Forbes.com:
Buying or selling an apartment building or strip mall from your phone or laptop sounds much more complicated than shopping for clothes online, but with the commercial real estate (CRE) industry’s shift to digital underway, transactions are becoming swifter and simpler for everyone involved.
Property technology, or proptech, the industry’s term for online platforms offering data analysis, property management and accounting tools, simplifies and expedites transactions while preserving the essential relationships among stakeholders, says Steven Jacobs, president of Ten-X, an auction-based CRE exchange.
Explore four ways proptech is making deals more frictionless and fruitful for buyers, brokers and sellers.
EFFICIENCY
Traditional CRE transactions can be a slog: Property owners interview agents, receive property valuations, run marketing campaigns and then work with their brokers to narrow down offers to qualified buyers. Then there’s the contract signing, an approximate 30-day review period and sometimes additional pricing negotiations before the deal finally closes. The entire process can take six months or more.
An online CRE platform, however, can eliminate early steps by sharing property information with potential buyers in a private database, requiring proof of funds upfront and setting an offer deadline, typically about 45 days from the initial listing.
On Ten-X’s auction-based platform, for example, rather than negotiating the contract, buyers must make final offers on the auction date, sign the contract immediately and provide a nonrefundable deposit within 24 hours so the transaction can close 30 days later. “Sellers get their property sold and closed twice as fast and brokers get paid twice as fast in an online transaction,” says Jacobs, noting that sales that previously took six to eight months can now wrap up in 90 to 100 days.
ACCESS
Many CRE brokers have a local, regional or national audience, but few offer the global outreach possible with a digital marketplace, explains Jacobs. Online, sellers can benefit from showcasing their assets to more potential buyers. Buyers benefit from vast data about lucrative investment opportunities in markets outside of their region. And brokers enjoy access to a wider pool of investors who can become their clients.
“If a broker works with us to sell a property in Orange County, California, we’re probably finding the buyer in Chicago, Canada or Israel,” says Jacobs. “Brokers benefit from the reach we have, which brings in buyers and eyeballs from around the world.” In 2020, 56% of Ten-X buyers purchased properties from out of state.
INSIGHT
Proptech tools deliver aggregated, in-depth market insights, powering smarter real estate decisions.
Typically, a buyer might spend weeks on comparative market analysis when considering a property, including a review of financial statements, capital improvements, rent rules and tenant profiles. Today, data-rich interfaces make this information readily accessible.
Using Ten-X’s platform, for example, prospective buyers peruse an online data room where they can dig into details spanning property-specific information, market data, demographics, rental rates and more to fully evaluate investments from the outset.
From there, bidders can tap into their partnerships with brokers for additional guidance along the journey. Brokers reap the rewards of digital tools while remaining part of every sale, explains Jacobs. “We offer our technology and our transaction tools to help brokers go faster.”
TRANSPARENCY
Traditional property listings feature limited information, so buyers typically conduct their own market research or ask brokers for help, resulting in varying levels of insight among an investor pool.
Proptech democratizes access by providing consistent, accurate data to all interested parties, ensuring that every investor consults the same in-depth analysis required to make educated decisions.
Some online marketplaces provide even deeper transparency. For instance, instead of wondering how high demand is for an asset, Ten-X’s users can view how many other bidders are competing.
While bidder names are confidential, the actual offers are viewable to all users, so investors know exactly where they stand and have rare visibility into the process from start to finish. In the online commercial real estate marketplace, says Jacobs, “there are no games. It’s full transparency and an even playing field for buyers.”
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