According to Jeff Berman, General Partner at the venture capital firm, Camber Creek, one in three recent home buyers made an offer before even seeing a home in person. This revolutionary trend brought about by the adoption of cutting edge PropTech, is one of the subjects Realty Biz News discussed with Berman last week.
RealtyBiz: Why do you think property technologies have lagged behind the trend to adopt technology-based solutions set by other industries?
Jeff Berman: The most common reason given is that real estate is a “dinosaur” industry. And while that may be true to a certain extent – after all, many of the processes involved in property purchase/sale/lease haven’t changed in hundreds of years – that’s only half of the story. The other half requires us to examine the root of innovation…which is typically borne of necessity (as the old proverb goes, “necessity is the mother of invention”). And the fact of the matter is that players in the real estate industry have been making (a lot of) money going about their business(es) in a decidedly 1.0 manner. But I think that time is ending. Over the last few years we have noticed a sharp uptick in interest in technology from real estate industry insiders. They’ve woken up to the fact that technology is no longer a “nice to have” but a “need to have”.
RealtyBiz:We are seeing hundreds of millions in funding for proptech of every description. What do you see as “game-changing” technology in the space?
Jeff Berman: One of the fundamental ways technology is changing the real estate industry is in workflow/process. Let’s take a typical real estate (buy/sell) transaction. Even with the best stock trading apps at our disposal, you still have to follow a fairly cumbersome process to execute a transaction. There’s discovery (i.e. finding the property you want to buy or listing the property you want to sell), diligence, appraisal, title, legal, financing and settlement. And you have to pay a different set of professionals for each step along the way. The analog I like to use is the stock market 30 years ago. Back then, if you wanted to trade stock you would call a broker who would call a market maker who would call the trading floor to get the trade executed.
Now you can buy stock with a few swipes on your phone. So it will be with real estate. And while we’re still in early innings of this transformation, there are a number of companies developing software tools that are bringing that reality that much closer. For example, Camber Creek portfolio company Bowery built the world’s first end to end technology enabled appraisal firm cutting down the time to generate an appraisal – which is needed in most real estate transactions and is therefore a potential bottleneck – by up to 75% and often at less cost. It is companies like Bowery which will bring ‘game-changing’ technology to the fore.
Realty Biz: You and other experts have predicted that virtual reality (VR) will be an $80 billion dollar market by 2024. What kinds of tools do you see leading this dynamic market?
Jeff Berman: The promise of augmented reality and virtual reality in real estate is borne of the number of potential applications for the technology. From improved digital home/office tours to virtual collaboration – the possibilities are endless. In time, these technologies will reshape how we interact with our homes, our experience of walking down a city street, and how we conceive of offices altogether.
Realty Biz: – How do you pick a winner in a race to fill this property tech void?
Jeff Berman: Our (i.e. Camber Creek’s) ability to identify and scale market leaders is built on our unmatched network of decision-makers and principals in all real estate asset classes. This network provides the firm with a platform to rapidly test potential companies during diligence to determine actionable facts and propriety insights. We can literally “try before we buy” allowing us to find winning companies prior to making an investment. Once an investment is made, our hands-on approach provides portfolio companies access to the network and significant new revenue opportunities. This allows us to de-risk investments, accelerate the growth of portfolio companies, and create exceptional returns for investors.
Berman and other industry experts predict that by 2021, the market for virtual reality and augmented reality technologies will reach $108 billion. Virtual reality tech will become an $80 billion market by 2025, an of this, more than $2.5 billion will come from real estate. The
Camber Creek executive’s suggestion that PropTech is a necessity rather than a nicety now, this is the takeaway every forward-thinking real estate professional should glean. For this analyst, I try and imagine a modern movie studio still trying to market silent films. This is the nature of the paradigm AI, AR, and machine learning are causing today. An investment in these technologies is an investment of necessity, in the infrastructure that is the real estate business.