The real estate industry is one of the oldest and at the same time one of the fastest growing sectors in the world.
In view of these facts, the industry faces a major challenge: it must modernize traditional brick-and-mortar processes and transfer them to the digital realm. Remarkably, 58% of real estate companies have already recognized this need and developed a strategy to overcome these challenges. To be successful in this competitive market, fast action is therefore essential.
Companies need to tackle digital transformation in real estate software development. This includes using cutting-edge technologies such as virtual tours, automated transactions and AI chatbots. In this article, we’ll dwell on top examples of digitalization in real estate, as well as statistics and trends in this area.
To grasp the concept of digital transformation in the real estate industry, let's first define the term itself. In general, it refers to the shift of business processes from traditional methods to digital ones. In the context of the real estate industry, digital transformation means the adoption of technologies in business.
Even though the idea sounds simple and yet somewhat abstract, we'd like to explain it in more detail using concrete examples. Real estate digital transformation is essential for brokers and other professionals who want to increase their sales with the help of the latest innovations.
The COVID-19 pandemic in particular has triggered remarkable social changes. For example, the pandemic has led first-time homebuyers in the U.S. to increasingly turn to online tools when looking for a home, as traditional options have proven less effective.
With digital transformation, a real estate company can improve its workflow and amplify the effectiveness of its marketing efforts. Technologies revolutionize how businesses interact with clients, gather and manage data and deliver services.
Companies achieve cost reductions by using various CRM systems, employing digital marketing tools and implementing smart contracts.
Companies that use technology to digitally transform the real estate industry meet the needs of their customers better. The statistics speak for themselves, as 97% of homebuyers search for properties online. Therefore, companies should prioritize improving their digital experiences.
As more and more buyers search for properties via mobile apps, a solid online presence is essential for digital real estate businesses. By ensuring that all customers are fully satisfied with the online home-buying process, you can set yourself apart from the competition.
There are six key technologies that are driving digital transformation in real estate and revolutionizing this fast-growing sector. In the following section, we provide a brief overview of these technologies and explore their potential for improving the sector.
One of the most significant changes that the Internet age has brought is the ability to make purchases online. However, in the early 2000s, online real estate listings were still relatively uncommon, although other online platforms already existed that enabled consumer-to-consumer and business-to-consumer sales. Fortunately, this landscape has evolved significantly.
Today, digital real estate businesses can use these online portals to list properties and provide comprehensive information and photos for each listing. Potential buyers or investors now have a wide range of options available to them. They can access detailed property descriptions and photos to make an informed investment decision.
The advent of online real estate portals has revolutionized the home search process by allowing individuals to search for properties for sale and retrieve relevant information from the comfort of their home or office via their computer or mobile device.
In addition, websites such as Lamudi and MyProperty have played a significant role in increasing interest in properties beyond major metropolitan areas and in less prominent locations. Besides, online listing platforms like Zillow, Redfin and Realtor.com have made it easier for homeowners to sell their homes while matching potential buyers with their dream properties. As a software development company, 111Minutes helps companies build online listing platforms tailored to their goals and needs.
Digital real estate business analysis is an important process for evaluating the potential return on a property. In the past, agents performed this analysis manually. However, to succeed in today's competitive landscape, companies need to analyze their competitors and customer behavior. By using specialized tools, they can assess a property's potential and streamline various management tasks.
Software solutions such as Buildium, Dealcheck and RealNex are specifically designed for real estate analysis. These tools allow brokers to accurately assess the condition of properties both before and after the sale.
Buildium, for example, is scalable software that caters to the needs of both small and large businesses. It offers built-in accounting tools to identify and record payments, process fees, handle refunds and track deposits. The solution also automates various business processes to increase efficiency and productivity.
A real estate chatbot serves as a virtual assistant that can handle inquiries about buying, selling and renting properties. It efficiently answers questions about the process, provides information about ongoing sales or purchases, schedules appointments and even collects contact data from online leads.
Surprisingly, chatbot adoption in this industry is still relatively low. In Brazil, for example, only 1% of chatbots have been developed specifically for digital real estate businesses. Similarly, in Italy, only 8% of customers expressed interest in using virtual assistants to handle their real estate queries. Nevertheless, their use is expected to grow significantly: A tenfold increase is predicted between 2020 and 2030, with an average annual growth rate of 25.7%.
As with any new technology, consumers are still getting used to conversational bots, and the evolution toward full adoption varies from industry to industry. Still, it's important to recognize the many benefits of chatbots. Rather than viewing them as potential risks, it makes more sense to view this software as an opportunity. In fact, in many cases, chatbots can generate an impressive return on investment (ROI) of over 1000%.
Crowdfunding provides a way to raise capital specifically for real estate projects. It brings together individual investors who contribute small amounts of money in properties.
Platforms like Crowdbase have made it incredibly convenient for individuals to discover and invest in exciting real estate projects without having to worry about the size of their investment, property maintenance or tenant management. Crowdfunding has democratized more opportunities in the sector and opened up the possibility for a wide range of investors to participate in lucrative projects.
The global real estate crowdfunding market saw significant growth, reaching $10.78 billion in 2021, and it's forecast to reach $250.6 billion by 2030. This software has become a game changer, enabling small businesses and investors to tap into a broader market despite limited funds.
A 3D virtual tour is an interactive model of a property, allowing potential customers to explore the space from anywhere. It provides a "walkthrough" experience online that captures the reality of the built environment. Viewers can effortlessly navigate the 3D space by looking up, down and sideways, just as they would in real life. Transitions between points on the tour are seamless, creating a realistic experience. At 111Minutes, we craft platforms for posting and viewing 3D virtual tours to help our clients attract more customers and open up new revenue streams.
Compared to 360 virtual tours, 3D tours offer a higher degree of realism. They're called "reality capture" because they closely mimic real-world conditions. High quality and lifelike virtual property tours can effectively replace in-person tours. For digital real estate businesses, this brings several advantages:
According to Grand View Research, the property management software market reached $2.9 billion in 2020 and is expected to grow at a CAGR of 4.8% from 2021 to 2028. There is an increasing demand for software-as-a-service (SaaS) property management solutions, which are expected to reach $1,823.92 million by 2028. Some of the key players in the market include AppFolio, Entrata and Yardi Systems.
Modern real estate management software leverages CRM technology to enhance the connection between property managers and tenants. This enables agents to provide excellent customer service and build long-term business relationships. Key features of property management software include trust accounting, maintenance scheduling, inspection reporting, vacancy listings, tenant communication and analytical reporting.
With 41% of buyers willing to purchase properties without physically viewing them, digital transformation in the real estate industry has become inevitable. Staying competitive in today's market requires embracing digitalization, which 67% of companies have already recognized, according to Gartner.
In this section, we'll explore three remarkable case studies that demonstrate the power of digitization in transforming traditional business models. Let's take a closer look at the success stories of WeWork, Opendoor, and Fundrise, along with some compelling statistics.
Founded in 2010, WeWork revolutionized the real estate and coworking industry by embracing digitization. Traditional office setups required significant investment in rent, furniture and infrastructure. However, WeWork recognized the changing needs of professionals and leveraged technology to create a shared workspace revolution.
With a seamless online platform, WeWork offers flexible office solutions for freelancers, startups and large companies. On the digital platform, users can easily search for and book workspaces. The result? WeWork has become the world's leading coworking provider, attracting millions of members. In 2022, WeWork had 800 locations in more than 150 cities worldwide with around 600,000 members.
Opendoor, founded in 2014, has turned the market on its head with the innovative approach to buying and selling homes due to real estate digital transformation. The traditional process involved multiple agents, lengthy negotiations and uncertainties. Opendoor recognized the opportunity to streamline this process using technology.
Through its digital platform, Opendoor offers homeowners a convenient and hassle-free way to sell their properties. Sellers can request an offer online, and the company uses advanced algorithms and market data to determine a fair price. This approach eliminates the need for traditional real estate agents and shortens transaction times. By 2021, Opendoor expanded its services to more than 40 markets across the United States and processed more than 100,000 transactions.
Fundrise was established in 2010 with the goal of democratizing real estate investment by leveraging digitization. In the past, investment was only accessible to a privileged few with large capital. Fundrise saw the untapped potential of opening up this asset class to the masses.
Through Fundrise's online platform, individuals can invest in real estate projects with as little as $500. Using technology, the company gathers capital from individual investors and channels it into diversified real estate portfolios. Sponsors can track the performance of their funds in real time through the platform. Since its inception, Fundrise has attracted a large community of investors and facilitated over $4 billion in investments.
Digital transformation has completely shaken up the real estate industry. The idea behind it is to improve the way things are currently done by embracing new technologies as much as possible.
Digital real estate businesses are jumping on board the digital bandwagon by using high-tech solutions like blockchain, 3D virtual tours, smart contracts and alternative payment methods. These innovations give service providers a competitive edge in the cutthroat real estate market.
But here's the thing: digitalization isn't just a nice-to-have, it's an absolute necessity to meet the ever-changing demands of customers. In fact, digital transformation in the real estate industry is expected to grow even more in the coming years. So, it's important to stay up to date.