will be more private property buyers looking for digital products that make the buying process fast and easy, and - in some cases - remote. There will also be more and more virtual open houses, so people won’t have to travel in order to check out their desired homes. For this, digital products that operate and manage virtual and augmented reality will be in demand.
With growing competition in the real estate market, companies need to pay more attention to meeting customer expectations. The trend of boosting customer experience with innovative, interactive, and useful digital products will definitely continue. Scott Rechler, an American investor and developer, says (source):
The future of real estate is no longer about delivering four walls to tenants. Instead, it’s about creating a unique, personalized customer experience that fosters meaningful interactions, collaboration, and productivity. Delivering this will require a unique combination of capabilities that seamlessly integrate across the physical and digital realms.
The new real estate industry will continue to move towards a higher level of digitalization, which will eventually eliminate traditional business models. The real estate companies that will adapt and keep up with the pace of these fast transitions have a greater chance of becoming real estate leaders in the U.S. market and beyond. Will your company be one of them?
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