Tech Disruption For Real Estate Professionals?

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Let’s talk about technology! It is disrupting the world we live in, and every industry known to us is attempting to be simplified (and disrupted) thanks to it; recruitment, dating, retail, and travel to name a few. But of course, the major topic of discussion this week is our profession, real estate and mortgages!

What most new tech companies are attempting to do is make the whole mortgage acquisition experience easier than before for everyone involved. This means you have the brokers (like us), the lenders (banks or private institutions), and the borrowers (you!). What these apps are offering is an online application, where you create a profile for which the latter tailors solutions. In today’s regulatory environment, using wide parameters to service clients is no longer enough.

These young company CEOs aim for their businesses to provide free services to their clients such as their affordability, how much mortgage they can actually get to find a property and then which steps to take to realize their homeownership dreams. These young founders believe the media keeps propagating the difficulties of homebuying due to the stress test and interest rates, so creating an application without many barriers can help many.

Given these tech apps gain ground and interest from lenders such as A-list banks and credit unions, the algorithms they develop is becoming just like many these days, matching clients to fund provider by looking at different criteria. The application takes roughly five minutes to fill out, and the algorithms do the rest!

It’s also normal for these mobile apps to target first time buyers, because they are inexperienced with the lender, broker and mortgage situation, and need help, potentially from ‘machine-learning’ tools like those. CEOs also claim that the average first-time buyer doesn’t live five full years in that property, so offering a five-year fixed mortgage doesn’t make sense. Rather than attracting them with the lowest rate, they try attracting them with the best packages, such as good rates, features, terms, and length of terms—because the best mortgage for that person might be a three-year fixed or a four-year variable, the reason being that penalties are lower if they’re able to break their mortgage.

Being able to move the mortgage elsewhere is also important. A lot of first-time buyers who buy a condo might meet a significant other who has their own property, or will want to buy a place together in the future, so enabling them to make the right decisions early on mitigates big penalties later in the process simply because they were looking for a couple of basis points lower of a rate at the outset.

What about the target age group? Millennials comprise about 75% of first-time buyers, according to a Genworth Canada study, and they just happen to be incredibly tech savvy. Moreover, the same study notes that first-time buyers are the fastest growing home-buying cohort in the country.

These founders are also aware of the demographic of future home buyers, and especially that they like doing things online! Face to face interaction has only become a secondary thing, only if necessary. They try to keep busy with everything available to them online, so they can get what they’re looking for with minimal effort.

Other types of technologies making waves include VR and 360 video tours of homes that make viewings much more simple, and with equipment that is not complicated

And of course, most new tech companies are young, so they know exactly how and who to target, because some of these engineers and businessmen find themselves in the same position. Their goal is more admin work to be able to figure out how to match lenders and homebuyers, and for everything to be the right fit for all involved. At the end of the day, everyone wants to save time and have something convenient. Do you?