In 2000, Netflix was willing to sell itself to Blockbuster for $50 million. Blockbuster, as an established industry giant with increasing profits, refused the offer. Ten years later Netflix had an eight-figure market cap while while Blockbuster filed for bankruptcy. Blockbuster’s decline is not an isolated incident: Digital disruptors are shifting the marketplace and forcing organizations to change or die.
This process is called digital transformation (DX) and it is increasingly becoming a focus across industries. Unsurprisingly, this effort to transition a company for the digital age is a daunting task. But what is driving DX, what does a successful transformation require and what does this means for the real estate rental market?
I have nearly a decade as an executive in the real estate industry, from running Berlind Properties to starting a technology company aimed at disrupting the rental property application process. I’ve learned throughout my career that technology drives industry change and have been closely studying its effect on real estate. I’ve developed an understanding of digital transformation and identified five key areas that DX will have an impact.
What Drives Digital Transformation?
Digital transformation is often a result of “digitally native” companies such as Netflix, Uber and Amazon that dramatically overhaul the customer experience of familiar industries. As younger generations enter the marketplace, they’re accustomed to technology that is connected, always on and instant.
Take Uber as a case study: Tired of poor taxi experiences, Uber founders Travis Kalanick and Garrett Camp envisioned a world when getting a ride was as simple as tapping a button. As they began developing the idea further, they examined the key customer touch points: car request, driver screening, location tracking and ease of payment. By optimizing for the moments that matter, Uber was able to disrupt an entrenched industry: Uber is now valued at close to $50 billion while the cost of a taxi medallion has dropped more than 80% since 2013. Uber’s presence forces taxi companies to adapt or go out of business.
How DX Is Changing Real Estate Rentals
This consumer-obsessed mindset is changing the real estate market as well. At every step along the process of finding, visiting and leasing a unit, property managers are now focused on enhancing the customer experience. Let’s examine five key industry impacts:
1. Finding A Rental
Landlords are changing the way they list units by adopting digital listings and offering virtual showings to allow prospective applicants to directly search for what they’re specifically looking for. Additionally, emerging companies are aggregating listings across property rental organizations to allow a single source of potential units for applicants.
Apartments.com compiles millions of units and averages over 40 million monthly visits, putting pressure on landlords to list their units or risk missing a sizable portion of the prospect market. This leads to a much better experience for prospects, as they can centralize their search and communicate with multiple landlords.
Further, companies like Rentping and Virtual360i are enabling virtual apartment tours. This reduces time and expense for landlords and creates convenience for the prospect.
2. Visiting The Unit
In addition to virtual showings, organizations are adopting online scheduling for in-person visits. By directly linking the applicant to the agent’s schedule, this simplifies the visiting process and allows for applicant self-service. Intelligent systems then contact the agent directly to notify them of the new showing and provide the applicant’s contact information directly.
Tools like EZnet Scheduler and ShowingTime allow landlords and agents to manage their time efficiently and avoid double-booking prospects. These tools also enable landlords to establish prerequisites for apartment viewing, such as providing contact information, requesting an application or even leaving a deposit — all of which help weed out flaky prospects, saving landlords more time.
3. Fraud Prevention
As online applicants increase, it’s vital that landlords are equipped to prevent fraud. From identity theft to fake bank statements, an unprepared landlord runs the risk of accepting bad applicants, which may lead to issues down the road.
In a survey by TransUnion, nearly 70% of responding landlords said they were concerned about fraud from online applications. In response, TransUnion launched ResidentID to confirm applicant identity. Beyond the options provided by the credit bureaus, landlords can use specialized services like Tenant Magic or RentPrep to offload the background check process. Additionally, nascent technologies are intelligently reading applicant materials to uncover doctored documentation.
4. The Lease Application
As my team examined the industry, we realized there was a major area that still needed transformation — the lease application — and set out to usher in the new. To fully shift from a disconnected application, real estate rental aggregators should compile a resident’s application information once and use that to standardize the application process. Similar to the Common Application for colleges, this simplifies the prospective tenant’s workflow and ensures the proper information is passed along to the landlord.
Moreover, smartly designed applications prompt the applicant to provide necessary documentation upfront in order to speed the review process and preempt potential confusion. With examples of accepted documentation and a clear indication of which documents still need to be produced, both the applicant and landlord can have improved clarity.
5. Signing The Lease
Digitizing the application process with a tool like DocuSign enables online verification software to increase efficiency. Rental aggregators can automatically provide necessary documents to the accepted applicant and prompt signatures where needed throughout. These leases are then digitally stored for the landlord, creating an easily accessible paper trail when needed.
Each of these changes improves the process for the landlord, the applicant or both. By designing these processes with the user in mind, real estate rental organizations can find common-sense improvements that transform their industry. If Netflix, Uber and Amazon are any indication, these transformations are necessary to survive in the emerging digital world.