Technology makes many aspects of residential real estate more accessible, as anyone can go online, select a property, and begin researching. From there, interested parties can schedule tours, check market comps, or even make offers before ever speaking with a person.
Virtual tours make it possible to walk through a property without actually visiting, adding another layer of insight for prospective buyers. The process has become more efficient, and over 44% of home buyers begin their search online.
We’re now seeing similar technology make its way into commercial real estate (CRE), as investors and business owners can evaluate and even purchase or lease assets with minimal human contact.
This has its limitations particular to CRE, however. Online showings and virtual reality tours don’t supply comprehensive market insights or analyze all crucial available data before purchasing. Tech also doesn’t craft a CRE strategy that accounts for a client’s current and prospective needs. This missing information provides immense value—and many buyers will be left without it when shopping exclusively online.
Here are some of the effects technology is having on commercial and residential real estate and where these advances have benefits and limitations.
Online property shopping has become a stable of the residential market, and many websites provide the opportunity to look for a home online. The best known, Zillow, has countless options for home buyers and allows them to get much of the information they require in one place.
At its core, Zillow allows you to search through available residential real estate listings in your area. You can also look at pictures, take virtual tours, and connect with a real estate agent through the platform.
More in-depth features include market reports, housing data, and inventory information, with much of this information presented as easy-to-read graphs. In short, Zillow provides a great deal of knowledge throughout the home-buying process. However, it can’t provide you with real, local insight, such as hidden trends or intangible quality-of-life aspects about a neighborhood; only an excellent real estate agent or more profound research by the buyer can do that.
Redfin, RealScout, Realtor.com, and OpenDoor are similar services that list houses and connect buyers with agents. Most real estate companies and agents have websites with their listings and other information, as well. These websites provide value through the ease with which sellers can list, and the easy access and information they give buyers.
Another innovative residential feature worth mentioning is that OpenDoor and Zillow will buy a seller’s home and then list it on the market. Buyers are purchasing directly from these platforms, in some cases.
Keep in mind that all of these services use local real estate agents and brokers to facilitate the deals. However, in the future, websites like Zillow and OpenDoor will likely begin making more direct sales online, adding an entirely new dynamic to the process.
Technology’s influence on residential real estate is evident, and it is becoming more prevalent in the commercial real estate world.
The most talked-about new platform is Ten-X. It links brokers, buyers, and sellers in the CRE industry, making it easier for these properties to change hands. This end-to-end platform can already facilitate an entire sales process, and it dominates the market—Ten-X is behind 90% of all online commercial real estate transactions.
There are also auctions on the platform, so sellers or brokers will set a starting bid, and interested parties can attempt to purchase it with the highest offer getting the property.
Currently, brokers are still a huge part of the process at Ten-X, at least when it comes to selling. However, buyers can place bids or agree to make purchases directly through the platform. This technology is sure to alter the CRE landscape even further as it becomes more common.
It’s easy to see why investors are considering technology like Ten-X, as it provides a quick look at properties all over the country without having to leave the office. This convenience makes the basics of evaluating commercial real estate more accessible than ever before.
But there is a drawback. Online CRE shopping could lead investors to make snap decisions without considering underlying market conditions and vital data that can make or break a deal’s profitability.
When it comes to finding information relevant to your objectives, there’s no substitute for speaking with a local, human expert on the subject. An algorithm or virtual real estate agent can provide you with data. But figuring out what the numbers really mean—or even knowing which data are crucial for your situation—requires a deeper dive.
The same can be said for commercial tenants, as tech seeks to take on some of the responsibilities of a tenant rep advisor. But no platform will help negotiate a deal, find the exact property to suit a business’s needs, or focus on your interests and understand your situation like an advisor does. And in-depth local knowledge is often the difference between a successful contract and a regretful decision.
Thus, some aspects of this CRE tech trend may leave commercial tenants and investors at a disadvantage.
Morris Southeast Group is excited about this technology and how it will provide CRE clients with greater knowledge and access. And we are already using much of it! But where we—and other highly-qualified advisors—shine is in helping commercial real estate investors and tenants conduct due diligence before signing any agreement.
Our team will gather all relevant data, organize inspections, go over the legal contracts, assess your financial goals to ensure the deal is right, “future-proof” decisions, and quite a bit more. And having a SIOR designee advisor on your side is an immensely valuable asset in many transactions.
To learn more about what Morris Southeast Group can do for you, call us at 954.474.1776. Ken Morris is also available directly at 954.240.4400 or firstname.lastname@example.org.