4 Ways The Real Estate and Mortgage Will Transform by 2020



Today, searching for and buying a new home is much different than in times past. With a wealth of data at buyers’ fingertips, the entire buying process is changing. As a result, agents have to readjust their tactics to meet the growing needs of today’s buyer.

It’s not just real estate agents who are being affected by this new buyer’s market: mortgage and lending professionals are also forced to reconsider their loan qualifications and mortgage processes.

And all of these industry changes beg the question: What are the challenges that will shape the real estate and mortgage industries in the not-too-distant future?

Proptech will create a hybrid buying environment
The rise in proptech and the “DIY approach” is driving the need for hybrid buying methodologies. In fact, according to a RE Tech survey, VCs invested $12.6 billion in real proptech in 2017, which was triple the amount invested in 2015. To say that proptech is impacting the industry is an understatement — it will change it for good.

Buyers are making adjustments in the ways they search, view, and buy a new home. And this access to new technologies is important because when they diversify the technology they use, they will get a wider, more comprehensive overview of the market.

But it won’t stop there — proptech will also have a huge impact on reshaping the role of the real estate agent and how you conduct business. New technologies will be integral to how you work with your clients to find the best home for their needs and budget.

Not to fret: this tech won’t replace you — rather, it will supplement you. You can utilize current applications to get a feel for the housing market, and then use this data in conjunction with empathy to help your buyer navigate the home buying process.

The real estate agent will get redefined
Although it is commonly believed that the 80/20 rule applies to real estate agents, it’s actually more of a ratio of 97/3. There is this growing gap between what normal agents are doing versus those elite 3%. And because of this, the role of the real estate agent will be redefined to help bridge this gap.

Agents will have to go full-time, and there will be no such thing as a successful part-time agent come 2020. Right now, real estate licenses are treated as easily acquirable commodities — The Association of Real Estate License Law Officials (ARELLO) estimates that there are about 2 million active real estate licensees in the U.S. These licenses are treated as a way that many people pick up some side business or easily sell their own house. But the real estate agent of the future will need to have a razor sharp focus on industry trends and the needs of their buyers. It won’t be possible to wear multiple hats and still be effective in 2020.

Additionally, the real estate agent’s relationship to the buyer will need to change. Today’s buyers value transparency, added value, and instant gratification — and if they can’t get what they want, they’ll look elsewhere. To win over buyers, agents will have to help them navigate the market data from multiple research tools and services in addition to offering great customer service.

Millennials will bring unique challenges to the market
Because millennials grew up during the economic downturn of 2008, they are more cautious about spending, and they seek out the best deal that delivers the most return and reward. Because of this economical approach, real estate agents will need to motivate millennials.

One big hurdle that millennials face is their ability to see the value in purchasing a home versus renting. They saw the impact of the financial crisis and how houses (maybe even their own) were foreclosed out of nowhere. Because of this, they’re wary about investing so much of their time and money in a house that could be gone in an instant. Plus, isn’t renting easier?

Only 34.7% of Americans under the age of 35 owned their homes as of 2016, according to a Census Bureau survey. To combat this, the key for real estate agents will be to instill confidence in millennials about the home buying process and showcase the benefits of owning a house.

With a house comes wealth, a better place to live, and a sense of accomplishment and appreciation. It will be important to display how millennials can afford a monthly mortgage payment as opposed to making their landlord rich by renting a tiny apartment.

And what about student loans? According to personal finance site Make Lemonade, there are currently over 44 million U.S. borrowers with student loan debt. Due to the expensive cost of college, many students have been forced to take out student loans, which impacts their overall financial health. This directly impacts their ability to take out (or even afford) a loan for a house payment. Thus, mortgage lenders need to find new ways to help millennials qualify and give them the confidence to take on the cost of ownership.

Mortgage qualification criteria will be reassessed
Think of the mortgage industry as a swinging pendulum: on the far left, it’s impossible to get a mortgage; on the far right, anyone with a pulse can get one. During the economic downfall of 2008, the pendulum was to the far right — but it has been slowly moving back to the middle. To keep it stable, mortgage lenders will need to rehash their qualification criteria.

Since the crash, government-sponsored enterprises (GSEs) are enforcing new criteria to ensure that the people getting loans are qualified. But there are some gaps. What about self-employed individuals, like gig workers? The gig economy is huge — the Bureau of Labor Statistics found that over 16 million people are working in “contingent” or “alternative work arrangements” last year. Yet these individuals are lumped into the contract worker or self-employed categories, where guidelines and regulations have been undetermined until recently.

And what about folks who have less than stellar credit health? Student loans, late credit card bills, and even a shaky credit history all contribute to a less than perfect picture, yet these pitfalls are more than common. If mortgage lenders want to help instill growth in the mortgage and housing markets, they’ll have to adjust their qualification criteria.

For 2020, it will be of the utmost importance for real estate agents and mortgage lenders to review their criteria and apply a healthy dose of common sense to the way they treat the new age buyer.

Bill is the founder and CEO of Griffin Funding, the nation’s fastest growing mortgage tech company. He is also the co-founder of Greendoor, a new real estate search tool for home buyers. Bill is a member of the San Diego chapter of Entrepreneurs’ Organization (EO), Young Entrepreneur Council (YEC) and Forbes Real Estate Council. His opinions and accomplishments have been featured in Entrepreneur and Forbes.

Bill Lyons About Bill Lyons

Bill is the founder and CEO of Griffin Funding, the nation's fastest growing mortgage tech company. He is also the co-founder of Greendoor, a new real estate search tool for home buyers

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