Tag: proptech

August 17, 2024, saw major changes in the real estate policies and practices with the NAR settlement. How will these major regulatory changes govern the agent commission structure? Do these new rules redefine how sellers and buyers approach real estate transactions? Is the real estate market witnessing a major shift? This blog will help you understand the latest real estate regulatory updates, their impact on the market, and more!

About the Recent NAR Settlement

The National Association of Realtors (NAR) oversees hundreds of Multiple Listings Services (MLS) used by real estate brokers in the U.S. as a source of information exchange.

In October 2023, a federal civil jury accused NAR of deliberately inflating realtor commissions. Later in March, NAR agreed to settle the class action. As part of the settlement, NAR formalized major rule changes that could alter home buying and selling in the U.S.

What Was the Former Practice?

In traditional practice, when a home was sold, the seller paid a 5% to 6% commission, which was split between the sell-agent and the buy-agent. This practice used to inflate home prices outrageously, as the commissions often got baked into a home’s sale price. So, for a $400K home, a seller would be responsible for paying $24,000 in fees.

Though NAR argued in the class action that these commissions were openly negotiable, it was not so in practice. Also, NAR never used to demand written agreements between buy-side agents and buyers.

What Is Going to Change?

NAR’s recent settlement formalized two practice changes on August 17, 2024.

• A seller’s agent is not allowed to advertise an offer of commission to a buyer’s agent in any of the NAR-affiliated MLS listings.
• A buyer and their representing agent must sign a written agreement before the agent shows the buyer a house. The agreement should specify the agent’s compensation.

Changes for Home Buyers

• A buyer must enter a Buyer Representation Agreement with their agent even before the agent shows them a home. Legal representation is mandatory even before you negotiate with your agent.
• Buyers can opt for either an exclusive or non-exclusive buyer agency agreement. An exclusive contract permits the buyer to work only with one agent. A non-exclusive contract authorizes the buyer to work with multiple buy-side agents.
• The buyer agency agreement should detail how the buy-side agent will be paid. Buyers can discuss with their agents beforehand whether the commission is paid from the Seller’s Offer of Compensation (SOC).
• The new rule improves transparency for home buyers. Signing the Buyer Representation Agreement will legalize the process of agent hiring, and buyers will know how much they’re paying for an agent’s services.

Changes for Home Sellers

• The new rule prohibits sell-agents from publishing buy-side commissions on the MLS. Until an offer is discussed and negotiated, the buyer and their agent will not know whether a seller will compensate the buyer’s agent.
• Though the Seller’s Offer of Compensation is not posted on the MLS, sell-agents can still discuss the buy-side commissions with sellers off MLS, through emails, texts, or even their brokerage’s website.
• As mentioned above, new listing agreements will no longer allow sellers to pay the Buyer’s Agent Commission (BAC) directly. However, a seller can offer a SOC, which the buyer can use to compensate their agent, close costs, or negotiate price.

Impact on Realtors and Their Commissions

The new rules would change the way real estate commissions work.

• Home sellers can decide whether to pay the buy-side broker commission and how much they want to compensate the buy-side agent.
• Sellers can no longer publicize buy-side agent commissions on multiple listing services.
• The buyer agreement should clarify what services the agent will provide and what the buyer will pay for those services.
• Before entering into a real estate contract, all parties will know what their respective agent will be paid and who will be responsible for that payment.
• The new law prevents buy-side agents from receiving unfairly high commissions. An agent cannot simply steer a buyer to a particular listing because it has a ‘higher’ offer of compensation. This will enhance transparency and promote fair competition in the industry.

How Does the Change Affect Home Affordability?

The new rule indirectly expects that more buyers will come up with cash to pay their own agents. Experts believe that the changes would help consumers in the long run.

Experts say mortgage rates will significantly impact property costs more than a rule change. The rate for an average 30-year fixed mortgage has recently hit 6.50%. So, the right equation that may make up home affordability will be mortgage rates (70%) plus the rule changes (30%).

Things to Keep in Mind When Buying or Selling a Home

• Home buyers: Buyer-agent agreements may vary from state to state and brokerage to brokerage. So, sign any legal contract only after thoroughly reading it.
• Real estate agents: Draft your buyers’ agreements with simplicity in mind. It can stave off potential confusion.
• Home sellers: Sellers can opt out of paying any buyer agent compensation. However, they cannot avoid economics entirely. For example, a buyer can negotiate with you to help cover closing costs.

How Can PropTech Help Navigate the Changes?

The historic NAR settlement and the subsequent rule changes are expected to transform the U.S. real estate market like never before. The regulatory changes present unique opportunities for property technology providers.

• Innovation: PropTech developers like Fingent can help build innovative solutions that organize and simplify real estate transactions, cut costs, and improve transparency.
• Compliance: Adapting to the new regulatory requirements may require real estate companies to implement highly compliant and contemporary PropTech solutions.
• Pricing optimization: By using AI to analyze large datasets, we can help you predict upcoming market trends and assess your investment risks. AI can also help define the price of a property by tracking evolving market circumstances.
• More customized services: Real estate agents can use AR and VR to offer highly personalized services to potential buyers. Virtual home tours, interior design simulations, interactive 3D models of homes, etc., allow agents to offer a real concierge service.
• Less paperwork: Blockchain-based transaction ledgers and smart contracts reduce the need for traditional, paper-heavy processes and make your legal documents more secure.
• Effective property listing: Real-time visibility into property listing performance. Appropriate data visualizations allow brokers and investors to make informed decisions.

Complying with the policy and practice changes is mandatory for MLSs owned or governed by the NAR. Customized PropTech solutions help you stay compliant with the evolving real estate regulations. Take the next step by partnering with a reliable PropTech development company. Contact us to learn more.

According to a 2020 report, 58% of real estate brokers have a clearly defined digital strategy, a figure that represents a 6% increase from the two previous years and thus indicates that an increasingly large percentage of the real estate industry is buying into the concept of digital transformation.

While the real estate industry is — and always will be — centered around interpersonal interactions between buyers, sellers, and agents, technology plays a more significant role in these transactions than ever before. Innovative real estate firms worldwide are leveraging futuristic technology far more frequently, and those that fail to adapt will find it hard to keep up.

Technology such as machine learning (ML) software, artificial intelligence (AI)-powered mobile apps, drones, and augmented reality (AR) solutions are no longer just “nice to have” in the real estate industry. Digital transformation is an inevitability that real estate professionals must embrace if they want to thrive in such a rapidly evolving business space.

Why Digital Transformation Is Inevitable for the Real Estate Industry

While many factors fuel digital transformation in the real estate industry, the most potent catalyst is consumers. Home buyers and sellers have grown accustomed to being able to perform a variety of essential life tasks online thanks to the ever-evolving nature of smartphones and other sophisticated internet-connected devices.

According to a 2022 report, 51% of all home buyers found the properties they purchased via the internet. Another 29% found their dream home with the assistance of a real estate agent, whereas just 4% located the home they eventually purchased via traditional signage.

These statistics indicate that the vast majority of prospective buyers are taking charge in their search for their next home. Real estate agents who want to keep pace must incorporate futuristic technology into their sales models or risk finding it increasingly difficult to provide consumers with the efficient and primarily digital experience they prefer.

Still, the industry is about more than buying and selling homes and real estate technology means more than improving sales. Many property management firms want to leverage technology for payment platforms, leasing and facility management, back office processes, and more. Most important to these management teams is having all those processes in one place.

Read more: Reshaping Real Estate Operations with Fully Integrated End-to-End Software.

Futuristic Technology is Poised to Reshape Real Estate

The real estate industry can solve many existing challenges by embracing digital technologies. From complex workflows brought on by the multitude of activities required of a real estate firm to communication shortfalls, there are many leading technologies that property services can embrace as part of a digital transformation. While there is no single answer, some forms of futuristic technology that are already making a big splash in the real estate industry include:

1. ML and AI

Machine learning and artificial intelligence technologies are true game changers for the real estate industry. They enable real estate agents and brokers to automate redundant tasks, like creating timesheets, filling out paperwork, generating offer documents, or scheduling meetings. Within property management, automation can lead to higher sales volumes, efficient back-office solutions, and a more valuable experience for clients and management teams.

2. Mobile Applications

Real estate agents and property managers are always on the go, and while smartphones help them stay connected to clients and co-workers while in the field, these devices are only as good as the applications installed on them.

With that in mind, many real estate firms are turning to robust mobile applications that are purpose-built for the real estate industry. These applications can enable the performance of a wide array of tasks remotely, including approving documents, sending forms to clients, and much more.

3. All-in-One Property Management Platforms

Traditionally, real estate firms that manage rental properties have done so by using a cobbled-together network of disparate applications. Though that kind of approach works, it is hardly ever efficient or cost-effective. Fortunately, dynamic, all-in-one property management platforms like Rentmoji exist.

Created by Fingent, Rentmoji empowers property managers to govern every facet of property management from a single, user-friendly platform that includes a mobile application. The platform includes a suite of interconnected apps, each of which addresses specific property management challenges and pain points.

With separate sub-portals for tenants, owners, and vendors, the Rentmoji suite provides complete transparency for all parties and makes process automation a breeze. Rentmoji is the reality of futuristic technology for the present.

Read more: How Does The NAR Settlement Reshape the U.S. Housing Market

4. Drones

Drones enable real estate agents to capture aerial pictures of a home and property to provide a more comprehensive overview of each listing. Unique and captivating aerial drone photos on an online listing will help real estate agents make the properties they are selling stand out. In addition, multiple listing service (MLS) reports that properties with drone images in the United States are 68% more likely to sell.

Agents can also use drones to help assess property lines, landscapes, and potential maintenance concerns. Real estate agents and property managers can then use this information to help clients make informed purchasing decisions or evaluate upkeep issues.

5. AR/VR Technologies

Virtual reality (VR) and AR technologies benefit firms that sell yet-to-be-completed homes. Agents can use these technologies to give buyers a sneak peek of a home before it is built, and these digital images can help agents close more deals and bring customers’ vision of their dream home to life much more quickly as a result.

AR and VR technologies can also be used to digitally stage properties, an approach that is much more cost-effective than bringing furniture in just to stage a vacant home. Staging properties with AR/VR tech makes vacant homes more appealing and can thus speed up the selling process.

Read more: Augmented Reality and Virtual Reality: Transforming The Real Estate Industry!

How Fingent Can Help Real Estate Firms Embrace Digital Technologies

If you operate within the real estate industry and want to gain a definitive edge by investing in digital transformation, Fingent is here to help. We create customized, futuristic technology that is tailor-made for the needs of your business.

We understand the challenges that affect the real estate industry. You’re seeking solutions to marketing challenges that help you stand out against the growing competition, and your business wants to adapt to evolving tech trends. We have a track record of solutions that are here to help.

Our custom software development professionals have created numerous real estate software solutions for clients that engage in every facet of the industry, from single-family residential sales to commercial property management.

To learn more about how Fingent can help you step into the future, contact our team today to schedule a consultation.

The property sector in the United States came to a crashing halt in March 2020, when the first wave of COVID-19 hit the nation. Mortgage rates dropped by 34%, affecting home buying and selling plans. Retail vacancy rates spiked up to 20% and commercial property loan delinquency rates soared up to 11.49% in Q2 of 2020. Months of shutdowns, social distancing regulations, traveling curbs, stay-at-home mandates, remote working, online shopping, and home delivery led to a drastic decline in occupancy rates and rents. People shifted their working spaces from office to home which slashed the demand for commercial rental spaces. The liberty to “work from anywhere” triggered a mass exodus from expensive urban areas to affordable suburbs and rural areas, lowering home value growth in metros.
All these challenges forced the property sector into urgent changes. Along with reconciling fiscal and monetary policies, real estate leaders must capitalize on property management technologies – specifically automation – to recover and rake in profits. Bitwise Industries observes that “the immediate need for innovation and automation is now a necessity to not only survive but to truly thrive in the real estate industry.”
Read more: What’s in Store for Real Estate This 2022

How does automation help a highly fragmented industry like real estate to manage multiple operations in one place and sync a horde of activities?

Automation in Real Estate: Fostering “All in One Place – All in Sync”

McKinsey’s survey identifies that automation and remodeling of work processes enable businesses to control costs and mitigate uncertainty during recessions. A real estate firm needs to efficiently coordinate multiple business functions such as managing buyers, sellers, and properties, contracting and leasing functions, property listing and tracking, finance and accounting, and so on. Automation helps sync and manage all these activities in one place. Here’re the top five real estate processes that can benefit from automation:

1. Optimize internal workflows

Automating internal workflows improves your team’s productivity. Having a well-synced project management system with up-to-date dashboards, real-time analytics, and reports, automated document flow, task reminders, deadline notifications, meeting schedulers, etc. can save your workforce’s time and improve their focus on value-adding functions.

2. Enhancing customer journey

Custom real estate software and integrated PropTech solutions allow customers to create, view and modify personalized wish lists, look up and find property information, and filter details based on different criteria. Realtors can leverage Virtual Reality techniques to improve customer experience by offering virtual tours, 360-degree property views, and 3D site plans. Integrating mortgage calculators, neighborhood descriptions, and an easy ordering process enables customers to buy, sell, or rent properties easily.
Read more: How Virtual Reality Can Transform Real Estate Operations 

3. Improve sales and marketing processes

Real estate marketers and salespersons can leverage automation to sync all their leads in one place, access lead information anytime on their phone, create custom client lists, save time with lead routing, automate drip email campaigns, set up activity-based email workflows, keep track of previous interactions, and send out reminders and updates to clients on time. All these lead to higher conversion rates.

4. Manage invoices and finances

Manual invoicing and payment processes consume your team’s valuable time and affect your organization’s scalability. Automated, all-in-one property management software allows you to centralize, oversee, and streamline the payment process without any paperwork. Automating financial management improves your processes with customers, partners, and suppliers. You can easily track orders, gain approvals, send notifications, and obtain real-time visibility into each transaction using the real estate management software.

5. Carryout field and property inspections

Leading property inspection software offers customizable templates and checklists for property managers, field inspectors, site auditors, and clients to schedule inspections, record on-site data, and auto-generate reports. Automating the whole inspection process reduces both manual errors and report submission time. This helps find out the quality and condition of a property (home), secure governmental approvals quickly, and fix the best price for the listed property.

Benefits of Real Estate Automation: A Quick Recap

• Streamline workflows and back-office tasks
• Reduce tedious paper works and manual jobs
• Improve focus on value-adding functions
• Monitor property managers and personnel dispersed across various locations
• Implement innovative ways to showcase and market properties
• Process invoices and payments on time
• Improve customer service and attract more buyers
• Eliminate supplier management hurdles

How Fingent Enables Real Estate Companies to Leverage Automation and Digital Technologies

We help real estate companies and property managers to prepare for a digital, data-driven, and sustainable future. Our projects demonstrate the value we deliver to the real estate industry.

#1. Rentmoji, The All-in-one Property Management Platform

Inefficient communication systems, disconnected business segments, and poor customer experience failed to deliver the expected ROI to our customers. They needed a single platform that centralizes all the aspects of the property management life cycle. This resulted in the development of Rentmoji, an all-in-one property management suite that helps streamline and manage diverse operations in the industry.
Analyzing the challenges faced by different stakeholders in the real estate business, we automated key processes and implemented top-notch security solutions. Rentmoji now serves as a robust single-source property management solution for residential rental properties (Single-Family Rentals and Multi-Family Rentals), CAM, and HOA management.

• The company grew from 2 to 160 employees within two years of implementing the software
• Customized portals and integrations for tenants, owners, and vendors
• Structured lead management process and extensive syndication
• Enhanced speed-to-market with cloud capabilities and automation

#2. End-to-end CRE Transaction Platform

An investment brokerage firm in the United States was struggling to adapt to the changing Commercial Real Estate (CRE) market demands. They required an integrated solution that will offer them real-time visibility into the performance of property listings and visualize data insights for brokers and investors to make better decisions. To help them realize the benefits of data-backed decision-making, we created a modern net lease trading platform. It improved their CRE transactions and sales. The customer can now manage 10,000+ listings via the trading platform and track 1031 exchanges effectively. They also have access to reliable ROI metrics based on current and future trends.

• Predictive analytics matches properties to investors’ preferences and expectations
• Projected revenue charts and financial summaries help business analysts
• Place and manage offers on multiple listings and update them on the fly
• Brokers can use the application to easily demonstrate listings to prospective buyers

Leveraging the Latest in PropTech to Navigate the New Normal

The global pandemic emphasized the need for all aspects of real estate to embrace technology. Buying software to merely run your operations remotely isn’t enough. Technology capabilities should allow you to generate value and respond swiftly in a pandemic-afflicted economy. 58% of real estate organizations struggle to integrate their legacy applications with innovative tech solutions. It exposes these businesses to major financial and operational impediments. Fingent custom software development experts aim to help such businesses by bridging their technology talent gaps and developing all-in-one, integrated, custom PropTech solutions.

Adoption of Predictive Analytics

The Commercial Real Estate (CRE) industry is growing. New business models and competition, extensive use of technology, and changing tenant and investor expectations are redefining the face of this industry. Each year brings new technologies that alter the way agents approach their work. As investors are ready to change their business models with a tech-enabled ecosystem, CRE companies and agents will have to adapt to the new demands and technology trends. The market will remain wide open only for those who are ready to accept the change and adapt to new technologies.

Get to know how smart home technology impacts real estate.

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Based on the industry market research report on the state of the commercial real estate industry in the US, there are almost 1.3 million properties with an average sales volume of $55 billion. Over the past five years, the commercial real estate industry in the US has grown by 2.6% to reach revenue of $1 trillion in 2019. Moreover, it is estimated that the CRE industry expansion is expected to continue over the next five years.

“The CRE property values (specifically NNN properties) are unique in that the pricing is not driven strictly by the underlying real estate, but also by the lease terms and a single tenant’s credit rating”, says Camille Renshaw, co-founder, and CEO, B+E. This shows the relevance of analytics in tenant/property data.

Related Read: How Real Estate Technology Helps Predict Property Prices

Predictive Analytics Occupy a Pivotal Role in CRE

No investor cares about what the property meant in the past. They are keen to know about the future of the property or how its potential value will escalate in times to come. Here comes the significance of PREDICTIVE ANALYTICS, which uses past and present big data to make reliable, proof-based predictions about the future development of a property.

CRE is an industry sector that contains an abundance of data. Over the past years, analytics are slowly taking up its role among numerous listing sites. Its chief role is to provide both buyers and sellers more context about the property and its qualities. However, analytics that really benefits CRE agents is still a rare thing to find. This is where predictive analytics comes into place.

Predictive analytics tracks consumer (basically buyer/seller) behavior to understand the conditions in which they are most likely to buy or sell. This helps an agent to better utilize their time and resources, which in turn maximize the overall sales. It is expected that over the next few years the adoption of predictive analytics in the real estate industry will accelerate. Besides, studies also show that predictive analytics is one among the many real estate technology trends to follow in 2019.

CRE companies/agents can achieve clear and practical insights for different strategic actions that they must adopt by combining data from different sources and advanced analytics technologies. This includes predictions like analyzing the tenant’s benefits due to flexible leases, customer and traffic information for a retail center or staff usage information for office space, etc.

Features like heatmap analysis, property rental calculators, projected revenue charts, return during lease analysis are a few examples of predictive analytics that agents generally use to showcase how a property will perform in the future and its possible return on investment.

Related Reading: Check out how Fingent provided integrated Prop-Tech Solution for real estate brokers.

How Predictive Analytics Benefits the CRE Industry

Predictive analysis allows an agent to suggest the perfect property that matches their investor preferences, expectations, and goals. This saves time and risk by providing the investor with a reliable return on investment metrics based on past and present data as well as the future expected trends of their investment.

It also allows the agent not to have any specific financial background, as the analytics platform does its job to suggest a property that guarantees to provide its investors with positive cash flow and high return on investment.

It is possible to carve analytics, which can even identify the ability and education levels of possible agents from a list and suggest it to a CRE company based on use cases.

Many AI-based applications help its agents or even investors to get a detailed and personalized report by simply providing basic information like area, the fund available, risk level, expected CAP rate, etc.

In addition, such tools can even be customized for agents that will give them answers to queries like:

• Is this the right time to invest?
• What would be my ROI – maybe in the next five years?
• Neighborhood status and track record?
• How much is my existing portfolio worth?

Such predictive recommendation engines have proven to foster deeper engagement and increase ROI. For instance, Amazon’s predictive recommendations had a success rate as high as 60% in some cases.

Related Reading: The Impact Of Big Data Analytics and How it is Changing the Real Estate Industry

As a CRE Company, What Must We Do?

Developing an enterprise-wide strategy and supporting it with a sound technology core has turned out to be important for a commercial real estate company. This must be supported by data gathering and analytical techniques. According to the CIO surveys performed by different agencies, only one-fourth of organizations globally across industries have currently in place an enterprise-wide digital vision and strategy.

A solid technology strategy that is spread across the industry stands as the first step towards effective technology deployment and integration. More efficient utilization of IT budgets and resources also needs to be considered. This will include evaluation of how data capturing is performed, use of predictive analytics, advanced tracking and reporting management AI tools. A well planned and phased deployment of technology will likely yield amazing results than waiting for your turn and jumping into the development and implementation process.

However, there are a few things that require consideration before starting to work with a PropTech company. A CRE company must admit the fact that, when starting off working with a PropTech firm, they must not consider them just as vendors of a product or service, as this can very well limit the range of benefits that the company can achieve.

Instead, try partnering with them on potential innovations. Identifying a single point of contact to take up conversations with PropTech and a coordinated approach supported by guidelines to evaluate the features developed must also be taken into consideration. In addition, make sure that the size, scale, maturity, level of innovation, and relevance to existing business is conveyed properly to the PropTech company.

Commercial real estate technologies are relatively new and most of the PropTech companies are only beginners in the CRE Industry. They tend to make decisions quickly compared to CRE companies, which can end up delivering wrong results or create anomalies in the process flow. A shared understanding must be developed by the partnering company to allow successful coexistence. 

Related Read: Top Technology Aids To Accelerate Real Estate Growth

While delving into commercial real estate, having a solid technology roadmap in place is downright necessary. As a technology solutions provider and consultant, we can help find what’s right for you by outlining technology assets that uplift your business.