Less Pain, More Gain
How Tech is Reshaping the Real Estate Transaction
By Brien McMahon
In recent years, the residential real estate industry has been moving faster than ever before by virtually every measure, from the number of days homes stay on the market to the transaction processing times homebuyers expect. That is a sign of a vibrant, in-demand industry — but it is also a reminder that some aspects of the real estate business are overdue for an upgrade.
Although the U.S. real estate market is one of the largest and most developed markets in the world, it is largely served by legacy players, many of which are stuck in the past and struggling to reinvent their business models. As a result, real estate investors, agents, lenders and consumers have been frustrated by antiquated processes, unmet promises and a lack of high-quality, integrated digital solutions.
That might sound like a gloomy state of affairs, but it makes the promising innovations on the horizon all the more exciting. The real estate market is primed for disruption by new entrants that are more agile in delivering innovative digital business models that address the challenges consumers and professionals must navigate.
This article explores some of the key pain points market participants currently face, and previews how a new generation of tech solutions are poised to make things better in a big way.
Key Pain Points for Consumers:
Understanding and Navigating a Confusing, Antiquated Process
HomeAdvisor recently found that 86% of house hunters agree that the homebuying process is stressful, thanks to its many structural pain points. According to a survey by the National Association of Realtors (NAR), 33% of buyers aged 22 to 30 report that simply understanding the process itself is the most challenging part. While an incredible amount of information is available to consumers online, it can still be difficult to navigate without professional assistance.
People want expert professionals they can turn to; the NAR survey indicates that credibility and trustworthiness are the most important factors when hiring a real estate agent, and that it is especially important for younger consumers.
For more than half of potential homebuyers, the most challenging part is finding the right property, according to NAR. Buyers typically search for eight weeks and look at a median of nine homes. Once prospective buyers find a home they love, they still must navigate the many, sometimes vexing or archaic, steps in the buying process. They are certain to encounter multiple sources of friction along the way, from digging up obscure documentation for the mortgage application to the sometimes-befuddling title and closing processes.
Key Pain Points for Agents and Brokers:
Frustrating Tech “Solutions” That Solve Little
The number one challenge real estate agents and brokerages face is simply keeping up with technology, according to 2019 research by NAR. Many real estate agents end up spending far too much time dealing with the various workflow systems and portals they need, instead of doing what they do best: helping clients buy and sell real estate. Agents and brokers often must use 10 or more individual solutions, and there has not been a full-service option for transactions across the home buying journey. This requires agents to manage their relationships and data in a highly fragmented and frustrating way.
For example, consider the process of creating a comparative market analysis (CMA) for a property, the traditional report that helps agents and their clients contextualize the value of a property based on recent sales in the surrounding area. Compiling this essential piece of research is a time-consuming and largely manual task – one that has not changed much in decades. According to a 2022 research survey conducted by homegenius, Inc. and the Residential Real Estate Council, the majority of real estate agents surveyed spend over half an hour on a single CMA, with 31% stating it takes them more than 45 minutes. While there are a lot of great CMA tools out there, agents still must access multiple sources to compile suitable information before organizing it in a professional format.
Key Pain Points for Lenders:
Rising Costs, Secular Business Risks
Despite continual investment in technology, loan production costs have increased by more than two and a half times over the last decade to an all-time high of $9,470 per loan in the fourth quarter 2021, according to MBA mortgage performance report data. Similarly, these investments have not substantially shortened the time required to close a transaction or meaningfully facilitated the complex coordination of stakeholders involved in a closing.
Lenders also continue struggling to develop relationships with local real estate agents in a purchase market, and many are concerned about disintermediation from their customers.
Key Pain Points for Real Estate Investors:
Managing Complexity in a Rapidly Changing World
Every real estate investor has their own unique portfolio and complex set of issues to navigate. However, one capability that every successful investor has is an ability to manage a wide array of competing factors to ensure that time, capital and other resources are focused where they matter the most. That depends upon having access to the information and tools that help them make the best decisions and execute on those decisions as efficiently as possible.
A Market Ready for Change
Every participant in the real estate transaction process, from investors to prospective homebuyers, is eager to bid these pain points goodbye. The COVID-19 pandemic accelerated the enormous changes in our personal lives with the reliance on digital solutions. Both consumers and businesses are now increasingly comfortable with digital solutions like Amazon, DoorDash and Instacart, resulting in broad and enhanced changes to the way we used to do things.
Now taking hold in real estate, the question is not whether, but when real estate transactions will be driven by companies delivering digital solutions that leverage big data and analytics powered by advanced technology.
Real Estate 2.0:
An All-in-One Approach, From Search to Close
What does this new-and-improved digital future for real estate look like? At Radian, we believed the best way to overcome the traditional pain points was to build something new from the ground up, with a core mission of simplifying and modernizing all aspects of the real estate transaction. That is what we have done, through a digital ecosystem of products and services we collectively call homegenius.
Rather than focusing on bits and pieces of the home buying journey, homegenius delivers a full-service, digitally focused real estate network, integrating products and services from search to close, and creating value for all participants. Examples of homegenius’ technology driven value-creation include:
» A better, more personalized home search process that leverages artificial intelligence, machine learning and computer vision, enabling brokers and agents to provide a highly data-driven, personalized and up-to-the-minute experience for consumers.
» Smarter workflow technology for agents, providing access to all the tools agents need to do their jobs in a single, powerful workflow system. No more disparate systems just to complete a transaction or CMA.
» A faster and more modern title and closing process backed by blockchain technology. Digitized workflows and real-time in-app communication for all parties makes sharing data and documents easy, while robust security ensures personal information and funds are safe.
» Next-generation asset management to support Single Family Rental (SFR) securitizations, iBuyer transactions, warehouse facilities and more, including an unparalleled all-in-one investor workflow platform and a centralized, single point of contact for the requisite valuations, title and diligence services.
What These Changes Mean for Investors
This next generation of real estate technology will both transform the investor’s day-to-day workflow and reduce many of the friction points throughout the transaction process, from acquisition to valuation and securitization. Those pain points are more than annoyances; collectively, they make the industry less efficient, customers less satisfied, agents and brokers less able to focus on providing a great experience for their clients, and investors less profitable.
Going forward, investors that identify the best ways to leverage the changes brought about by new advances in real estate technology will reap big rewards. We hope you take full advantage of the promising future for our industry.
