“All happy families are alike, but every unhappy family is unhappy in its own way.” That’s the opening sentence from Anna Karenina, a massive epic by Russian author Leo Tolstoy. Since its publication, the line has gained serious attention not just from literary scholars but sociologists and business analysts too.
Essentially, the germ of the idea in business (called “the Anna Karenina Principle”) is that the conditions for success are similar across industries, whereas problems are diverse and unique to particular markets. For instance, every industry defines success according to things like net profit and consumer satisfaction. But problems tend to be specific, deep-rooted and endemic.
Today, let’s look at the “unhappy family” we call the real estate industry. What are some specific and endemic issues in real estate? And how is technology – like a talented family therapist – working to negotiate and solve those problems?
Lack of Practitioner-Consumer Transparency
One particular problem that’s existed in real estate for decades is a lack of practitioner-consumer transparency. Traditionally, real estate agents have had little incentive to be transparent – withholding resources, gatekeeping their listing services and keeping commission rates under lock and key. They could do so because the market was tilted in their favor; consumers needed them and had few recourses for weighing their options.
Recently, technology has helped correct the balance of power. The past five years saw the emergence of Nobul, a real estate digital marketplace that allows consumers to vet and select agents based on personal criteria. The agents then compete for a consumer’s business by offering attractive terms and lower commission fees.
According to CEO Regan McGee, “Nobul brings choice, accountability and transparency to an industry that has – for decades – been widely regarded by homebuyers as opaque and challenging.”
A Sluggish System of Paperwork
One of the most common consumer complaints in the real estate process is the labyrinthine system of paperwork involved. Signing, storing and referencing physical documents was an arduous task, even with the help of lawyers, notaries and agents.
Tech companies have helped significantly. E-signing and digital contract software like DocuSign certainly help. And on the agent side, transaction management software helps systematize and centralize paperwork so that it’s easily accessible and visible.
Inaccessible Investment Opportunities
A typical complaint among some small-budget investors has been the exclusivity in real estate investing. The bar for entry has conventionally been prohibitively high as investors need access to large down payments or high-wealth partners to enter the market.
Blockchain technology is beginning to change that. The technology (most commonly associated with cryptocurrency) enables “fractional ownership” and “tokenization.” Essentially, investors can use the blockchain to invest small amounts of money in a property, treating their investment like a common share.
Susceptibility to Crises
Before the 2019 COVID pandemic, many industry spectators assumed real estate was disaster-proof. Granted, the industry bounced back incredibly quickly (far quicker than other industries). But that was precisely because of some quick-thinking technology companies.
Augmented and virtual reality companies pivoted to address the real estate industry, helping agencies show homes to contactless and remote buyers. Agents adopted new video conferencing and messaging platforms to reach their clients. And some mortgage lenders have embraced artificial intelligence to manage the influx in demand (albeit creating different problems in the process).
As real estate technology matures, it will hopefully address even more outstanding problems in the real estate industry. For now, these tech-enabled solutions represent a positive step toward creating a proverbial “happy family.”
This content is a joint venture between our publication and our partner. We do not endorse any product or service in the article.