Pretty much nothing these days escapes the pull of the digital economy – and that goes for the most basic needs, such as clothing, food and shelter. Now comes further evidence of the change in home buying brought upon by technological advances and shifts in consumer behavior and desires.
The slow but ongoing shift from traditional boots-on-the-ground home buying to digital shopping continues with the launch of an iPhone app from Zillow that enables 3D tours of properties in the U.S. and Canada. According to one description of the newly released tool, “realtors use the iOS app to take panoramic photos of the home, which the server then stitches together into a complete 3D tour, in much the same way as Google’s Street View building interiors.”
Shoppers can click or tap to virtually move around the home. The 3D digital tool is not a full augmented reality “experience, but does provide a much better sense of the space of a home than static photos. The company says it is designed to supplement, rather than replace, video tours – as some buyers prefer to navigate around the home themselves.”
Zillow reportedly will add the tool to listings free of charge.
The move comes amid a larger effort by Zillow to turn itself into a real estate ecosystem and better compete with other real estate operators as home buyers become increasingly digital and mobile. Recent activity indicates Zillow also wants to help customers put in an offer, secure financing, pay their rent and – in some cases – even sell them the house directly. In short, Zillow doesn’t just want to be a customer’s entrance into the real estate market – it aims to be the real estate ecosystem that consumers can grow up and out with.
But as Zillow stands as a solid example of ongoing changes in the industry, the company is hardly the only real estate player that hopes to innovate and disrupt to make the most of digital technology, payments and commerce.
Among the main goals for some players?
Make the home buying and selling process come as close as it can to the “ease of trading in your car,” according to a recent PYMNTS interview with Sean Black, CEO of home trade-in platform Knock, which is coming off a $400 million Series B funding round led by the Foundry Group. He also likened the process to Uber, a relatively easy mobile experience by which customers can keep track of the transaction.
The Knock process shows how digital technology combines with other fresh processes to provide a new kind of home buying and selling experience.
First, a homeowner submits a property to Knock for a price estimate, followed by a phone consultation. A “licensed local expert” working with Knock then helps the homeowner look for a new house. Knock also helps customers find mortgages via the platform’s partners, Black said. Next, Knock buys the new home via an all-cash transaction (in fact, part of the new funding round goes toward paying for that part of the business, he told PYMNTS). Paying cash usually results in discounts of between 3 percent and 5 percent.
The next step?
Knock handles the listing and sale of the old home with its own cash. Once the homeowner accepts an offer and the old house is sold, Knock transfers the new house into the customer’s name and mortgage. Knock and the customer then settle the improvements and other costs the company incurred throughout the process. Finally, Knock takes a 6 percent commission on the sale of the old house.
Home buying and selling platform Perch is another company that recently announced new funding – in this case, $220 million. Perch also targets homeowners looking to sell their current home in order to buy a new one, which the startup calls “dual trackers.” These customers currently represent about 60 percent of all homebuyers.
As you can imagine, millennials are also changing the way homes are bought and sold – again, via digital payments and commerce. The market for millennial real estate consumers remains an extremely uneven and, for many, rather uncertain place.
According to data released from Redfin, affording a down payment was the leading concern among millennials looking to purchase a home in the last 12 months, with 50 percent of respondents noting down payment woes. But new services are striving to turn that problem into a business opportunity.
For instance, HomeFundIt, which is operated by CMG Financial, gives otherwise qualified (by credit score and income) homebuyers a way to crowdfund down payments and other associated costs from family members and friends. As part of a conventional financing agreement with a bank or mortgage lender, consumers can receive cash gifts toward a down payment, but the circle of eligible gift givers is very limited – and those gifts must be carefully (and sometimes arduously) verified.
HomeFundIt allows consumers to take crowdfunded gifts from a wider range of their friends and family network, and on average helps users raise about $2,500 toward their down payment costs. CMG also offers users some access to match funds with grants to further boost their down payment amount.
From new listing tools that reflect some of the latest advances in retail tech to the use of digital financing, home buying and home selling are undergoing dramatic shifts, with more certain to come.