In some ways, real estate was the poster child of an industry poised for disruption. It can be home to an intolerable amount of tolerated fraud. It’s rife with unnecessary procedural complexities. It can be opaque and unwelcoming, forcing consumers to rely on agents as gatekeepers. And it’s prohibitively expensive for the average person.
It was only a matter of time before innovative thought leaders applied new technologies to deal with these “workaday” issues in the industry. The result: real estate’s era of disruption.
Below, let’s focus on disruption in residential real estate (commercial real estate disruption is a whole other beast). This article explores the rise of “proptech” and offers a couple of case studies on disruptive innovations driving the industry’s transformation and evolution.
The Rise of Real Estate Technology
The past few years saw the meteoric rise of real estate technology, or “Proptech;” a class of tech applications optimizing every end of the real estate transaction.
“To emphasize the current size of this developing ecosystem,” explains a Deloitte real estate predictions paper, “proptech today has the same funding size as fintech did back in 2013. And given fintech’s growth of 44.8% (CAGR) since then, the prospects for proptech are strong.”
Real estate technology like Proptech is growing in volume, funding and influence every year. To illustrate its tightening grasp on the industry, here are a couple of notable case studies.
The Age of the Consumer: Nobul
Our first case study is Nobul, a real estate digital marketplace that matches consumers to real estate agents. However, unlike past lead generation marketplaces, this one is finally for the consumer. Using a proprietary AI algorithm, the marketplace sifts through agent information (history, sales, verified reviews, location etc.) to recommend relevant, quality agents for buyers and sellers. Agents can then compete for a consumer’s business.
Speaking to Medium, Nobul founder and CEO Regan McGee says that “We are the tip of the spear of disruption. We’re finally giving consumers power in this industry. Real estate transactions have the single largest fees people pay and the average person pays those fees 11 times in their lifetime. For us to be disrupting this market is extremely exciting.”
Democratizing Access: Fractional and Willow
The next case study is in blockchain technology as a disruptive force. Whereas Nobul stands alone as the only real estate digital marketplace for consumers, there are several established companies and plucky startups working in the blockchain space.
Here, let’s highlight two: Fractional and Willow. Each company facilitates what’s called “fractional investing,” blockchain-enabled real estate investing that breaks property assets into tokens. Essentially, investors can purchase a small percentage of a property (or several properties) rather than wait to accumulate a sizeable down payment. In this way, fractional investment on blockchain democratizes access to the real estate market.
There are several other case studies if you’re interested in exploring further: companies applying machine learning to valuations and appraisals; digital brokers and lenders; loan securitization platforms; IoT-enabled rental management systems, and much more. The theme throughout all of these businesses and innovations is that real estate is entering an era of disruption as new technologies and thought leaders emerge to solve the industry’s oldest problems.