Smart Home and Internet of Things FAQ

In addition to our Smart Home Glossary, CRTLabs has put together this Internet of Things FAQ.

Send us an email and let us know what you think (and if we missed anything!)


What is the Internet of Things?
What is a smart home?
What are smart devices, and how much do they cost?
What is a smart hub?
What are the benefits of a smart home?
What are the financial benefits of smart home technology?
Who owns the data, and how is smart home device data used?
What are the connectivity options for a smart home?
Do smart devices affect selling prices?
Can I install smart home devices myself?
What are some of the challenges of a smart home?
Are there security risks associated with smart home devices?
What is CRTLabs?


What is the Internet of Things?

The Internet of Things (IoT) is a broad term that refers to everyday devices like lights, thermostats, and locks that are able to connect to the Internet and to each other. These connected devices can exchange data and work together, automating tasks that used to be manually performed. By 2020, it is predicted that there will be anywhere between 26 billion to 200 billion devices connected to the Internet.

Samsung published a great, concise, and humorous explanation of the Internet of Things, available here.  And REALTOR® Magazine’s introduction to the Internet of Things approaches the subject from the real estate point of view and is well worth reading.
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What Is a Smart Home?

A smart home is more than a collection of smart devices, and it’s more than a “connected” home. One could live in a house with many smart devices that are connected to the Internet, but that wouldn’t make the home a smart home. If those devices are connected to each other and working in concert to automate a number of the home’s processes, we’re getting closer to a definition of smart home most people can agree with.
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What Are Smart Devices, and How Much Do They Cost?

The lights, thermostats, and more that comprise the Internet of Things are called smart devices. A by-no-means complete list of smart devices includes:

  • Thermostats, which allow you to control your home’s temperature remotely and see your usage for heating and cooling. Price range: approximately $200-$250.
  • Locks, though which you can control who has access to your home and see when they access your home, even if you’re not on site. Price range: most sell for approximately $200.
  • Lights, which can be adjusted from your smart phone for comfort and brightness, and which can be set on a schedule. Price range: pretty large; anywhere from $50 to $200.
  • Plugs, that allow you to control “dumb” objects, as well as monitor energy consumption of anything plugged into them. Price range: most are about $50.
  • Cameras, which can alert you to intruders, record video, and set off a siren. Price range: between $100 and $200.
  • Smoke and CO Alarms, which will alert you (on your cell phone) to increased levels of carbon monoxide or the presence of smoke. Price range: about $100.

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What Is a Smart Hub?

A smart hub is the central device that allows all the different products (lights, locks, thermostats and more) to work together in a smart home. You need not have a hub in a home to use smart devices, but you need one if you want to truly automate the behavior of the various smart devices in your home.
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What Are the Benefits of a Smart Home?

The top benefits of a smart home are convenience, energy efficiency, and security. According to a 2015 survey conducted by Coldwell Banker and CNET:

  • 57 percent of smart device owners say their devices save them time
  • 45 percent of smart device owners report their devices save them money, and
  • 72 percent of smart device owners state their devices make them feel safer

Many consumers install these smart devices to be able to control their lighting with their voice, or to be able to adjust the temperature level of their home from an app on their phone. Some install devices that will open their garage door automatically open as they pull onto their street, or unlock their front door as they approach their house. The goal is to make to make common household tasks more streamlined or automated.

Other consumers enjoy the energy savings of being able automatically disable the costly heating and cooling of their homes when they are away. There is even an entire smart home device category for home energy monitors, which can show real-time energy usage. Knowing your home’s energy profile can help you identify ways to save money. 

Motion detectors, smoke and CO detectors, and security cameras can work in concert to alert homeowners that something is amiss in their home. From there, you have the option to alert safety officials in your area. This technology exists today and is continuing to be improved all the time.
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What Are the Financial Benefits of Using Smart Home Technology?

  • Devices: Smart thermostats can easily pay for themselves over time. In a 2015 white paper, Nest claimed that use of their smart thermostat results in average savings of 10-12 percent on heating bills and 15 percent on cooling bills. Other manufacturers claim similar benefits.
  • Insurance: Many insurance companies offer reduced rates for homes that have smart locks, smoke alarms, and security cameras. We’ve seen discounts of up to 15 percent.
  • Rebates: Gas and electric companies often pay rebates to users of smart thermostats. These rebates can exceed $100 and will cover almost half the price of a new smart thermostat.

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Who Owns the Data, and How Is Smart Home Device Data Used?

The type of data collected will vary by device. For security devices, they may be collecting real-time video feeds; for door locks, it may be who arrives and when.

  • Who Owns The Data? In general, you, the consumer will own the data. However each vendor’s can vary, so it is up to the consumer to make sure they have ownership of their data. CRTLabs has also been working with the Online Trust Alliance to develop a framework for device manufacturers to allow maximum security for smart device data, as well as portability.
  • How Is Smart Device Data Used? The data collected by vendors can be used in a multitude of ways, from simple analytics to advanced algorithm improvement. These results are generally used by smart device companies to improve product development and provide additional services to their customers. You should also read the vendor’s privacy policy to see what they are legally allowed to do with the data. They may allow themselves to sell your data to 3rd parties, so read carefully.

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What Are the Connectivity Options for a Smart Home?

There are many options when it comes to device connectivity, but they can be generally put into 3 different categories:

  • WiFi. These devices connect directly to your router or gateway and have direct access to the internet. This makes it really easy to control the device from anywhere in the world. Some drawbacks are limited battery life, and a greater risk of attack from hackers.
  • Bluetooth. These devices will talk directly to your phone, this makes them ideal for creating a secure personal network. With the release of Bluetooth Low Energy (aka BLE), these devices can provide weeks and months of connectivity on a single battery charge. To connect these devices to the internet for control or monitoring, it will require your phone to act as a gateway or a dedicated hub connected to the internet.
  • IEEE 802.15.4, aka Zigbee. This is a low energy, mesh networking protocol specifically built for device-to-device infrastructures. This protocol is the basis for Zigbee, Thread, and others. It is extremely low energy and can provide months and years of operation on battery. Generally the only way to talk to these devices over the internet is to use a hub.
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    Do Smart Devices Affect Selling Prices?

    Because smart home technology is fairly new, its effect on home prices is just beginning to be evaluated. What we *do* know, according to a 2016 Coldwell Banker smart home survey, is that homeowners are willing to invest fairly significantly in smart home technology. 72 percent of millenial homeowners say they would spend $1,500 or more to make their home smart; 44 percent of them say they would pay $3,000 or more to do so. Who might be willing to pay more for a home with smart technology? Parents with children, for one; 59 percent of them told Coldwell Banker they would pay more for a smart home.
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    Can I Install Smart Home Devices Myself?

    Like any other home improvement project, some smart home projects are quick and easy, while some are time-consuming and more difficult. In almost all cases, there are physical tasks (removing dead bolts and thermostats, and replacing them with their smart equivalents), as well as information technology and connection tasks (getting devices to talk to each other, setting up schedules, etc.).
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    What are some of the challenges of a smart home?

    Today’s smart home is not without its complications. Just like any emerging technology, smart home products are going through their fair share of growing pains. These problems range from occasional downtime to exposing your home network to cyber criminals. Since these new products directly affect the safety and security of your home, the bar needs to be set much higher.

    Current low tech solutions (smoke alarm, lightswitches, deadbolts, and thermostat) in the home are already near 100% reliable. In order to be successful, new smart home products need that level of reliability and convenience to be successful. The heavy reliance on cloud computing means these devices may only be as dependable as your home Internet connection.

    Lastly, there is heavy competition between large corporations for control of the smart home retail space, leading to a large fragmentation of the market. This leads to consumers needing separate apps to control their lights, locks, or thermostats.
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    Are there security risks associated with smart home devices?
    Issues with security and privacy are to be considered as with anything connected to the Internet. As with any account you have, the first line of defense is a strong and regularly-changed password. CRTLabs is working with a couple of groups on these issues.

    First, in partnership with the Online Trust Alliance, we have produced a smart home checklist. This checklist is meant to educate members, but also be given to consumers who are moving into these increasingly sophisticated homes. CRT will work with OTA to update this list and also provide educational seminars on the different sections in this checklist.

    Second, CRT is partnering with a group called BuildItSecure.ly, a team of information security researchers from around the globe who are working with IoT vendors to ensure their devices are secure. Vendors can open their code to these researchers and have it vetted for free; bugs are fixed for small bounties.
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    What is CRT Labs?
    CRTLabs is a laboratory located in the National Association of REALTORS® building at 430 North Michigan Ave in Chicago, IL. Our purpose is to:

    1. Educate our membership on the utility and challenges of these devices
    2. Advocate outside the industry for security and privacy issues with these devices
    3. Innovate in IoT by building new devices and software for members’ use

    We partner with vendors, universities, non-governmental organizations, and government agencies; we serve the NAR membership. If your brokerage, association, or MLS would like us to come speak to you, or if you’d like to visit the labs, please get in touch.