Financial technology is an omnipresent feature of the contemporary financial landscape. Disruptive startups and major financial institutions alike leverage fintech innovations to offer everything from blockchain-enabled investing to lightning-quick online loans.
So, it makes sense that fintech is bleeding into the real estate industry. Real estate is the biggest purchase most people ever make, and it’s a central component of most high-net-worth investment portfolios. Despite some heel-dragging from industry stalwarts (many of whom were worried about job displacement in the wake of digital innovations), financial technology is finally making appreciable inroads in real estate.
The results? Far from displacing real estate professionals, fintech innovations are elevating the entire industry, making it more consumer-friendly, accessible and data-driven. Let’s take a closer look.
AI and ML in Mortgage Lending
In recent years, fintech companies and forward-thinking mortgage providers have explored the impacts of artificial intelligence and machine learning on mortgage lending. The thinking goes that if AI/ML can access enough data on borrowers, it can make instantaneous, highly accurate assessments that massively speed up the approval process.
The marriage of mortgages and AI/ML is still in its nascent stages, and has a few bias-based kinks to work out. Still, experts agree that fintech innovations in AI/ML are on track for widespread adoption in mortgage lending.
Consumer Empowerment through Resources, Transparency
Next, you have proptech (short for “property technology”), a subset of fintech specifically focused on real estate – often the relationships between real estate consumers and practitioners.
The best proptech companies elevate the industry by facilitating transparency, accountability and accessibility. For instance, the real estate digital marketplace Nobul empowers consumers by giving them access to agents’ transaction histories, trustworthy reviews and commission fees – all resources that used to be obscured from consumers.
“We’re helping bring more transparency, credibility, and accountability to the single biggest transaction of people’s lives,” CEO Regan McGee told Medium. Hopefully, in the process, the real estate industry will become more consumer-centric.
The New Rent-to-Own Model
With average salaries stalling and property prices skyrocketing, the housing market looks inaccessible to several consumers. In past decades, this might have posed an existential threat to the industry, but fintech companies are helping bridge the accessibility gap for cash-strapped buyers.
Companies like Divvy and Landis offer a tech-enabled spin on the old rent-to-own model. Far from their frankly sketchy rent-to-own forebears, these fintechs vet renters who are on a path to mortgage approval. A portion of the renter’s monthly payments go toward their future down payment, and the companies treat the rest as rent. It’s a creative solution to an unprecedented home price-income gap.
Fast Home Valuations
A relatively recent fintech phenomenon has been the rise of fast valuations. Some companies do it better than others. The aforementioned Nobul, which is determinedly consumer-focused, offers free valuations on its landing page as a consumer resource – no strings attached. Other companies, meanwhile, leverage fast home valuations as lead generators for real estate agents.
In any case, these accessible, on-demand estimations are a net positive for the real estate industry, empowering prospective sellers to take the first step.
These are just a few ways fintech is elevating the real estate industry by empowering, serving and accommodating consumers.