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WHAT IS PROPTECH AND WHAT YOU MUST KNOW
As the largest asset class in the world, the real estate industry is constantly
evolving. Real estate trends come and go like the seasons, so it can be
challenging to identify which buzzwords are worth paying attention to.
PropTech is a relatively new concept in the real estate realm that has people
talking. While the technology and focus area has been around for decades, the
term “proptech” is relatively new.
You have likely heard it thrown around, but what is PropTech, and how will it
impact the industry? Continue reading, and I will lay out everything you need to
know about PropTech.
WHAT IS PROPTECH?
PropTech is the technology that optimizes real estate processes and transactions
in an online format. It is essentially the union of the real estate industry
with technology. In some cases, it may have an overlap with other industries
such as MarTech (marketing tech), financial services, smart home technology,
etc. PropTech companies aim to make the entire property transaction process and
real estate industry more efficient, convenient, accessible, and profitable from
start to finish.
Disrupting the real estate market, PropTech companies are providing better
solutions to existing problems. This innovative use of technology examines how
people research, buy, rent, sell, and manage properties to make improvements for
all parties involved.
Proptech includes companies that help with real estate problems (e.g., tenant
relationships, property management companies, mortgage-related, etc.) and
marketing technologies that get explicitly used within real estate (e.g., IDX,
Realtor CRMs, etc.).
There are advantages and disadvantages to using the term. I have spoken with VCs
and private equity firms that love the term and those that are turned off from
the PropTech label, believing that you should be able to describe your company
in more specific, problem-focused terms.
Though recently popularized, many PropTech companies are well-known and have
been around for years. Examples of popular PropTech companies are Zillow,
OpenDoor, Frontsteps, Briq, Snapdocs and others. Modern brokerages such as eXp
Realty and Compass have PropTech components too but are not specific PropTech
companies.
HOW PROPTECH IS TRANSFORMING THE REAL ESTATE INDUSTRY
Let’s look at some features offered by PropTech:
PROVIDING DATA-BACKED ACTIONABLE INSIGHTS
Big Data is changing real estate operations and the ways we interact with our
properties. You relied on previous records, trends, and customer experience not
so long ago to inform your decisions. Thanks to big data, we have access to
real-time statistics to point you in the right direction and aid in making wise
decisions. This data is the basis for PropTech.
PropTech makes real-time data available to its users to help them make smarter
decisions. It may pull and synthesize data from across the real estate space and
others, including investment volumes, home-value trends, consumer demands,
consumer experience changes, construction sites, commercial properties, capacity
in rental property management, your customer relationship management tools,
recent customer satisfaction, asset lifestyle, your company’s business model,
asset lifecycle, 3D cameras, commercial lending rates, online portals, and many
other digital technologies and cutting-edge technology.
This sort of data access allows agents to identify possible risks and optimal
opportunities for their real estate ventures.
OPENING UP OPPORTUNITIES FOR SALES
Realtors can see where the market is hot or cold and adjust their strategies
accordingly. Instead of spending time spent theorizing how to make your next
move, you can invest that time elsewhere, thanks to PropTech.
Additionally, agents can create custom marketing campaigns based on buyers’
needs and preferences. PropTech examines consumer behavior so that real estate
professionals can optimize their operations. It looks at trends, past and
present, to inform and guide your strategy.
On the other hand, buyers can easily find properties with the help of this
technology. PropTech truly benefits all parties involved. People in housing
markets will appreciate the ease these applications add to their property
search.
An example of a PropTech solution that helps boost property sales is improved
accessibility to new listing information, real-time relevant alerts, and the
ability to unlock alternative funding options. A central goal behind PropTech is
to make real estate more accessible to more buyers and additional investors.
Think about the change in property searches since the early 2000s. Online
property listings are not only more convenient to look into with virtual tours
so you may not need to actually visit the property, but they are also available
to a considerably wider population than traditional listings. The more buyers
accessing the listing, the more sales will incur.
GENERATING RELIABLE PROPERTY DEVELOPMENT INSIGHTS
Developers can create better plans based on the data collected and made easily
available, sometimes through 3D models, a property portal, and a wide range of
other techniques. Decisions on critical project factors, such as location and
amenities, can be informed by PropTech data analyses of potential residents.
Property developers will appreciate the reduced risk and maximized benefits from
this property technology. It takes the typical controlled risk approach and
increases the ROI while reducing risk exposure.
PropTech not only aids in the planning phase of property development, but it can
also map out an accurate construction timeline. Developers can know what sort of
deadlines to plan on before breaking ground, which can avoid significant
blunders and save thousands of dollars.
Having helped a PropTech startup come through an accelerator at Georgia Tech, I
was able to see the advantages to all sides of large commercial projects by
bringing more modern technology to the project preparation, planning, sign-off
phases, and more. So many of these construction industry projects with budgets
of $10M – $300M are still handled by outdated technologies like excel/google
sheets, project management tools built for other purposes, and people printing
and comparing thousands of pages on a sometimes weekly basis. The PropTech
solution brought through GaTech took that time to minutes and provided true
transparency into the construction projects as well as tracking approvals as
pieces were completed. There has been so much construction technology brought to
the physical build, while leaving so much room for improvements from SaaS and
other software with digital capabilities.
NATIONWIDE AND ENTERPRISE-SCALE LEAD GENERATION
Increased accessibility also compliments lead generation marketing strategies.
Convenient and widely-accessible PropTech interfaces lend to improved customer
interactions.
PropTech may provide Product-led SEO and Enterprise SEO types of solutions for
national (and international) brokerages or large teams. PropTech makes this
possible by creating solutions to rank tens of thousands of keywords to drive
millions of potential clients to the solution.
These solutions can look like a brief survey to gather a prospect’s information.
For example, when a client visits your website, they are prompted to answer a
few questions to get an idea of who they are and what they are looking for. The
user’s responses are then sent to the agent or property owners. At that point,
the website can share some property info that is relevant to the prospect, such
as size, condition, and amenities.
Previous IDXs provide basic search and alerting experiences. Newer solutions
proactively use both human and algorithmic approaches to build the solution in
anticipation of what will meet the needs of both the active buyer and the casual
visitor who will be a client/buyer/seller in the future.
All of these virtual tools help with establishing connections and reducing
response time to guide the customer to their end goal better. When the visitor
and customer is happier, the real estate company wins in the end through
increased transactions and a higher IRR (internal rate of return).
IMPROVING RISK PREDICTION
Risk assessment tools are now more accurate than ever before, thanks to
PropTech. Real estate companies can gauge their operations’ successes by
analyzing relevant data. Examining the safety, sustainability, and profitability
of a project reduces overall risk.
PropTech Big Data examines real-time and historical trends to predict the risk
of investing in that project you have had your eye on. When armed with an
accurate risk assessment, real estate professionals and investors have an
increased capacity to make informed and profitable decisions. Spend less time
calculating and worrying about your next venture’s projected risk and more time
on your other pressing duties.
Operations win in the end, and data and tech help you spend more time on what
matters the most.
STREAMLINING MOST BACK-OFFICE PROCESSES
How much of your valuable time is spent gathering, organizing, and analyzing
data? On top of this, lead generation, marketing, and sales are time-consuming
and laborious. PropTech can help real estate agents and brokerages automate and
streamline these tedious back-office processes.
PropTech software will organize and analyze your data while comparing it to a
large pool of other relevant data. Through this data comparison, PropTech helps
you establish various strategies to boost your productivity.
An example of this PropTech perk is automated responses. Without PropTech, real
estate professionals can find themselves caught in a never-ending cycle of
repetitive tasks like drafting messages to potential clients. Automated answers
will take care of establishing that connection and even addressing subsequent
inquiries through a chat tool.
With recent advances in AI and chat, data gathering, cleansing, and even basic
tasks like setting up relevant saved searches for new listings can be automated
in a way that feels both personalized and friendly for buyers and sellers.
FREQUENTLY ASKED QUESTIONS
Let’s take a look at some common questions regarding PropTech:
WHAT DOES PROPTECH MEAN?
PropTech is the combination of property and technology. It uses technology to
simplify real estate operations, including buying, selling, developing, and
managing properties. PropTech analyzes consumer behavior and market trends to
reduce risk and guide users to prime opportunities. PropTech also aids in
streamlining time-consuming back-office processes.
WHAT ARE EXAMPLES OF PROPTECH?
Well-known PropTech companies are Curbio, AirBnb, Showcase IDX, OYO, Obligo,
Divvy, and StackSource. These PropTech companies use real estate technology to
improve the real estate related processes for their users. Any instance of real
estate processes occurring online is considered PropTech.
Property searching, renting, selling, and managing online are all great examples
of PropTech. These are virtual tools that simplify real estate operations for
all parties involved. If you have ever conducted an online real estate search,
inquired about a property through a live chat feature, or sold your property
over the internet, you have utilized PropTech!
WHAT DO PROPTECH COMPANIES DO?
PropTech companies facilitate real estate operations in an online format,
provide meaningful data insights to users based on consumption patterns, and
speed processes around owning properties. The underlying technology examines Big
Data to make these operations more convenient, accessible, and successful. These
companies help people buy, sell, rent, manage, and develop properties.
Many PropTech companies also specialize in providing this technology to existing
real estate brokers. Adopting this innovative approach to real estate can seem
daunting for many businesses, so PropTech specialists help with this transition.
IS PROPTECH THE FUTURE OF REAL ESTATE?
Many people wisely consider PropTech as the future of real estate startups. It
is reasonable to believe that users will continue to prefer having the option of
partaking in real estate operations online.
The evidence for this claim can be seen in the FinTech industry. For years we
have reaped the benefits of online banking and money lending. FinTech, the union
of finance and technology, made these modern conveniences possible.
Just as FinTech shaped the future of the finance world, PropTech is fulfilling a
much-needed solution to the lack of convenience and accessibility in the real
estate sector.
WHY IS PROPTECH IMPORTANT?
PropTech is responsible for filling many holes in the real estate industry.
Through Big Data analysis, this technology can boost productivity and
profitability for any real estate venture. This analysis helps with assessing
risk and improving accessibility for both customers and real estate
professionals.
Considering many real estate agents view PropTech as the future of real estate,
it is vital to understand and embrace this new technology.
SHOULD LARGE BROKERAGES BUILD PROPTECH SOLUTIONS IN-HOUSE OR LICENSE FROM
INDEPENDENT COMPANIES?
PropTech enhances all real estate operations, regardless of how it is
implemented. That said, many real estate professionals do not feel tech-savvy
enough to establish this technology on their own.
In this case, outsourcing PropTech data collection and other services to
independent companies is wise. Once you map out your company’s areas of growth,
a PropTech specialist will come up with data-based rates, strategies, and other
tools to help you meet your goals.
Building in-house PropTech solutions requires thorough technical expertise that
is different than the expertise needed to successfully run (and grow) the realty
side of a typical brokerage, but it can be a lower-cost option in the
medium-to-long-term. Once you establish the framework of your PropTech software,
it is helpful to enlist other engineers and specialists to ensure top
functionality.
To be successful in building in-house PropTech solutions, the brokerage does
need to bring in those with proven track records of building technology
solutions, from both within the real estate industry and more importantly those
from other industries. Trust these technology and product leaders to build an
agile team and give them the resources to wisely invest in these in-house
PropTech solutions. I’ve found it helpful to intentionally find time to safely
allow leadership to ask questions, discuss problems that need solving, find
agreement on stable resources, and agree on the leading indicators to prove the
solutions are on the right track towards success.
WHEN DID PROPTECH START?
Dating back to the 1980s, early PropTech manifested as real estate companies
searching for more productive methods of indexing data, managing portfolios, and
analyzing their stats. Early PropTech used platforms like Excel and Lotus but
had no way of communicating with other companies and datasets.
PropTech modernized as online real estate transactions became more reliable and
accessible. From 2001-2007 and the dawning of the internet era, companies like
Zillow and Tourbuzz emerged and became wildly popular.
Significant data processing advancements made recent PropTech advancements
possible. Nowadays, PropTech utilizes Big Data, machine learning, and AI to sort
past and current trends that inform all types of real estate decisions.
HOW BIG IS THE PROPTECH INDUSTRY?
With a massive demand for its improved accessibility and profitability plus
reduced risks and costs, it is no wonder that the PropTech industry is booming.
PropTech currently accounts for an estimated $18.2 billion in the U.S. market as
of 2022, and it is projected to increase to $86.5 billion by 2032.
PropTech has already disrupted the real estate world by incorporating Big Data,
automizing tedious tasks, and conducting real estate operations in an online
marketplace. By modernizing the largest asset class in the world, PropTech is
sure to be a top-growing industry in the years to come. Just think how many real
estate assets there are just within your local town and that will give you an
idea of the proptech market size.
SHOULD I START A PROPTECH COMPANY?
Before you jump into building the next proptech startup, take a look at the real
estate tech startups already out there. Look at the real problems people in the
industry are solving with manual means or multiple solutions. Is there real pain
enough for people to pay for an early access program before you have the
solution completed? Do you have a solution with a real competitive advantage?
Answering these will guide you towards if starting a company is a good idea to
explore.
WHY SHOULD REALTORS WORK WITH REAL ESTATE INFLUENCERS?
Learn Why is Influencer Marketing is Critical for Real Estate? And, learn the
best type of influencers for individual agents to work with.
INCREASE REAL ESTATE SALES USING SEO
Learn the Importance of SEO for real estate agents, teams, and brokerages. Get a
quick overview of what you need to know and what to avoid.
HOW TO BUILD A SUCCESSFUL REAL ESTATE MARKETING TEAM?
In real estate, whether you're selling or buying, the property must be ready to
show at all times of the day. This means that an experienced and well-trained
team will have to work together and communicate effectively to ensure that each
property shows its best qualities. While marketing is an…
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6. Cognitive disorders – we utilize a search engine linked to Wikipedia and
Wiktionary, allowing people with cognitive disorders to decipher meanings of
phrases, initials, slang, and others.
7. Additional functions – we allow users to change cursor color and size, use a
printing mode, enable a virtual keyboard, and many other functions.
Assistive technology and browser compatibility
We aim to support as many browsers and assistive technologies as possible, so
our users can choose the best fitting tools for them, with as few limitations as
possible. Therefore, we have worked very hard to be able to support all major
systems that comprise over 95% of the user market share, including Google
Chrome, Mozilla Firefox, Apple Safari, Opera and Microsoft Edge, JAWS, and NVDA
(screen readers), both for Windows and MAC users.
Notes, comments, and feedback
Despite our very best efforts to allow anybody to adjust the website to their
needs, there may still be pages or sections that are not fully accessible, are
in the process of becoming accessible, or are lacking an adequate technological
solution to make them accessible. Still, we are continually improving our
accessibility, adding, updating, improving its options and features, and
developing and adopting new technologies. All this is meant to reach the optimal
level of accessibility following technological advancements. If you wish to
contact the website’s owner, please use the website's form
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