Proptech Primer: Trends In Real Estate Technology

Proptech Primer: Trends In Real Estate Technology

In recent years, PropTech has emerged as a dynamic new force within the real estate Technology space. usually speaking, PropTech is a collective term for global digital transformation occurring within the real Estate industry. PropTech seeks to bring new workflows to bear across this broad sector. This trend has dramatically accelerated in recent years, fueled by an explosion of venture funding and a steady infusion of startups that have risen to the challenge of transforming yet another ‘traditional’ industry. There are a significant number of VC funds, hedge funds, and incubators focused on PropTech, funding, and powering the present startup wave.

Broadly speaking, there are many trends at play in the PropTech sector. For this discussion, i will focus on the real Estate industry, specifically although this broad sector additionally includes Construction, Building Management, and other related fields.

The market trends in PropTech can be roughly sorted into 2 categories:

1) Innovators who wish to disrupt and fundamentally change the method that residential and commercial real estate is bought and sold by eliminating brokers and realtors. this is the ‘consumer-centric’ model.

2) Innovators who wish to bring new technologies to enhance and transform the traditional business of real estate. this is the ‘broker-centric’ model

In the consumer-centric model, PropTech innovators are seeking to replace (or eliminate) traditional real estate brokers and Realtors with a lean and efficient transaction process geared directly towards consumers. Naturally, this is a huge threat to the conventional real estate business model.

The broker-centric innovation models seek to transform and enhance the real estate transaction model through innovation wherever the real estate broker or agent remains at the center of the transaction. the traditional brokerage community has embraced this second trend.

It is value noting that over ⅔ of the funding and development within the PropTech space falls into the consumer-centric category due in part to the broader market share and opportunity size.

For the consumer-centric startup, there are significant challenges posed to any disruptor of an outsized and well-established trade section that's threatened by technological change.

For the consumer-centric startup, there are significant challenges posed to any disruptor of a large and well established industry section that is threatened by technological change 

Both Zillow and Redfin fall under the consumer-centric category as they still disrupt the normal brokerage model. Zillow introduced the automated Valuation Model (Zestimate) to enable consumers to understand the potential value of a property without consulting a realtor. Zillow began as a property search portal and is steadily transforming into a web brokerage. Redfin may be a brokerage that leverages technology to supply better customer experience and lower fees. Together both Zillow and Redfin have captured a majority of online land traffic due partially to their success at understanding the importance of consumer user experience (UI/UX).

The buyer trend, where a home merchant can receive a moment all-cash offer online, has been embraced by both firms and is presently being tested in many regional markets. to know the size of this single opportunity, Zillow estimates that its iBuyer program might generate up to $20B annually within a few years.

For the consumer-centric startup, there are significant challenges posed to any disruptor of an outsized and well-established industry section that's threatened by technological change. this will be particularly true within the US, where the National Association of Realtors features a poor diary of responding to structural changes within the industry. That said, a number of the foremost innovative developments in PropTech still come from the consumer-centric group, who are liberal to think outside the normal trade boundaries. For the broker-centric innovators, a serious challenge is a way to partner with trade leaders (brokers) to develop an answer that meets the everyday desires of a broad group of consumers.

Make no mistake about it: this is often a time of fundamental change throughout the whole land industry, fueled by rapid innovation and growth within the PropTech space. Many of those innovators are seeking nothing but the elimination of brokers and realtors on an outsized scale. Several PropTech startups are better funded than the brokers they seek to exchange and are liberal to innovate outside of land industry constraints and regulations. For a CIO, this represents a challenging opportunity.

Agile brokers will partner with like-minded startups that seek to reinforce rather than replacing their workflows. With proper execution, this partnership can significantly improve an organization’s capabilities because it relates to new technology development. complex workflows that utilize AI, Machine Learning, and tongue processing are beyond the scope of most brokers not operating in partnership with an outdoor technology team.

A PropTech CIO must develop a broad understanding of the landscape and help to formulate digital strategies that will keep the organization before this breaking wave of innovation. this needs industry research also as evangelism within one’s organization. Forming an organizational partnership together with your CMO and digital marketing teams is additionally crucial, as this group is typically an early adopter of the newest technologies.

The PropTech sector is driving a wave of rapid change across the important estate industry and therefore the land technology space. Consolidation is happening and affects technology startups and brokers alike. big brokers are rebranding themselves as technology firms whereas technology startups are fundamentally changing the way that we buy and sell housing. It’s an exciting time during this sector, and that I encourage my colleagues here to urge within the game.

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