We live in the digital age and digital technology is on an unrelenting drive to cause massive disruptions across different industries. Take transportation for instance, in the years past, you'll have to stand by the roadside to hail a taxi or call a chauffeur service to pick you up for a significantly higher cost. The emergence of Uber and Lyft has changed how we hail cabs and a couple taps and swipes on your smartphone could get you a cab.
Ecommerce, payment processing, and entertainment are some of the industries that have witnessed massive disruption from mobile apps in the last couple of years. The real estate industry however seems somewhat immune to disruptions from mobile apps. Of course, you can still find a couple of listings online and many realtors conduct a significant part of their business over the Internet.
Nonetheless, the fact remains that mobile apps have not been able to reduce the influence of traditional realtors in the real estate industry. However, 2017 promises to be the year in which digital mobile technology will finally succeed in causing a paradigm shift in the real estate market. This piece examines two of the hottest digital tech apps seeking to disrupt the real estate market.
Meet some of the hottest real estate apps
EasyKnock is a residential real estate startup that wants to change the process of listing and selling houses. EasyKnock is the brainchild of Jarred Kessler, a former head of US equities at Cantor Fitzgerald who has spent 15 years on Wall Street. EasyKnock provides a rare meeting point whether you are looking to buy, sell, or just curious how much your home is worth.
EasyKnock seeks to provide homeowners with a way to discreetly test the waters of the real estate market without actually entering the market. Many homeowners often find themselves in a bind when they start to entertain the thought of selling their houses. Once you tell a realtor that you are thinking about selling your home, you'll be surprised by the speed with which a "For Sale" sign will spring up on your lawn.
The scenario is often embarrassing for most homeowners. The bigger problem however is that you'll find it hard to know if the realtor is on your side or on another side. EasyKnock observes that "once the pressure is on, the buyer, seller and broker will all have competing agendas, and it's hard to know if you are getting the right price, or just the 'right now' price."
Real Estate is an Amazon Echo app that provides virtual voice assistance to people looking to buy, sell or rent properties. Amazon Echo is no longer a stranger,the portable Bluetooth speaker is paired with Amazon's Alexa voice-enabled digital assistant. Real Estate is an app designed with Amazon Echo so that you can run real estate queries with voice without having to sit in front of a screen.
You can activate the virtual agent by telling Alexa to “open real estate,” and the app will respond by saying “Welcome to your virtual agent.” Alexa will then ask you if you are looking to buy, sell or rent a property.
You can watch the that Miguel Berger, president of Better Homes and Gardens Tech Valley made on how the app works. Miguel has more than 30 years in the real estate market; hence, it is not surprising that his son, Ami Berger who is also the Chief Technology Officer of the firm came up with the idea to disrupt the traditional MLS listing system.
Real Estate makes it easy for Alexa to help you find properties by Zipcode, price range, and other custom filters you might have. The app will also be enabled to provide you with quotes on similar properties and on other properties in the neighborhood so that you'll be fully informed about the market situation before you start negotiations.
Real estate tech has low odds of survival in the Commercial sector
2017 is shaping up to be an interesting year in the real estate industry as we prepare for massive disruption with digital technology. However, as exciting as the prospects of real estate sounds next year, the industry is under siege from politicians. Mobile apps will bring about a rebirth in the residential real estate market, but the change might be ill-timed with respect to the commercial sector because Congress is already on course to knock all but the wealthiest 0.01% of investors and real estate owners out of the real estate market or trigger an economic tail spin in early 2017.
President-elect Donald Trump has made it clear that he wants to push major tax reforms, and one of the reforms he plans to push is a reduction of corporate taxes. Congress is already preparing a bill for the president-elect that does exactly this, with a radical new tax deduction that benefits businesses and individuals wealthy enough not to have to rely on financing to make purchases or pay their employees.
The House Ways and Means Committee is currently drafting this legislation, which they intend to pass through the budget reconciliation process in order to avoid being filibustered by the opposition. While the bill cuts taxes for large corporations, it kills the 1031 exchange and business interest deduction—two historical pillars of the American commercial real estate market that the middles class relies on—to pay for it.
Why the 1031 exchange must be rescued
Congress is working behind the scenes to kill the tax provision that protects the vast majority of real estate owners and businesses in order to provide billions of dollars of tax breaks for the largest corporations and the wealthiest 0.01%. The death of the 1031 is against the principle of tax fairness and real estate investors must make a concerted effort to to stop the plan to kill the 1031 and business interest deductions.
The plan to ax the 1031 exchange and business interest deductions could exert massive downward pressure on the U.S. real estate market in 2017. To start with, the elimination of business interest deduction and 1031 exchange cause taxpayers to be taxed on the interest expenses they pay out on their real estate investments and businesses.