The Millennials: Driving the Imminent Upheaval of Homebuying

The Millennials: Driving the Imminent Upheaval of Homebuying

Estate agency has, until very recently, been a very localised service. Its limitations to buyers and sellers have consistently been crippling. One instance in 2005 stands out for me; a buyer entered the high street estate agency that I was working at, jumping town to town up the A1 searching for a house to replace their current property in North London. Fairly early into our exchange they said: "If we're honest, Hitchin's going to be too far, but we thought we'd pop in anyway."

Immediately my cause was lost. They were probably only somewhere between 1.25% and 1.75% inclined to buy a house in Hitchin, which is approximately the level of commission we would have charged them to sell their house in North London, which hadn't even been put on the market yet, and which I wouldn't even be able to market due to my office being restricted to the boundaries of Hitchin... There had to be an alternative.

Enter stage the online estate agent. OEAs are springing up practically on a daily basis these days. But why has it taken nine years (the time since I setup one of the original disruptors, Hatched) for this to really begin to be a staple in the public psyche?

It's a generational thing. The average first time buyer today is in their mid to late 30s and the first time seller slightly older, perhaps late 30s or early 40s. So we have finally reached the point where first time sellers are all fully aware of the benefits of using the internet (anytime-anywhere, speed, ease of use, and mostly, significantly lower costs). Not only that, but with the ever evolving safeguards being put in place for users, they are becoming more and more familiar with online transactions, they're savvy when it comes to security and privacy issues, are embracing internet phenomena such as the sharing economy, and are simply no longer afraid of buying and selling online.

Technology is entrenched in so many areas of our lives and will continue to transform our daily processes and practices, but how so in the property industry?

Technology in the building of new homes is especially fascinating, with 3D printers in China and the US now able to print 1-10 homes per day! Materials is another area where technology is taking hold, with self-repairing materials and even materials coming together to self-build!

Technology needs to be fully embraced and championed in order to support with housing a population that's growing twice as fast as that of Europe more generally. Without it, house prices will continue to rise as supply becomes even harder to secure. Due to ever-unattainable house prices, an increasingly high percentage of the UK population (35%) choose to rent over buying. That's higher than even France. A loosening of planning laws and a relaxation of the greenbelt policies are also important to working towards alleviating the UK's housing crisis, but I digress...

Back to the matter of estate agency and its historical resistance to technology...

Whether it's the marketing of a property, sourcing of buyers or the processing of a sale, there continues to be a surprising lack of understanding and uptake where the use of technology is concerned. Surprising considering it facilitates lower cost implications for both estate agents and for their customers. A win-win all round.

When it comes to marketing, for example, the approach is often a scatter-gun one that can see an agency advertised in local papers and in leaflet drops to whole swathes of a town, rarely taking into consideration the potential vendors' motivations, budgets, family circumstance, or other (very) local issues.

The not-too-distant future, however, will see algorithms created that will be able to identify properties that are about to come up for sale based on data collected from a multitude of sources and including when the property was last sold, if the homeowner recently got married or had children, whether they've recently retired, along with all sorts of data related to what those people are researching online.

Access to this type of information, will enable an agent to identify which houses are likely to come on to the market within the next six months, allowing them to target individual properties and targeted individuals, rather than blanketing entire towns or cities.

Homeowners will also begin listing their own properties, using their iPhone to take the photos, infrared lasers to automatically create a floorplan, and auto-generating 3D images of each room for example. This DIY approach is less desirable due to a whole host of legal, compliance and security issues, but it will inevitably see growth.

So how will the buying and selling experience for homeowners essentially be transformed?

Currently, the buyer contacts the agent, requests a viewing, the agent then calls the owner to book viewings one after the other, with the owner or the estate agent having to show the buyer round and ultimately answer the same questions multiple times.

With the recent rise of live streaming, however, property owners will be able to stream an online viewing to an audience of multiple buyers using the likes of Periscope, for example.

Following viewings and offers and acceptances, there's the process of getting a sale through to legal completion.

Today, buyers need to apply for the mortgage, they then instruct a surveyor, after which the lender approves the mortgage and sends out the mortgage offer in the post.

At some point during the mortgage process, or just after, the solicitor will be doing the legal work, applying for searches and waiting for these to be returned, they will also raise enquiries about the property and report to the client.

All in all, the process takes around 12 weeks!

So how will it change? It has to start with the lenders...

Currently, the main roles of the surveyors are to act on behalf of the lender; firstly checking that the property exists, making a judgement on the valuation and making sure the property isn't going to fall down... all to confirm to the lender that the property that they are lending on is a safe and secure risk.

In the future, this process will be automated, along with the critical online ID checks that will need to take place to confirm that the property does indeed exist and is owned by the person who claims to own it, thereby minimising any risk of fraud.

Accurate and automated valuations of the property will be determined by pulling data from previous sale prices, extensions and work carried out to the property, as well as measuring average price rises in the particular area; all of which will determine whether the sale price agreed is accurate and a safe risk for the lender to take on.

In terms of the property's risk from a structural point of view, we would see live streaming come into play again, with drones checking out roofs and drainage systems, for example, to provide more in depth surveys.

The surveyor will be able to evaluate all of this information without leaving their office, meaning they could get through dozens of surveys a day rather than the current four or five that a working day allows for.

Assuming the lender is happy with the ownership, that the automated valuation matches the sale price and the surveyor is happy with the property structurally, then the sale could be signed off within a matter of minutes and the mortgage offer, issued instantly.

The technology available to us today makes this more streamlined house selling process truly feasible. This isn't make believe; it's no sci-fi vision... All that's necessary is for the industry to realise the benefits and invest in the right equipment and the knowhow.

The conveyancing process will be the most challenging element to change. From a legal point of view, it is at the moment, one of the most antiquated systems in the world, but with the collaboration of lenders, search companies and local authorities, conveyancing could also be carried out online, with no need for the profusion of paperwork that currently exists.

So; property and its related industries are about 15 years behind every other industry because of the generational gap. But now that the millennials are becoming homeowners we will see seismic change over the next five to ten years. They simply won't put up with the current model.

My prediction is that my three year old daughter will exchange contracts on the purchase of her first home simply by tapping a button alongside the property she wants to buy which she will be viewing on mobile device or monitor.

And that is my vision of the future of the homebuying process... The demand from increasingly tech savvy consumers will inevitably push the estate agency industry to review and adapt their approach to marketing and managing the homebuying process and the result will provide countless (and long-awaited) benefits for all parties involved.

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