Interview: Digitization of the real estate industry - challenges and opportunities

In the real estate sector, many companies still use manual or paper-based processes for a range of internal administration or communications between buyers and sellers. However, like many other industries, adopting digital tools to innovate around these areas can greatly improve efficiency, quality and customer experience.

Here we talk with Richard Bachem, a digital marketing expert with many years of experience in the financial services and real estate industries, about the current challenges in the real estate sector and the opportunities digital transformation can bring.

TIMIFY: What are the biggest challenges faced by the real state industry today?

Richard Bachem: We see three general challenges in the real estate industry: Political, technological and market dynamics. The extent and potential impact of these challenges vary from country to country.

In Germany, for instance, the industry is waiting for the outcome of the legislative process of commissions regulation. It’s called "Bestellerprinzip", which is the principle of charging the commission to the person who orders the service. 

If the home owner wants to sell a property and utilizes the services of a real estate broker, he must pay the commission in full. This is already the case for rentals in Germany. The federal government now wants to extend the same principle to the sale of properties.

Today, seller and buyer split the commission. It remains unclear if such a split agreement will continue to be legal in future and how high the maximum commission will be. In the worst scenario, real estate brokers could lose up to 50% of their revenue.

The general challenge for real estate brokers in most countries, however, is the lack of properties up for sale. Any real estate broker needs properties to make business. The markets are tight and only very few properties are on the market. 

Digitization is also a challenge for the industry as many processes are still manual and paper-bound and therefore cumbersome and expensive.

TIMIFY: Do you know any company in the sector that has started to build a strategy for digitalisation?

Richard Bachem: There are some players that already have apps on the market. But just having an app doesn't make a company digital. And it certainly doesn't have an impact on the business. 

The first step is always a review of existing processes. They have to be optimized first, and only then can you automate and digitize them.

There are some players that already have apps on the market. But just having an app doesn't make a company digital. And it certainly doesn't have an impact on the business. The first step is always a review of existing processes. They have to be optimised first, and only then you can automate and digitise them.

For instance PlanetHome, one of the leading real estate service providers in Germany,  started introducing digital innovations three years ago. The PlanetHome app allows users to evaluate properties, both as an owner and as a tenant. 

The app also allows the seller to book an appointment with a broker, while the buyer can register a search request, and so on. The user is guided seamlessly through the relevant process, end-to-end. 

PlanetHome has also introduced a customer portal that enables a convenient property search, digitization of property documents and the ability to transfer them securely between relevant parties. 

TIMIFY: To be competitive in today’s market, digitalization of services and processes seems to be a priority. Are there any other ways for agencies to be more competitive? ?

Richard Bachem: There are many options for real estate brokers to add value. They can certainly improve the existing services of brokering properties, but they can also add adjacent and, potentially, totally new services. 

A key factor for the former is customer experience. Why is it still so difficult to search for and to find properties? Why do I still have to call and send old-fashioned emails? Why do I have to store stacks of printed documents about my property at home?

Real estate companies may have started to move towards digitization but most of them are still far away from what the customer really needs and wants. Customer experience is the name of the game. 

TIMIFY: Do you have any suggestions of how companies can optimised their customer experience?

Richard Bachem: Ensure hassle-free communication with property owners and buyers on every touchpoint. Prompt responses to enquiries are key. Potential buyers hate nothing more than feeling like a “second class” customer, just because there are more of them than property sellers.

Streamline internal workflows so brokers can focus on more proactive tasks that add value to business and customers. 

Integrate an online scheduling tool like TIMIFY into your brokerage process. There are various process steps that would benefit from online scheduling. 

Firstly, a property seller can book a broker to evaluate the property. Next, the broker could use online scheduling to orchestrate property viewings with potential buyers. The buyer, in turn, could make an appointment with a mortgage broker. Communication with customers around appointments can be fully automated, including appointment confirmations, reminders and re-scheduling. 

These are just a few ideas but there are many more opportunities for using online scheduling to increase productivity and proactively engage with customers. 

TIMIFY: What the future of real state for you?

Richard Bachem: There are two major trends that are gradually eroding the core business model and the value proposition of traditional real estate brokers.

On one hand, we see demographic shifts and rising digital education. Nearly 50% of all property sales are already conducted by predominantly younger and digitally competent target groups (moving, enlargements, divorces, inheritance). 

The other half of sales are conducted by older target groups that rely more on a “full service” and convenience offering. However, this core target group for traditional real estate brokers is likely to be gradually “refreshed” by demographic shifts.

On the other hand, we see growth in the self-service market and the emergence of new types of offerings. The launch of real estate portals has already triggered growth in the self-service market segment and is ever increasing the number of “do-it-yourself” property sellers. 

New competitors are gradually lowering commission rates and will most likely be introducing tools and services supporting the growing self-service segment.

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