How fast is technology developing?
When Neil Armstrong walked on the moon on July 20, 1969, less than 70 years after the first Wright brothers flight, many people thought that humankind was on the brink of an exciting new age of space exploration and settlement. But guess what? we haven't returned to the moon since 1972 because of the huge cost associated with anything related to space travel. Now only a few very rich people can afford to buy tickets on the private space expeditions.
Space travel isn't the only technology that is available only for a few people. We're still waiting for electric cars, genetic test and renewable energy become mainstream and to change our world for the better. However, some new technologies are spreading rapidly and changing our way of life; one of them is online shopping. You can buy your groceries, your clothes and even your furniture online from your armchair. It's only natural to extend this and ask why you can't buy your next home, or sell your current one, without leaving the cosiness of your living room.
However, the process of buying or selling a home is multi-faceted and involves many people whose individual tasks need to be scheduled and coordinated. This complex process and the need for technology to support it online are the reasons why I believe most people won't be buying and selling their homes solely online by 2030.
A complex and emotional process
Buying or selling a home is simply too large a transaction to be handled solely online. You could argue that people already conduct transactions worth tens of thousands of dollars online - you can buy a car and have it delivered straight to your doorstep without taking a step outside your door. But cars only have so many different options and configurations, and not to mention come with extensive warranties. Even with these guarantees, most people would still go to a car salesroom to see the car and experience how they feel in it when they take it out for a test drive. Emotions play a strong role in selecting the right car.
In contrast, the complexity of buying and selling real estate requires specific knowledge and skills in various fields including finance and law; local knowledge; municipal guidelines; building codes; marketing; sales and negotiation. You need an expert to guide you through the process and to coordinate all the necessary tasks.
Buying a home is also an emotional process. For many, it represents the ascension into adulthood and independence. You're likely going to spend a majority of your time there for the next few years, if not decades - you'll want somewhere you can truly be comfortable and relaxed. Visiting the property in person and walking around the neighborhood, perhaps meeting the neighbors, goes a long way to giving you the feel of the place. You wouldn't be capture the same experience online.
We have to ask ourselves if buying or selling a home completely online through a computer screen is even technically possible and if a VR walkthrough of the property could provide enough information about the home for us to make a decision to purchase.
Future developments needed
I believe that the future of real estate lies in creating less friction in the buying and selling processes, by paying smaller commissions to both buyers' and sellers' agents, providing walkthroughs via virtual reality, and using online pricing tools for accurate appraisals. To realize this, potential customers as well as online platforms will do most of the agents' traditional tasks.
Artificial Intelligence (AI) algorithms could take over the task of appraising the home and so provide more accurate online pricing for both buyers and sellers. However, there would still be a small error range of ±0.5%. This margin of error is because some judgement calls must be made in the appraisal. The objective elements of the appraisal, such as the location of the house and the number of bedrooms, are easy to assess, but the more subjective ones including the level of wear and tear on the home and the state of the yard are more difficult for an AI algorithm to figure out. Also online real estate tools will replace some of the traditional mortgage brokers' tasks.
Virtual reality would let you "walk" through each property from the comfort of your home, looking into each room and perhaps even opening cupboards. You could rule out the homes that don't appeal to you without even going to visit them, saving your in-person visits for the properties that you want to experience for yourself. These technologies are not yet developed enough to support real estate online services to their full extent for buyers and sellers, but are available in part.
Finding the right realtor or mortgage broker will become a completely online task. You will read online website testimonials and reviews for each agent or broker, as well as social media accounts, and be able to make an informed choice of the right agent for you.
If not by 2030, then when?
Successfully buying and selling property online comes down to two things - technology and trust.
The technology has to be in place to support the complex buying and selling processes. For example, the AI algorithms have to accurately appraise the property; virtual reality has to let people go everywhere they want to in the home, even into every dark corner and under the sinks. As always, early adopters of technology will jump in and buy and sell their properties online as soon as the service is available - maybe 5% of resale properties will be through online by 2030.
Buying a home in the pre-construction phase could also be done online by 2030. Instead of visiting a show home, you would use virtual reality to "walk" through the home. After selecting all your options from a checklist on the website, your new home will appear with all your choices in VR. You would also receive a precise AI-generated account of all the costs.
General opinion has to shift and accept that online is the safe and efficient way to buy everything - cars; services such as trustworthy lawyers, clever accountants, experienced realtors, etc. The general public has to trust these technologies, the processes and the people behind them.
Even when technology and trust are in place, other issues have to be considered. For example, will there be a return policy if the home you buy isn't as advertised? A mediator - a big player in the field - is needed between the buyers and the sellers to absorb this risk and as well as any other complications that may arise. This requires a revolution to the real estate process itself as well as companies willing to assume this role.
The bottom-line answer
It's not likely that you'll be able to buy or sell your house entirely online by 2030; 2050 is a more reasonable timeframe for the online real estate process to become mainstream. However, you don't have to wait until then to get started. Wowa is already enabling buyers, sellers, and renters to find experienced agents online and many other proptech firms are experimenting with 3D walkthroughs of properties. Even Zillow's work on AI pricing algorithms for home evaluation is becoming really accurate.
Of course, if the public demand for online buying and selling of houses increases and with enough funds and legislative support to develop the technology, perhaps 2030 people may buy their pre-construction homes online.