A Place to Live: An Online Process

By Mateusz Chachulski, CTO, Cenatorium Sp. z o.o

Mateusz Chachulski, CTO, Cenatorium Sp. z o.o

One of the fascinating areas of the proptech panorama is re-creating the process of purchasing an apartment or a house. In other words, finding a property, deciding where you want to live and what you can afford, getting a loan (optionally), and ultimately closing the purchase transaction.

Today, we are getting used to quick and easy online services faster. We can now buy or rent many things online, within minutes; a car, a holiday apartment, or insurance.

On the other hand, as buyers, we have limited trust in digital descriptions of properties. We can afford to make a mistake when choosing a holiday house, but buying a place to live in for years is a different thing. To feel the real character and atmosphere, to imagine what we can change, rebuild or refurbish, to subjectively assess if the place suits us, we want to see it with our own eyes.

Additionally, as non-professional buyers, we feel uncertain and insecure. We don’t know the property market, and in most cases buying a house or a flat is one of the most critical transactions in our lives.

Also, especially within the CEE region, we are faced with a very heterogeneous market with many coexisting building types, different technologies, and different construction quality parameters. We always have to evaluate the property carefully and its surroundings in terms of potential advantages and flaws.

When we find a place we like, we have to verify and negotiate its price. Again, we have little knowledge of the process. Then, if we are going to get a mortgage loan, the bank has to make the property assessment by its own too.

What can technology change?

First, it can significantly narrow a gap between online and on-site experience. All we need is already here; VR, 360-degree photos and virtual walks, 3D renderings. And to tell the truth, it’s not even necessary. We can actually describe the property pretty well using regular photos, plans, publicly available satellite imagery, and Google Street View. Not infrequently the reason behind inadequate property descriptions is the lack of skills or imagination, but also intentional concealment of flaws or a precise location of the building (common in Poland).

The online mortgage process is going to be a powerful dominant leverage factor in the property market

There are great tools available, but what we see now is mainly their particular use, so there is still space to develop the new-level user experience.

Second, there is an excellent potential in solutions that support finding and choosing properties. As in the case of songs and movies, some things may be hard to capture by filters and parameters, but which are still essential for us. Moreover, there is a space for using AI algorithms and models with property data, including photos as well as surrounding information, for learning and suggesting the offers that we are more likely to choose so that we don’t have to scroll through hundreds of pages with search results Third, there is a property assessment/evaluation aspect. We can use machine-learning models to determine property value (AVMs). Depending on local regulations and access to databases or registers, we can run a full property check that includes technical and legal information. Also, as building and updating property databases is a huge challenge, we can collect data from satellite/aerial imagery, and utilise image recognition solutions.

As more sophisticated models are developed, we can apply them to property scoring as part of the e-mortgage process. Not for all properties, and probably not very soon (at least not in the entire EU), as technology and regulations have to keep up, and the debate on the subject with an active involvement of property appraisers is still going on. Nevertheless, the online mortgage process is going to be a dominant leverage factor in the property market.

Finally comes the transaction itself, and here we have several interesting attempts to enable property trading online, using blockchain and hybrid legal solutions, which takes us even further into the virtual world.

Many great companies are trying to change or improve the processes listed above in different ways. Some try to digitise the processes with AI or other suitable technologies, while some just put it online, optimising its logistics and introducing new communication channels. Still, others invent new business models to address the needs of sellers and owners.

While the future shape of the property market is unknown, there are some things we can be sure about:

- in terms of technology, we already have all we need to completely digitise property transactions and transfer them into an online process; all the barriers are about mentality, the market status-quo, legal solutions, and data infrastructure, but not about the technology itself

- data infrastructure is an organisational and financial challenge, but not a technical one, but of course, we can employ new technologies to improve it or optimise its costs

- due to the above-mentioned trust factor and significant transaction amounts, most of the processes are firmly based on human participation and interaction; if we want to fully digitise the process, we have to provide a sense of security and support differently (maybe by a brand/authority-based approach or as another field of application for AI)

- while we don’t need a technical breakthrough, there is still ample space for innovation in user experience and business models

- as is usually the case, technical solutions tend to evolve and mix with changes in people’s lifestyles and habits; it’s quite possible that we will have another way of acquiring a place to live (the own vs rent ratio will change, new types of rights to the property will emerge, while the transfer of rights will be easier, faster, and much more frequent).