Digital transformations in real estate
- Insurance expertise
Nearly everyone in the real estate industry wants to create a more seamless digital experience for their customers and partners. In practice, this means using a combination of digital basics, like customer relationship management (CRM) platforms and smart contracts for businesses. However, to succeed in the future, real estate businesses will need to think outside the box and incorporate new digital products and services. Some growing services are virtual tours and alternative payments. It’s this progressive thinking and updated technology that will help companies grow their business and develop longer-lasting relationships with customers.
Digital transformation – that is, technology changes to improve workflows, processes and offerings – in real estate isn’t just, however, about adopting new technology. It’s also about shedding legacy software and outdated processes and fostering a digital culture. With an expected 289.9 million eCommerce market users by 2027, it’s more important than ever to serve the needs of digitally-minded consumers, thus retaining and securing business for the long run.
While there is a valid concern that digital transformations can be disruptive, the availability and rapid evolution of new real estate and mortgage broker technologies is a positive for businesses. Four prime examples of new technologies that are already paying off for real estate professionals, both monetarily and in showing modernity to clients, include:
- Blockchain and NFTs – NFT-based digital mortgages allow lenders and borrowers to store lien information and borrower data on the blockchain. Ultimately, use of this type of tech reduces fraud and expenses while boosting transparency and security.
- Metaverse – By 2028, the global metaverse real estate market – essentially virtual properties that can be bought, sold and leased like physical real estate for use from everything from virtual trade shows to sporting events to workplaces – is anticipated to grow exponentially. It will inevitably change how businesses and consumers interact with products, services and each other and it’s exciting for real estate agents to get in on the action now as the market emerges and takes shape.
- Next Generation Chatbots – There’s been an explosion of bots that simulate human conversations via advanced generative artificial intelligence. Everyone is working to figure out where in the digital experience this new generation of bots can be incorporated to enhance and personalize the customer experience.
- PropTech 3.0 – Technology applied to property, or PropTech, started decades ago but has entered a new era with staggering amounts of investment and new applications. From house tours using virtual reality to digitizing transactions using the blockchain, these technologies create an immersive and modern experience for buyers.
Driving efficiency in the paperless era
Real estate agents and mortgage lenders are working to figure out how to track, upload and share all relevant documentation in a digital environment – a big shift for the historically paper-driven industry. Adding to the complexity is the fact that the information being sent back and forth is sensitive, as it includes legal, contractual documentation like credit reports, proof of employment and tax data that must be handled securely and in compliance with privacy laws.
That’s not to say that document sensitivity is the only challenge to overcome. Outdated data, technology and systems extend into all areas of a company’s digital landscape. Many struggle to integrate new technology into their existing infrastructure. This leads to tasks and data existing in silos, causing the entire system to be disjointed – a system is only as modern as its oldest component. Valuable time is being wasted by converting documents from one program to be read and used by another or waiting on a program that has slowed down from a lack of updates. By investing time and resources to research and create an integration plan, real estate professionals can get the full benefit of their tech tools and solutions.
Staying ahead of regulation
Regulations and compliance priorities for the protection of consumers are always evolving in the mortgage and real estate industry. Changes stem from a variety of factors, such as the political landscape, existing market conditions and fluctuations in the economy. It can be challenging for lenders and mortgage service providers to try to update their digital offerings while remaining aware of, and compliant with, changing rules and regulations. Staying on top of compliance requirements can help lenders identify and manage potential risks, avoid costly mistakes and maintain a positive reputation in the industry for responsibly servicing clients. Two digital-related regulatory requirements to note are:
- Real Estate Settlement Procedures Act (RESPA) compliance – The Consumer Financial Protection Bureau (CFPB) issued an advisory opinion in early 2023 to protect Americans from double dealing on digital mortgage comparison-shopping platforms. It outlines how companies violate RESPA when they steer shoppers to lenders by using pay-to-play tactics rather than providing comprehensive and objective information. RESPA also limits certain marketing and payment practices between vendors and real estate professionals, and compliance with these issues remains an important consumer protection.
- Legal document and information requirements – In early 2023, Fannie Mae and Freddie Mac began requiring new notes and security instruments for loans delivered to them in an effort to reduce fraud. If a lender uses a document technology platform, it’s imperative that they coordinate with those vendors to be sure that they’re using the correct documentation. They also have begun requiring the collection of certain borrower information, such as language preference, race, age and ethnicity with the aim of increasing fair lending and servicing, meaning mortgage broker technology will have to evolve how they collect and interpret this data during the loan process.
Staying on top of compliance requirements can help lenders identify and manage potential risks, avoid costly mistakes and maintain a positive reputation in the industry for responsibly servicing clients. There are a number of ways to accomplish this, including:
- Attending industry conferences and events – Industry events will often have speakers and presentations designed to inform real estate agents on how to implement changes necessary to stay compliant when regulations change.
- Joining associations – Many organizations will publish new regulations that impact members. Beyond their official communications, being a member gives access to peers who share their experiences and solutions.
- Reviewing government agency websites – Creating internet news alerts enables real estate agents to stay current with government agency news. Following government agencies on social media is another method to stay even more up to date.
- Consulting with a real estate lawyer – These professionals have to know the law and how to apply it. Keeping one close means that they will know what to update based on specific systems and marketing materials.
- Using compliance software – Consider what software and online programs can be added during a digital transformation that will monitor compliance and be responsible for flagging anything that may conflict with the latest regulations.
Incorporating flexible tech solutions
It is clear that real estate professionals have their work cut out for them when engaging in digital transformation. Considerations need to be made for what programs are currently being used, the ideal future state, how to get from current state to future state and how to get staff on board with it. One thing that can make the process easier is to think critically about what products and services would best benefit all of their website users – including office staff who will need to make updates to listings or pages and clients who are looking for confirmation that their real estate agent is up to date with modern offerings and experience design. Careful attention to offering select information on the opportunity to purchase related services can be a differentiator for consumers looking for a real estate or mortgage professional. Connecting a real estate purchaser with the opportunity to explore products with an insurance partner, for example, can streamline the homebuying process when this is done in a seamless and legally compliant manner. VIU by HUB offers an innovative and delightful user experience that can show customers a flow and opportunity to shop for customized insurance quotes quickly, and the VIU by HUB platform can be seamlessly embedded into company websites.
While it can seem daunting, there is a path to digital success for companies willing to put in the effort. Employees are also likely to appreciate the time and effort saved by having more streamlined digital processes. Reconfiguring tasks and systems to be integrated instead of siloed, keeping up with regulatory changes and effectively aligning a digital strategy for these changes – all while dealing with the complexity of tech advances is no easy task. However, digital success and business success are correlated, and the benefits of doing so are undeniable.