Proptech and the pandemic: Will coronavirus change how real estate works?

Proptech pioneers have long sought to disrupt the real estate industry with new ways of doing business. Will the coronavirus pandemic speed up that evolution, or be just a blip on the radar?

As real estate pros nationwide have had to adopt new technologies to go about their day-to-day business in the age of social distancing, The Real Deal‘s E.B. Solomont sat down with three proptech leaders Friday, via Zoom, to discuss the short- and long-term impacts the current crisis may have on their businesses.

“This is the catalyst that’s going to kick all the landlords and the property managers in the behind, to realize that business as usual can no longer continue,” said John Fagan, CEO and co-founder of Doorkee, a startup rental platform that helps departing tenants and apartment seekers arrange deals months in advance. “Because all of their peers are taking this opportunity to make their processes a lot more efficient and a lot more user-friendly.”

Fagan noted that many landlords that were set to join the platform in April had asked to speed up the process because of coronavirus, over concerns it would become more difficult to fill vacancies. Other panelists said they have also reported an uptick in business.

“We’ve seen a surge in demand,” said Jarred Kessler, CEO of residential sale-leaseback company EasyKnock. “Less so from our direct-to-consumer channels and more so from our B2B channels…real estate agents, lenders who are experiencing a surge in refis and have a lot of people they can’t help, reverse mortgage lenders…people are looking for new channels because either they’ve been shut down or they’re looking for capacity.”

Viral Shah, co-founder and head of financial products at online mortgage platform better.com said his staff made the switch to working from home in early March. Still, he said the company had no trouble responding to a surge in new applications as brick-and-mortar mortgage providers face capacity problems.

“We’ve seen about a 200-percent increase, month-over-month, in customer demand,” Shah said. “We helped fund about $1 billion in loans in March, and that’s more than we did in all of 2017 and most of 2018.”

But restrictions on social contact have also brought challenges.

“With the surge in demand, there’s going to be a lot of capacity issues with appraisers,” Kessler said. “So you’ve got to maybe get drive-by appraisals.”

Other technical solutions can also help with assessing property value remotely. “At the end of the day, people want certainty on what they’re buying or lending on,” Shah said. “We can still get that certainty virtually — we just need to move quickly to embrace that technology, and I think that’s happening.”

“I don’t think every home will be bought virtually, sight unseen,” he said. “But I do think there’s more opportunity here than people think.” That was especially true, he added, for buyers of investment properties, or buyers who use virtual screening as a first step to help narrow down potential purchases.

For Fagan, whose firm operates in the rental space, the dynamic is somewhat different, and renters may be more open to sight-unseen deals. “When you’re buying a home, that’s the largest purchase that you’re going to make in your life, in all likelihood,” he said “When you’re renting an apartment, it’s considerably less expensive, and considerably less of a commitment.”

The worst case scenario for renters was a one-year lease, he said, “and you can probably sublet it.”

Questions remain about whether the current shift will have a lasting impact, but the panelists were optimistic.

“I can’t see a cultural shift not taking place,” Shah said. “We’ve all had our lives turned upside down in a matter of days, and it’s going to have a lasting impact.”

Fagan pointed to the impact of Hurricane Sandy, which forced many firms in New York City’s Financial District to switch to remote operations for months, as an event that led companies to rethink emergency response.

“There’s going to be an opportunity to show the older generation, who hold a lot of power in the economy, that there’s nothing to fear here and we should be adopting these things,” Fagan said. “People are not going to be wait-and-see anymore, they’re going to be a lot more proactive, and it’s going to make their businesses a lot more resilient.”