Digital Transformation of the Real Estate Industry

What exactly does digital transformation of the residential real estate industry mean and where are we seeing the greatest business benefits in the process?

Digitisation 

Since the mid nineties searching for a new home has not centered on newspaper listings or the window displays of real estate agencies; rather potential purchasers have focused their initial attention on information available online. 

What exactly has this digital transformation of the residential real estate industry comprised? The process apparently involves two distinct steps: digitisation; and digitalisation.  The former followed by the latter results in digital transformation.  But what exactly do these words mean?  

Digitisation can (apparently) be relatively easily defined as “the process of converting information from a physical format into a digital one” [1] or the process of “taking analog information and encoding it into zeroes and ones so that computers can store, process and transmit such information” [2] (I like the pictorial nature of that definition).

Digitalisation appears to be a more taxing concept to define, or, as Jason Bloomberg says, a word “fraught with ambiguity and confusion”.[3] The tension appears to be that some would try and define it by impact on business models whilst others focus on its affect on social interactions. In any event, and sidestepping the complex discussions that this word appears to be able to prompt, an overarching (if potentially over simplified) explanation of digitalisation is that it is “the process of leveraging digitization to improve business processes”.[4]

So digitisation allows digitalisation but may not necessarily result in it.  Where digitisation leads to digitalisation that is when you have a digital transformation.

My earlier reference to the nineties will highlight to most readers that I am referring to the portal giants that have become juggernauts in the residential real estate market. I doubt that anyone would argue that portals were the digital transformation of their day and many will have kicked themselves for not coming up with a Rightmove / Hemnet / REA / Realtor.com. However, given the main innovation of these portals was effectively (with a hefty price tag) putting agents’ window displays online and, therefore more immediately available, are they really the digital transformation that is going to tick with the Tik Tok generation?  

I have to admit, that was a rhetorical question. The answer is obviously no: consumers are now used to algorithm-driven personalised advertising appearing alongside pretty much anything they look at online; a study conducted by Zoopla [5] found that nearly 25% of purchasers do not use portals; and it is widely recognised amongst agents that portal fees are high and there are alternative methods of attracting customers.

So what are the alternatives? The options include agents’ websites, digital communications (including alerts), social media and apps. Of course, the immediately obvious common denominator with all of these is the lack of obvious middleman. That fact, in and of itself, indicates that both agents and consumers can take control of the digitisation and shape the digitalisation in the manner they find most useful. That, to me, would seem to be a real digital transformation.

So knowledge is power but let’s look at the impact this can have in some specific contexts. Before we start, the caveat here is that I am going to assume the agents in question are ready to create, or have already created, a digital footprint through a website, an app, or a social media presence.Fully embracing a digital-first approach is going to involve more than just posting the occasional tweet …

Customer experience

Purchasers of real estate are like any other purchaser these days – they like to research online. Knowing this, an agent can target purchasers through social media and digital communications so that the customer is then directed/attracted towards that agent’s website/app. Feeling empowered with the knowledge they have obtained, the purchaser can then make direct contact with the agent through their app or website. This direct ‘digital’ contact between agent and customer could perhaps mean that instead of there being conflicting definitions of digitalisation (referred to above) they, in fact, complement each other - the  impact on business models is social interaction and it is being driven by purchasers.

The research of customers is the key to an agent’s ability to provide their customers with the experience they want. Traffic on an agent’s website, the information collected via their app and responses to their social media, provide a mine of information about what customers want which, in turn, helps agents attract both purchasers and sellers. 

What does the customer expect, and meeting those expectations (aka customer service)

As stated above, the re-presentation of the agent’s shop window online is not going to cut it for Generation Z. They are used to everything being tailor-made to their search history and their expectations are unlikely to change when it comes to buying or selling a property.  

So, in a sense, agents must be ready to expect the unexpected.  After the events of 2020 this should not come as much of a surprise to anyone. But let’s not forget that there are some very nifty innovations that may help agents cater for another 2020. For example, the inability to conduct viewings in person is not a problem with augmented reality (AR) and virtual reality (VR) that allow vulnerable, overseas or simply time-strapped customers to view properties from the comfort of their current home.

With a comprehensive grasp on technological innovations and well thought out online and social media presence, the unexpected (be it another 2020, although let’s hope not, or the tech-literate expectations of Generation Z) should not be a problem for agents. With the goldmine of data that is available, innovations such as AR and VR and customers contacting agents directly through their own website, an agent can tailor their replies to fit each customer’s expectations and provide the individualised service that most of us (probably unconsciously) expect and want.

The customer journey 

Who owns it now? Well, customers are certainly not at the mercy of the local agent’s window or when their advertisements appeared in the local paper. But then again, neither are the agents. Therefore, it seems safe to say that each party can shape their experience to quite a considerable extent.

Customers can do their online due diligence. They can sign up to alerts. They can review social media and then decide which agent(s) they want to contact.

Agents can use their online presence to collect data (do their own due diligence) and use that data to target a particular market/type of customer. Once in contact with a customer, they can tailor the journey to fit the customer’s needs.

Are ‘traditional’ agents capable of keeping up with consumers’ expectations and can they maintain and build on customer relationships?

Of course but it is all about keeping your finger on the pulse and knowing what your potential customers are ‘into’ so that you know how to speak to them. I have no doubt that this is a challenge that most agents are well and truly able to meet. The key is to remember that success will come from owning and taking charge of your online presence and the information that it provides.

To learn more about what comes next for this rapidly-changing industry, read about the efficiency and financial benefits digital adoption can bring to your business in the article: Real Estate Marketing Automation and Revenue Growth.


References: 
  1. Working Mouse, 19 December 2017, David Burkett
  2. Forbes, 29 April 2018, Jason Bloomberg
  3. Ibid
  4. Working Mouse, 19 December 2017, David Burkett
  5. State of the Property Nation Report of 2020 which involved speaking with 6,000 consumers and over 650 agents across the United Kingdom

 



Vanessa-Babington-Monegard
Vanessa Babington-Monegard

Vanessa Babington-Monegard is a real estate and insurance lawyer and lover of technology. She worked as a real estate disputes lawyer in London for 10 years with clients such as Blackrock and CLS Holdings and agents including CBRE, Cushman & Wakefield and Savills. In 2019, Vanessa went to work as counsel in a boutique development insurance underwriting firm. She has been a lover of technology since realising nobody could read her handwriting and wondering what other processes it could simplify.