Free Essay Example. The Real Estate Industry Today

The real estate industry encompasses tangible property such as land and activities practiced on the ground to improve its value. These activities include the building of structures and fixtures that enhances the utility of land. The current real estate industry dictates that property rights offer the title of ownership on the real estate and various natural resources on the land. The current real estate industry is broadly categorized into four primary classifications. The classification comprises of the land, residential, commercial, and industrial real estate.

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The land is the most fundamental component of real estate property. It is a term used to describe an undeveloped, unoccupied or vacant piece of land. The real estate developers use such an area to erect building and structure in a process known as assembly, thereby increasing the utility of the city. Residential is the component of the real estate that includes housing projects for individuals and families. It is the most known type of real estate. Commercial real estate is the land, buildings, and structures that are primarily used for business activities. Commercial real estate includes shopping malls, business centers, medical facilities, office buildings, restaurants and hotels as well as parking lots (Warburton, 2016). Industrial real estate is the part of the real estate that includes the land, structures, and buildings designed with the sole purpose of industrial activities. They include all production, manufacturing, construction, warehousing, among others.

The real estate industry deals with several aspects such as real estate development, sales, and marketing, brokerage, real property management, borrowing and lending, professional services like economics, account, legal services, among other disciplines. The real estate development component of the current real estate industry involves the acquisition of land, rezoning the property, erection of new structures, and renovation of existing buildings. These structures and buildings are then either leased or sold to the end-users. Therefore, the real estate developers earn considerable profits through value addition on the piece of land. They should the financial and uncertainty risks of implementing the real estate project.

The real estate industry relies heavily on sales and marketing firms to obtain a market for the developed project. The sales and marketing companies are paid in terms of commission on the sale or lease of the real properties. Therefore, the sales agents are an essential component in the current real estate industry. The industry cannot exist without the real estate brokerage, which are organizations that employ realtors to enhance financial transactions between the developers and buyers or lenders. The real estate brokerage specializes in the representation of either the developers or buyers and lenders and ensures that they reap the best from the business transactions.

The property management organizations in the real estate industry are in charge of renting out the buildings and land. Their primary roles include maintenance of the buildings and structures, collecting rent and leases, and managing tenants. Just like the sales and marketing firms, they are paid a commission that is a small percentage of the funds collected. The current real estate industry thrives on the lending funds. Financial institutions offer financial assistance to real estate developers to develop the land and perform various business activities. They include banks, government agencies, and lending unions. The structure of the real estate industry creates room for a wide variety of professions. These professions include those mentioned in the above sections as well as the accounting firms, legal advisers, interior designers, contractors, and construction staff, among other occupations.

Changes Taking Place in the Real Estate Industry

The real estate industry, just like any other sector, is very dynamic. Technological advancement plays a vital role in the swift shift in the real estate industry. The changes influencing the upcoming of the industry are evident in the application of Artificial Intelligence, embracing the digital open houses and the adaptation of the blockchain in the industry (Spielman, 2016). Nevertheless, current technologies are captivating the entire industry day by day.

The impact of technology in the industry is evident in the introduction and implementation of automated house hunting and buying technology. People are now migrating from the traditional house search and purchasing practices. They are now embracing the various house searching opportunity available on the internet. The report released by the National Association of Realtors in 2018 September indicates that over 60% of prospective home buyers are using online search engines to determine and make the real estate acquisition decision (Warburton, 2016). The evolution in this sector has created an opportunity for a buyer to purchase a house without the necessity of a pen and paper. Nevertheless, technology in this framework has enabled sellers to advertise their homes using video technology, while the developers are embracing 3D design models in the interior and exterior design of structures.

Technological improvements have led to the development of current tools and devices that increases efficiency and service delivery in the real estate industry. Such tools and accessories include the use of computer-generated and augmented reality apps. These new technological advents have entirely shifted the track of the real estate and the buying practices. The tools make it possible for a buyer to navigate through the property in the comfort of their homes. They can get a better view of the real estate without visiting the site. Customer Relations Management (CRM) in the real estate is vibrantly undergoing a massive revolution (Warburton, 2016). It makes it easier for real estate developers to manage and maintain the business. It has enhanced leads generation, contact management, and streamlined the whole real estate business. Realtors and homeowners are increasingly applying the Internet of Things (IoT) to monitor and manage activities in real estate.

Other significant developments envisioned in the industry include the use of websites as a means of connection between buyers and sellers. This trend has slowly replaced traditional sales agents in the sector. The route is safe, convenient, and cost-friendly, thus attracting buyers and sellers. Although blockchain technology has not yet taken over the industry, there is an excellent possibility that it becomes the means of exchange in the real estate industry (Spielman, 2016). A shift into the use of bitcoin and other forms of cryptocurrency in the real estate industry is inevitable.

The drastic changes in the real estate industry call for preparedness from all stakeholders in the business. The traditional practices in the real estate industry will not hold for long. The shift in real estate takes a more tech-savvy approach. These calls for players in the industry to embrace and employ technological advancement in real estate. Buyers in the industry connect to the sellers via the internet. Therefore, a company will lose if it will still rely on traditional sales and marketing techniques. Nevertheless, sales and marketing firms in the industry should train their agents on soft marketing skills such as affiliate marketing to survive the bumpy ride in the industry. They should also learn about the entire blockchain and cryptocurrency systems. New changes in any sector come with unique challenges. Adaptation of the blockchain technology in the industry without a critical examination of its weaknesses, security concerns, and cost implications can adversely affect the business. Furthermore, these changes are inevitable soon.

References

Spielman, A. (2016). Blockchain: digitally rebuilding the real estate industry (Doctoral dissertation, Massachusetts Institute of Technology). https://static1.squarespace.com/static/59aae5e9a803bb10bedeb03e/t/59ae8c263e00be1cd60ebf7a/1504611369971/spielman_thesis.pdf

Warburton, D. (2016). The role of technology in the real estate industry (Doctoral dissertation, University of Cape Town). https://industrytoday.com/article/technology-in-the-real-estate-industry/