Real estate appears to be one of the last frontiers ripe for disruption. So what room for improvement is there, and how is it already being approached?
The last few years have brought disruption, in one form or another, to many industries. Some of these already crossover, and have implications for real estate. Uber, Airbnb, faster internet speeds, and driverless cars are just a few examples. Developments in healthcare, and even in the general economy, could bring even more changes in the future.
Disruption and game changing innovation isn’t easy to come by, nor is it a given, in the real estate industry. Change happens slowly because there is a lot of heavy weight, and seriously entrenched resistance. No matter how you look at it, it can be complicated to bring change to an industry that has been around for as long as real estate. If it is was easy, it would have been done already. But what parts of the real estate industry are still ripe for disruption, and how are some already attempting to change things? Will they help your real estate business?
1. Mortgage Lending: We’ve begun to see a significant pivot in the mortgage business. Various forms of real estate crowdfunding are taking on the old status quo to connect peers versus going through traditional banks. If current crowdfunding portals can prove their performance, the appeal of ditching the bank to lend ‘direct’ could substantially change how loans are made, approved, and serviced. Though there is no question that new players have their work cut out for them, against a well-entrenched, deep-pocketed industry that isn’t going to let their position be taken easily.
2. Regulation: Regulation is one of the biggest challenges to reinventing both the mortgage and real estate industry. Realtors and bankers’ associations have hefty lobbying power, and the ears of legislators. Then there are the unscrupulous scammers which bring need for more protections. However, with each new round of regulations, consumers seem to suffer more. More self-policing of the industry and an environment of positive peer pressure will certainly help to make further regulation do more good. Everyone who has an interest in protecting the industry should be involved.
3. How We Build: Building trends are already changing. Some examples may be temporary fads. Others will certainly only continue to grow and evolve. Small urban micro-apartments, smarter homes, and greener homes are becoming more and more common. New designs are pressing ever closer to creating more floating real estate, and disaster resistant properties. However, there is a long way to go. The demand is there, and the ideas are there, but as with solving other world crisis, there is room and need to innovate in logistics.
4. Where We Build: Where we are building is already changing. In the wake of Sandy, New York has literally changed the rules about how close to the coastline properties can be built. New rules covering flooding and rising water levels are also altering what is built near the coast. The recent devastating fires in Northern California may cause many (including insurers and legislators) to re-consider building there. As more data becomes available, expect real estate investors to seek safer destinations.
5. Consumer Experience: If there is one aspect begging to be disrupted, it is customer service. It could be so much better, and needs to be in order for industry professionals to retain their value. It can be hard to balance and service, but that excuse won’t fly for long.
6. Payments: While there are many competing payment processors, Peter Theil still says he believes the true potential of his startup PayPal is still years away. Can you believe some people still use checks, and even demand them? Consider the increased speed and efficiency that could be realized with better payment processing and handling in real estate.
7. Real Estate Training & Education: There have been massive improvements in the availability of data and information in the last decade. Real estate investors, businesses, and homebuyers are far better off for it, when they use it that is. Still, when it comes to licensing and reliable sources beyond the media hype, there is a lot of work to do.
With everything you just heard, what will you change in the real estate world?