3 Things You Need to Know About Real Estate Tech

Innovating is a key component to the success of any business.

Any technology you can adapt to move faster can be a game changer for your company and push you to the front of the pack. Conversely, without innovation, your business will suffer—like we’ve seen with the cab and hotel industries during the rise of brands like Uber and Airbnb.

It’s widely accepted that the real estate industry is both one of the most lucrative and high-yielding spaces, and also perhaps the slowest moving.

But, there is no doubt that tech is coming.

Whether through online real estate investment with Fundrise or crowdsourced data fromCompStak, the world of real estate is being disrupted.

For anyone working in Financial Tech or real estate, here are three key things to understand about real estate technology:

#1. The space is seeing hockey-stick growth.

The development of technology has helped conquer communication barriers and continues to offer more ways to make our lives easier. New innovations emerge on a daily basis to help create competitive advantages for businesses.

Whether it’s in identifying an agent or broker, sourcing and reviewing data, or optimizing the manner and speed with which deals are made, technology is impacting the real estate industry at every stage in the buying, selling, and investing process.

According to a recent article by TechCrunch, venture funding of real estate technology startups peaked in the fourth quarter of 2014, with 32 companies raising nearly $300 million. In total, funds invested $605 million in RETech in 2014 versus $241 million the year before, year-over-year growth of more than 250%.

#2. The market opportunity for real estate is enormous.

The rise of innovation within the real estate industry is largely fueled by the size of the real estate market in the US and the enormous opportunity for profitable disruption that it represents.

Real estate was the largest asset class in the United States in 2014—worth an estimated $40 trillion (Federal Reserve data). Residential housing encompassed approximately $23 trillion, while commercial real estate accounted for $15 trillion.

Investment crowdfunding has been one of the technologies that has perhaps grown most quickly within the real estate space—as individual investors use online investment platforms to provide capital for real estate projects around the country.

According to the Council for Mortgage Lenders, “the global crowdfunding economy grew to more than $5 billion in 2013” and a recent Foundation Capital white paper predicts that the global crowdfunding market could reach $1 trillion by 2025.

#3. Both commercial and residential real estate are seeing innovation.

Though there are major differences in the commercial and residential real estate markets, both sectors are seeing enormous changes and improvements through the advent of technology. Even routine tasks are becoming easier with the introduction of new programs, apps, and platforms.

Buyers and sellers alike are signing papers, contracts, and affidavits via platforms such asDocusign. Using tools like Redfin, Trulia, and Zillow, prospective buyers and renters are able to inspect and tour properties online—and continued advances in 3D and drone technology stand to make the purchase and renting processes almost entirely virtual.

Furthermore, through the rise of real estate investment marketplaces, commercial and residential projects can now be funded almost entirely online within days. Investors from across the country can source investments easily and with the data necessary to make the most educated investment decision.

What’s next for real estate?

Technology is beginning to impact almost every aspect of the real estate industry—from buying, renting, and selling to analyzing, investing, and financing—and signs point to continued growth throughout the coming years.

Although real estate has traditionally been slow to change, new technologies are paving the way for industry leaders to reconsider how tech can impact the space and move real estate into the 21st century.

Source: joiseyshowaa, Flickr

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