Technology’s Inescapable Impact on Real Estate Investments
Ocean Sotheby’s International Realty
Research-driven, professional investments in real estate have traditionally been reserved for family offices and institutional investors. Now, a swathe of new technology platforms and consumer products are revolutionizing the industry, opening up access and shifting valuations.
From discovery to reselling, cutting-edge technologies have transformed the real estate sector across the world. The most mainstream applications have been implemented by companies like Zillow and Redfin and have democratized the multiple listing service (MLS®) services that were typically reserved for realtors and professional appraisers.
Zillow’s Zestimates feature, which provides an estimate of the value of each house, and Redfin’s broker commission rebates, which amount to nearly a 1% fee reduction for buyers, have already had an impact on a market that contributes 20% of Canada’s and 6.5% of the United States’ economy, according to official government data from both countries.
In recent years, similarly innovative technologies have infiltrated other aspects of the real estate market. Startups like OpenDoor offer cash to buy properties within 24 hours, to flip them on the market. Others like Bungalow, WeLive (owned by co-working giant WeWork), Common and Roam offer flexible lease terms for long-term renters willing to share accommodation in bustling metropolitan cities.
Technology is also transforming the way premium properties are sold to wealthy investors. Ocean Reef Club Sotheby’s International Realty recently partnered with Evolution Virtual, an interactive technology company to create visualization tools for its premier private island listing, Pumpkin Key. The visualizations give potential investors a 360 degree view of the 26-acre private island in Card Sound Bay before they decide to make the 10-minute helicopter journey from Miami for a viewing.
“There is a larger appeal to the new affluent younger demographic as they consume real estate information as entertainment,” says Nikki Bussard, Ocean Sotheby’s International Realty’s Marketing Director. “However, we have found that all demographics gravitate toward technology that allows them to immerse themselves into a property.”
Bussard says private and exotic properties like Pumpkin Key have something to offer that simply cannot be captured by basic videos or photography. The virtual tours add an extra layer of storytelling and critical information for potential buyers. “Our goal was to bring it to life,” she says.
While consumer-facing platforms like this rely on software and data intelligence to guide buyers and renters, there’s a growing demand for bespoke solutions for investors. Former mortgage trader Sean Dobson happened to create such a platform for his investment holding company before the onset of the housing crisis in 2008.
Dobson’s Amherst Holdings, a real estate investing firm with $20 billion under management, applies data science and artificial intelligence to discover underpriced properties scattered across the Midwest and Sunbelt. It owns or manages some 16,000 single-family homes and Dobson believes the team can scale up to a million by 2034. That makes Amherst one of the biggest, fastest-growing players in institutionally owned rental homes, according to Fortune.
Amherst isn’t alone. Nine other startups have deployed AI-powered solutions for the real estate investment sector in recent years, according to data published by market research firm Nanalyze.