Real estate is by far the world’s most valuable commodity with a valuation of more than two hundred trillion dollars, according to Forbes Magazine. The sheer weight and volume of the industry makes it a tempting and attractive investment opportunity for both seasoned veterans and the uninitiated. Whether taken from the perspective of the established professional, the budding entrepreneur, the prestigious capital investor, or even just the humble homeowner, there’s one fact about real estate today that everyone will want to remain abreast of: technology is disrupting it. This is true not just from a first-time buyer perspective, but even from a long-time homeowner perspective. Technology is changing everything from home buying to refinancing.
Disruption is Good
Industrial disruption might sound intimidating but disruptive forces are typically for the good. To say that technology is disrupting the real estate industry is to say that it is changing it in a powerful and fundamental way which will create new opportunities and change industry practices. Given the notorious technological obsolescence of real estate, this is a disruption which should be welcomed, not feared.
How Disruption affects Consumers and Entry Level Investors
If you are a prospective homeowner or first-time buyer, technological disruption in real estate is especially useful. While it may seem commonplace now, consider that something as“basic” as online listings is actually a relatively new practice. Twenty or even ten years ago, real estate shopping had to be done through classified ads and dedicated real estate publications. And it only gets better from there. Virtual tours mean that not only can you get a snapshot of the property you’re considering, you can do a basic walkthrough without leaving your house. E-signing platforms mean that you don’t have to keep a messy binder of files related to your transaction, nor do you have to leave work in the middle of the day to rush over and sign that final document your lender forgot about.
How Disruption affects Existing Homeowners
Existing homeowners are affected just as much by technological disruption. Homeowners may want to refinance their mortgages to take advantage of better rates, to shorten the term of their mortgage, or to switch their adjustable-rate terms to fixed-rates terms. Whatever the reason, technological disruption in the lending sector has considerably streamlined, consolidated, and expedited the back end processes on which your refinancing depends.
Mortgage processing—whether viewed as loan origination or refinancing—is made much quicker. In fact, as lenders adopt technological innovation for loan processing, refinancing process times have decreased by nearly thirty percent according to a recent academic study. And because initial financing processes are quicker, homeowner behavior towards refinancing has changed, too. The same study discovered that homeowners who use a tech-savvy lender during the initial financing stage are more likely to consider refinancing when interest rates are low, because they are less intimidated by the length of the process. And since it makes processing much quicker, meeting unique needs like determining reverse mortgage eligibility for non-traditional homes can be simpler and more streamlined. So, regardless of the refinancing type or the individual homeowner situation, technology is proving to be a considerable advantage for the existing homeowner, not just the prospective one.
Embrace it
The integration of real estate and technology has been a long time coming. No doubt that a fair amount of adaptation will be required for the industry to fully adopt technological reform. But the sooner that happens the better. It has already made not just the home buying but the refinancing process quicker, and further disruption, innovation, and adoption will make matters even better.
