The PropTech market is on fire. A recent report from the venture capital firm MetaProp shows PropTech start-ups’ confidence in future fundraising to have reached an all-time high. Almost 40% of startups surveyed said it would be easier to get venture capital funding during the next 12 months compared to last year. Needless to say, the pandemic has helped speed the adoption of the new technology.
Today, we seem to have reached an inflection point where real estate brokerages that have traditionally been very low-tech now seem to understand PropTech, which refers to startup companies that offer innovative business models or new technology to optimize how consumers search for, buy and sell real estate.
However, real estate firms should not adopt PropTech applications out of a fear of missing out, but only in those instances where the technology can provide tangible value. But how do you find where that value is? Typically, many real estate firms mistakenly view PropTech through a company-centered lens, asking themselves three questions:
- How can PropTech benefit the company?
- How can PropTech lower the company’s costs?
- How can PropTech automate the company’s repetitive tasks?
These three criteria seem intuitive, but they are sadly misguiding when deciding on PropTech investments.
Solve the client’s problem
If you identify the problems and goals of clients, there is no more urgent use for PropTech than to help solve and achieve both. Real estate brokerages have two tasks: to solve the client’s problem, and to fulfill the client’s goals.
- If your client is a seller, the client’s problem is getting the property sold, and the goal is to receive the most money, or best terms, in the fastest amount of time.
- If your client is a buyer, then the client’s problem centers around purchasing the most value and the goal is to use the least amount of dollars.
This mapping of needs – called value demands – should now guide the research of real estate companies into those PropTech applications that will serve them best.
In very concrete terms, the task at hand will come down to this:
- Researching what your clients need;
- Researching where clients spend time with technology;
- Researching what tools clients would like to see used;
- Researching what tools clients think are old fashioned.
Two applications that your research is most likely to validate as valuable to your clients are virtual tours and esigning. Both are tools that have received a huge boost during the pandemic because of the ease with which they allow people to discover a property and commit to a transaction without leaving their home.
Real estate professionals shouldn’t always attempt to be early adopters of PropTech in their markets, so you might want to wait and see when it’s uncertain whether some applications will prove its worth. Waiting for your investment risk to come down to zero is not a wise option either.
Laggards tend to miss opportunities and lose precious ground to their competitors, and before you know it, you will not only be unable to impress your clients but will also fail to persuade young and talented digitally native professionals to come join your ranks.
Curtis Williams is a Land Professional with National Land Realty licensed in Virginia and based in Washington, DC. The company’s proprietary 360-degree viewing technology, Land Tour 360®, as well as its GIS land mapping system, LandBase™, is offered for free to the public.
