Digitizing the real estate industry
Property tech (PropTech) is changing the way we buy, sell, rent and interact with the property market. Consumers now find new houses on Zillow. Tour houses digitally in a virtual 3D experience. Apply for mortgages through Better. Sell homes on Opendoor. And invest in the real estate market using CrowdStreet.
For businesses: realtors now advertise online rather than in newspapers. Landlords manage rentals using TenantCloud rather than spreadsheets. Property managers stage a home with furniture and interior design using Virtual Staging Solutions and much more.
In this report, we will unlock new opportunities to build in the real estate space, the market demand & key signals, and adjacent product categories to serve the property markets. Let’s go!
- Residential property marketplace: Zillow, Trulia, HotPads, Realtor.com, Redfin, Opendoor, Homes, Homesnap, NeighborhoodScout, Orchard, RealtyTrac, Movoto, Coldwell Banker, Sotheby's Realty, RE/MAX, ZipRealty, Compass, Rightmove, Flyhomes, ZeroDown
- Commercial property marketplace: LoopNet, Crexi.com, SquareFoot, CommercialCafe, 42Floors, Ten-X, Brevitas, The Broker List, Instant Offices
- Rental homes: Airbnb, Zeus Living, Zumper, Apartments.com, Rent.com, PadMapper, ForRent.com, Apartment Guide, RadPad, Bungalow, The Plum Guide, Agoda Homes, Homestay, Sonder, Nomador, MyNewPlace
- Outdoor rental: Getaway, Glamping Hub, Tiny House Vacation, RV Share, Cruise America, Outdoorsy, Campervan Rentals, Indie Campers, El Monte RV
- Accessory dwelling units (ADUs): United Dwelling, Homestead, Cover, Cottage, Rent the Backyard, Backyard.Homes, California Modulars, Villa, prefabADU, BackyardADUs, Abodu, Crest Backyard Homes, Small House Solutions
- Online lenders: Better, Quicken Loans, nbkc, Guild Mortgage, Guaranteed Rate, Rocket Mortgage, Ally, Reali, Mr. Cooper, loanDepot, SoFi, LendingHome, LendingPoint, LoanSnap, Neat Capital
- Online brokers/loan marketplace: Morty, Lower, LendingTree, Breezeful, Mortgage Choice, Exactly, Credit Karma, NerdWallet, Bankrate
- Alternative home equity loan: EasyKnock, Orchard, Divvy, Unison, Hometap, Point.com, CoBuy, Landed, Homeward, LendInvest
- Real estate investing & crowdfunding: CrowdStreet, Fundrise, PeerStreet, DiversifyFund, EquityMultiple, RealtyMogul, Mynd, Groundfloor, Roofstock, Modiv
- Property management apps: Buildium, AppFolio, TurboTenant, Zillow, Stessa, SimplifyEm, MRI Software, Yardi, RealPage, ResMan, Propertyware, Rent Manager, TenantCloud, Avail, Rentberry
- Realtor tools: Market analysis (Renomy, Catylist, Mashvisor, Realtors Property Resource, Revaluate) Lead generation (Zillow Premier Agent, RealScout, CINC, REIPro, REDX, Propertybase, Dotloop, RealGeeks) eSignature (HelloSign, DocuSign)
- Virtual staging: Virtual Staging Solutions, RoOomy, iStaging, Housecraft, Homestyler, VisualStager, VRX Staging, Virtually Staging Properties, Virtual Staging Lab, IBD Luxury Home Staging, Spotless Agency, PadStyler, BoxBrownie
How to solve valid problems?
A tech business only becomes profitable when they solve real problems (need) faced by a large group of people (demand). This section unlocks the valid problems in the real estate space, and how you can use them as market validation to build something people want:
- Simplify home search. It takes 6 months+ from searching to moving into a new house. Zillow, Trulia, Realtor.com, Redfin simplify home search by creating search engines for property, database & online tools. For example: property listing, filtered search, housing data, pricing & 3D tour for users to buy, rent, or sell their homes.
- Lower the cost of mortgages. Home loan isn’t free. It involves brokerage fees, closing costs, credit report fees, transfer fees, etc. It takes about 30 days to finalize a mortgage, requires strict qualifications & in-person visits at the banks. Quicken Loans and Better helps people compare mortgages in one place, offers fast approval, fast closing, and lower interest rates & fees. Morty helps you save mortgage fees by analyzing your financial information,generate accurate quotes, calculate repayments in minutes.
- Help home sellers get paid fast. Sellers spend 55-70 days to sell a home, including listing, viewing, and closing. Opendoor cuts that process into a matter of days—get cash offers, skip viewing, and get paid. Zillow offers different options for home sale: through Zillow, through an agent, or sell yourself. Orchard offers you a 3D tour, professional photos, and expert marketing to sell your home—for free.
- Lower the cost of housing. The average cost of a new home is $408,800 in the United States. Rent the Backyard, United Dwelling, Homestead, Cover converts backyard or garage into affordable homes known as Accessory Dwelling Units (ADUs). Consumers can get a customized home for $200,000.
- Help people make money from real estate. Convert underutilized assets into profits. Airbnb helps owners list their homes and get paid. Rent the Backyard converts your backyard and adds $180,000+ to your property.
- Democratize real estate investing. Accessing the property investment is hard—research effort, capital, & legal processes. CrowdStreet, RealtyMogul, Fundrise lets you own a fraction of the property without purchasing 100% of it and generate investment returns.
- Help landlords manage property business. Landlords typically spend days on tenant screening, rental agreements, expense receipts, rental tracking, accounting, back-and-forth communication. Avail, Buildium, Zillow, Stessa digitizes and automate these processes in one dashboard.
How to monetize?
- Advertising. Selling ad spaces to businesses (agents, mortgage lenders, property managers, banks), and consumers (renters, buyers, owners) by leveraging site traffic, visibility, organic keywords & audience. Zillow offers Premier Agent Advertising where ad costs are driven by the market demand and competition. The more agents buy ads in a ZIP code, the higher the price. Check out other ad products by Zillow.
- Listing fees. Zillow charges $9.99 per property listing, per week. All listings will be pushed to three of the company's sites (HotPads, Trulia, and Zillow) and exclusive access to online property management tools.
- Subscription. Charge users a recurring fee for premium services. Zumper’s “Signature Virtual Package” includes 12 months of promoted placement, 3D tour integration, and Done-for-You social media style content.
- Commission fees. Redfin charges 1%-1.5% of the home’s selling price when your listed property is sold. Orchard charges 6% that includes home preps and staging. Opendoor charges 5% in total by focusing on fast processing time.
- Brokerage fees. Most common in online mortgage marketplaces like Morty, Breezeful, where the platform acts as a broker of loans by working with lenders (banks or credit unions), finding loans for the borrower, and charging a service fee.
- Affiliate fees. A low-tech way to generate income for your real estate websites. Find any real estate affiliate programs (here are 9 examples), create an affiliate referral link, and promote it on your website, newsletter, blog, etc. When someone makes a purchase through the link, you will get a commission.
Market demands & key signals
- Remote work creates more digital nomads. Short-term rental accommodations and co-living/co-working solutions will rise.
- Millennials represent 38% of U.S. homebuyers in 2020. New solutions will cater to the way millennials shop real estate: find mortgages online rather than realtors and banks, compare options, use 3D tours, live-stream or drone viewing to make buying decisions, and prefers bigger houses in the suburbs.
- Embedded investing allows businesses to build investment products as a native feature. In the future, any non-finance companies will be able to offer trading apps on top of their core business offerings.
- Real estate investment is becoming more accessible. Non-accredited persons can access property investment. DiversifyFund starts with as little as $500. New solutions will help anyone to own a fraction of real estate, invest in real estate, or operate a landlord business remotely from around the world.
- Virtual tour boosts 40% more engagement. Zillow, Redfin, and Realtor.com have implemented 3D virtual tours natively on their websites. In the future, every real estate website will have a virtual tour feature. Solutions for 3D virtual tours software, plugins, or no-code integration will rise.
- Port for remote home tours. Virtual tour software can give you an interior home experience but can’t provide details on the surrounding of the property. A solution could offer on-demand booking of a real person to live-stream the property, tour the neighborhood, receive real-time feedback, get an extra pair of eyes to check the environmental “vibes”—remotely.
- Remote home building. You have bought a piece of land to build your dream home but the location it’s far away and you don’t have time to pay frequent visits until the home gets built. A solution could help with long-distance home-building projects. Users can browse, hire and invoice contractors, access cost budgeting apps, project management tools, and chat/video functionalities to communicate with their contractors.
- Turn physical properties into experiential products. Underutilized commercial property owners want to generate cash flows. Traditionally, it can be done by leasing or selling the property. A construction or event company could offer renovation, platform build-out, event planning, and design to help transform their locations into long-term thematic properties or seasonal events and charge visitors for the physical experience.
- Launch House for X. Launch House is an in-person + digital community that gathers founders under one roof and creates the next big things. They rent a property and cover the expense by upselling a membership club. Think Launch House for cooking, gardening, arts, gaming, NFTs, investing, etc. To expand, operate the business like a real estate franchise, e.g. Soho House and build physical locations for private communities around the world.
- Airbnb for gardeners. Want to grow your own fresh produce but don’t have a backyard? A solution could be “Airbnb for gardening” to connect with agricultural growers or local residents, rent a garden space, pay for the rental, and harvest your produce when it’s ready.
- TikTok for real estate. A mobile-first social media app for property managers to post short-form video content, build an audience and interact with potential buyers or tenants.