Motivated by technological advancements, the commercial real estate industry has seen significant changes in recent years. This is apparent in investment sales. Specializing in digital business development for a real estate technology company, I’ve observed how technology is changing how we conduct overall real estate operations for the better. These are five ways that brokerages are making use of technology to improve their business.
Underwriting
Underwriting is always a crucial element of every investment brokerage. Our client’s clients rely on them for insight and direction on the value their properties are worth in the marketplace. This, in turn, requires an understanding of numbers and the different measures of return (e.g. Internal rate of return, cash-on-cash, the debt service percentage of coverage). However, people don’t need to calculate these numbers with a pen to paper. The technology is enabling numerous of these sophisticated calculations.
In the past, investors and brokers generally used their own custom Excel models. Nowadays, applications such as RedIQ, Archer and Clik.ai are becoming increasingly popular. Certain platforms even have the ability to complete 50%-85 percent of the work by providing a central web-based platform that pulls the financial information from operating accounts and categorizes it before integrating it into its own institution-grade model.
With AI underwriting, it is continuing to develop. It is no mistake that investors and brokers alike must critically examine a property’s financials and apply their market expertise to make various assumptions. However, AI is currently providing an initial review, performing the majority of the first work, which would typically take a long time. Some AI programs go so that they pull comparable properties and market data.
Databases
In the past, brokers used spreadsheets to track relationships, sales, properties, etc. Today, customer relation management software (CRMs) assists brokers in managing these tasks better. They track interactions, investor preferences, and transactions, allowing for specific and personalized customer communication.
Although databases are only just as effective as the data included in the databases. Some of the most popular CRMs are Salesforce, HubSpot and Apto, just to mention several.
Analytics
There’s never been a moment in the history of mankind when information is more easily accessible. Today, many third-party service providers offer different CRE-related analysis (e.g. average median incomes, number of units in construction ave, range caps and the average price).
Companies like CoStar, Trepp and Yardi Matrix offer this type of data and much more. If utilized correctly, the data can aid in underwriting, something that AI is starting to perform this task automatically. CRM’s are assisting brokerages to better monitor internal data points related to sales and underwriting.
Offering Packages
Nowadays, homes are typically advertised through brokerage firms’ websites. These websites require potential buyers to sign up for access to the material to ensure brokers can keep track of who is viewing their listings and other things.
Some brokerages also seek the aid of third-party advertising websites. In reality, I’ve observed that most institutional properties available in the states are displayed through the same third-party site by brokers who are listing in those states.
Technology is altering how packages and memorandums of offer are designed and produced. While most brokerages have in-house designers, others use websites such as Buildout, which assists in designing packages, or BetterPitch software, which was designed specifically for sponsors, but it has many applications.
Social Media
Unsurprisingly, commercial real estate is one of the last industries to jump on the social media bandwagon. In the present, every aspect is trying to get your attention. It’s the same for properties in CRE.
You’re losing if you’re not posting helpful information, whether in real estate offers or valuable information. Today, I’m noticing more buyers coming to Instagram, Facebook, X (formerly called Twitter) and LinkedIn than I have ever seen. The more people look at the property, the more likely it is to sell.
Getting Started With Technology
Before implementing a new software, you must invite everyone in your group to try the software out. Many tools, such as CRM or an underwriting program, permit trial durations. Testing them with actual information as well as deal flows is highly beneficial.
Adopting new practices is often a struggle, especially in CRE. Although it may require some time to get comfortable, adopting new technologies saves a significant amount of time and gives you an edge over competitors. Early adopters can gain an advantage and contribute to the advancement of technology in the CRE brokerage.
