From bricks to clicks: Will real estate catch up on digital?

Developers will need to reimagine a holistic digital journey for homebuyers. For going digital means much more than just creating a website

Arvind Subramanian

[Image by Lorenzo Cafaro from Pixabay]

The COVID-19 crisis, and the lingering restrictions on movement arising from it, means that for some time to come, homebuyers will be hesitant to visit crowded sales galleries and interact at close quarters with unfamiliar sales executives. The time has come for real estate developers to sell online. As it is, home buyers already do extensive online research.

The suggestion that real estate can be sold—and not just prospected for—online is invariably met with incredulity. How can you expect a customer to buy an apartment without visiting the site or seeing a show apartment? For an instructive lesson, we only need to jog our memories to our own childhood. My conception of a bank remains the Indian Bank branch across the road from my childhood home. I still remember the cherubic face of the branch manager, the nested counters and the teller hidden away in a cage in the corner. My children, on the other hand, believe a bank is merely some software code that sits between a netbanking screen and the neighbourhood ATM machine! Apparel, with its highly personal and sensory attributes of fit and feel, should never have been amenable to e-commerce. Automobiles were always bought at dealerships. These categories have found a way to move the point of sale away from the shopfront. There is then no reason to doubt why homes cannot, in fact, be sold at home. 

For this to happen, however, sellers must go beyond slick web-fronts and confront and address the three I’s—Intent, Integrity, and Incentive.


It is a moot question whether trusted brands will win in a digital world or digital brands will over time build more trust. Either way, it is irrefutable that digital and trust are joined at the hip.  Unfortunately, trust has not been the strong suit for real estate developers thus far. 

Embracing digital media for sales is a double-edged sword. With customers as captive audience in their sales galleries, realtors could control the narrative. What they chose to highlight and gloss over as they presented their product was entirely their choice. The skill and charm of the sales promoter had disproportionate influence on the customer’s decision.

As homebuying moves to the web, developers will need to increasingly put their sales collateral online. To be read and understood rather than heard and felt. This immediately puts the projects being advertised in the crosshairs of comparison-shopping portals. These portals will parameterise competing products—reducing alluring art to mundane math—in order to equip customers to objectively evaluate alternatives side-by-side. It will no longer be possible then to hide shortcomings in the product, its neighbourhood or the developer’s track record. Nor will it be possible to draw desired attention to unique and innovative features. Already customers, well-informed by their digital research, are arriving at developers’ sales galleries armed with uncomfortable questions they were never supposed to ask!  As digital adoption accelerates, this will only get amplified.

With their appetite whetted by being courted online during the sales cycle, customers are demanding online post-purchase service and engagement as well. They quickly find other buyers in the same residential development and coalesce into groups to share information they are picking up, even if it is hearsay. They expect the developer to be responsive and transparent. Twitter has become the favoured service channel for customers. All eyes there are on how the developer responds to every individual customer grievance. This lays bare the innards of the developer, requiring them to rapidly clean up their act. They can no longer hope to get away with ad hoc palliatives to mollify one irate customer. Instead, they need to systemically address the root cause of each complaint, knowing that others are watching every move. They need to demonstrate consistency and fairness in the public glare.


The next ‘I’ that developers need to turn their attention to is the integrity of the entire digital journey for the customer. They will have to visualise their digital offering as a united whole that touches each point in the customer journey. A zero-touch sale is only the first step, and a disjointed digital experience thereafter would undermine its value. Developers are in the best position to provide this end-to-end digital experience. For this, they will have to orchestrate activities that are beyond their traditional ambit.

For example, a large proportion of customers require home loans to fund the purchase. For these customers, the home is not ‘bought’ until the loan is sanctioned. Can’t developers and mortgage providers work together to embed the loan appraisal into the developer’s selling tools? This would pave the way for a seamless experience where the home and mortgage are purchased together, from the same person, rather than sequentially.

The digitally savvy mortgage companies are already equipped to sanction loans on the spot. Yet, they are constrained by internal rules and regulatory mandate to get a wet-ink signature on a loan application form and the loan agreement, breaking the paper-free flow. While digital signatures have been legally enforceable for some time, it appears their acceptance is still not universal. It would ironically take just a stroke of the pen from the National Housing Bank to rid this process of ever having to put pen to paper in future.

Several years ago, some states like Maharashtra had enabled electronic registration of the Agreement for Sale. Buyers did not need to visit the Registrar’s office and could execute and register their agreements online in the plush environs of the developer’s sales office itself. Despite the considerable convenience, adoption remains abysmally low. One reason was the onerous eligibility criteria. Only projects with more than 500 apartments were given permission to set up an e-registration facility. The initiative was also handicapped by ineffectual technology choices. The state mandated a private leased line from the state-owned telecom provider, which is famously inept.  Recently, prompted by the loss of revenue during the lockdown, the state has unfettered developers from both these constraints and paved the way for registrations to be done at the customer’s doorstep using a laptop, webcam and thumb-scanner. The next step would be for the customer to self-register on a portal sitting at home without the need for any authorised intermediary.


Finally, how should the economic incentives across the value chain be realigned to enable digital sales? The historical process is broken—the entire emphasis was on lead generation rather than actual sales—and is in need of urgent re-tooling. The advent of digital provides much-needed impetus for this. It also furnishes the instruments.

Real estate is a long-cycle sale contested by multiple sales channels. This naturally leads to channel conflict. A typical customer is touched and influenced by several channels over the period she is considering the purchase—real estate brokers, digital ads, print ads and outdoors, call centres, direct selling agents, among others. Who then gets the credit—and thereby the commission—for the sale?  A smart marketer decided that a ‘site visit’—a potential customer visiting a realtor’s sales office—would be the defining event that would determine which channel gets credit for the eventual sale (which might happen several months later). This has rapidly become the industry norm. As a result, the entire sales machinery is currently geared to drive site visits and not necessarily sales. If, in future, home purchases were to move predominantly online, how would it change the demands on these traditional channels and their claim to the ensuing sale? Channel conflict would only accelerate with expanding digital influence.

New sales attribution models and incentive structures would be needed to break the logjam. At a recent digital-first launch of a new residential project, we trialled a model where the sales partner would send the customer a link for a token payment. Among the many links the customer received, the one she chose for payment would determine who got the credit for the sale. The customer voted with her wallet. And the number of contested sales was markedly lower as a result! 

Emboldened by this, we have resolved to go a step further. In the foreseeable future, we will enable our sales partners to conclude the sale—including the choice of apartment—without having to enlist a company sales executive at all.

But why stop there? Should sales partners only earn from customer acquisition, or is there an opportunity for them to participate across the extended customer lifecycle?  Automotive dealers earn more from financing, insurance, service, parts and trade-in than they do from the sale of the new car. Mutual fund distributors earn a trail fee for as long as the customer stays invested. Given that brokerage, the primary source of income for sales partners, is a lump-sum, a recurring income stream would be a welcome risk mitigant. To lay claims to this they must expand their remit to include collections (assisting the developer in collecting ongoing construction-linked instalments from the buyer) and customer service (assisting with documentation for the sale agreement or loan application). And developers and financiers will need to equip them for the same.


So, will the COVID-19 crisis force one of our economy’s most foundational sectors to finally commit to a digital catch-up? Will customers be willing to take the decisive step forward from self-motivated research to a virtually-assisted purchase? Real estate developers must meet them halfway. 

Realtors have already just in the past few weeks commissioned meaningful investments on website development and property visualisation tools. These are necessary, but not sufficient.  To truly script a digital future, real estate developers will need to unabashedly embrace the three I’s—Intent, Integrity and Incentive.

Still Curious? Watch these two clips from a soon-to-be-published conversation on Realty Reset, with Arvind Subramanian, Sujay Kalele, co-founder of TRU Realty, Vikram Kotnis, founder and MD of Amura Marketing Technologies, and Nruthya Madappa, managing partner, CoWrks Foundry.

But does the demand exist? Watch this clip on why demand is strong from first home buyers and how consumer needs have changed.

Partnering with startups is key. Because no one company has all the solutions. Watch the clip.  

(Views are personal.)

About the author

Arvind Subramanian
Arvind Subramanian

MD & CEO designate

Mahindra Lifespaces

Arvind Subramanian is the Managing Director & CEO designate of Mahindra Lifespaces.  He has been serving as Chief Executive Officer of Mahindra Happinest, the affordable housing business of the Group, since September 2018.

Arvind’s interest in the intersection between business growth and social impact dates to his time as a Managing Director & Partner at Boston Consulting Group (BCG). At BCG, Arvind was the global topic leader for the ‘Next Billion Consumers’, picked by Financial Times as one of The Fifty Ideas That Shaped Business Today. He was also tasked with setting up and leading BCG’s Centre for Customer Insight. Arvind led the Technology Media and Telecom practice at BCG in India for several years.  

Arvind started his professional career with the Tata Administrative Service, the central management cadre of the Tata group. He holds an MBA from the Indian Institute of Management, Ahmedabad and a B.Tech. from the Indian Institute of Technology, Madras.