The tech side of the real estate industry seemingly grows hotter every year. In 2020, that trend has accelerated as technology’s increased role in transactions throughout the COVID-19 pandemic has helped agents connect with their clients, generate leads and facilitate transactions at a time when other businesses are having a difficult time staying afloat.
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Time, energy and money all go into developing useful tools that agents will want to use on a day-to-day basis. Ro Baldwin, a Coldwell Banker agent in Hinsdale, believes many agents prefer to stick to tried-and-true tools and techniques that have served them well in the past.
“Most real estate agents don’t like to take the time out to learn a new product,” she said. “You have to try to make it user-friendly and have staff available for support so if you have a hard time with it, you could reach out and chat with someone about how it works and why it works.”
Perhaps partially due to that increased pressure to perform, the funding for delivering the next hot real estate, or proptech, app often comes from venture capital firms these days. Investors who are on the lookout for a product that’s going to give them a good return know that real estate is a vast field. There’s a definite upside to finding a product that has the potential to reach the millions of agents in the field.
The crowded proptech ecosystem
More than 2,000 proptech companies are based in the United States, according to Unissu, a proptech marketplace and consulting firm. They span the real estate industry, from residential to commercial to rental needs, and include smart building tech and mortgage tools. Some are major players in the real estate industry, like the big data firm CoreLogic.
Many more are relatively obscure. And for all of those Unissu lists, there may be hundreds or thousands of similar companies trying to break out.
One of the key tasks for many real estate professionals is the need to keep the sales pipeline full. But of the tools that agents use for lead generation, most aren’t exclusive to real estate. Scott Shapiro, industry relations client partner for real estate at Facebook, cited a 2019 study by Borrell Associates Inc. that estimated that 80% of agents in the U.S. use Facebook.
“With that number in mind, we realize that we have a responsibility to the industry to help align agents to use our platforms for business outcomes,” Shapiro said, noting that Facebook published a guidebook for agents looking to use the social media platform to boost their business, hosted an industry webinar and will have a site specifically designed for real estate professionals soon. “We want to make sure agents and brokers know how best to use our platforms for lead generation, branding of your services locally for consumers and to communicate with them more effectively.”
Developing new technology for real estate requires a deep understanding of the industry, knowledge of how agents work and the ability to convince them that the product being offered is better than what they’re already using. Baldwin feels tech companies should keep the actual needs of agents in mind when developing new tools.
“We are on the front line,” she said. “Keep it user friendly; keep it simple. Create products that possibly can be hyperlocal to your market and make it easy for us to remain in front of our sphere in our network.”
But building technology just for one industry can be risky. While they do concentrate on real estate technology, Chicago-based Moderne Ventures invests in early-stage “horizontal” companies that can serve multiple industries, according to partner Shawn Hill. Doing so protects those companies and investors in the event of economic downturns.
“There are other industries that have some of the same business problems that real estate people are solving,” Hill said. “If you talk about lead gen, or financing, or referrals or other things, those aren’t real estate-specific, either. If you can find companies that are serving those broader markets and apply those to real estate, when the economy goes bust and all of a sudden you have these events, your companies can survive because they’re not beholden to just real estate agents.”
Solving the lead gen problem
While many tech tools are marketed with the promise of helping agents convert their leads, it still falls to the agent to figure out how to best use them.
One problem caused by the wide net of online portals is that agents need to narrow the number of leads they follow down to those that are more likely to make a purchase, weeding out curious neighbors who visit sites like Zillow to see how much the house next door brought on the market. Hill expects refinements to artificial intelligence to help agents with the task of qualifying potential buyers.
“We started looking at other companies that are doing more conversational or behavioral AI, which now is taking that interaction on the lead form and using AI to start to qualify,” he said. “So, when a lead comes in, there’s been much more conversation. Data models have seen hundreds of conversations like this and can now start to learn. These are the people with the propensity to purchase, based on hundreds or thousands of people who have gone through sort of that same workflow.”
Shapiro offered Facebook’s Custom Audiences and Special Ad Audiences tools as ways to efficiently target consumers. Additionally, the platform’s lead ads program helps find consumers across the social media platform itself and affiliates like Instagram, Marketplace and Messenger. Special Ad Audiences enables agents to define a target audience for their campaigns on the platform. With lead ads, users tap an ad and a form generates that’s already populated with their contact information. If the user taps submit, that form goes directly to the advertiser.
“We’ve heard from our partners about just how important lead generation is for their real estate business,” Shapiro said. “We’ve worked hard over the last several years to build lead ads as a product that helps consumers connect to your businesses in an easy, mobile-first manner. Prospective customers want to hear from your business but filling out forms can be difficult on mobile. Facebook lead ads make that easy.”
Leveraging an investment
The tech companies Moderne Ventures funds and supports through training on how to reach agents include Addressable. This Los Angeles-based firm uses patented robot technology to create handwritten, personalized mail for marketing campaigns and lead generation. Addressable helps agents cut through some of the processes that might bog them down if they’re putting out mailers themselves to generate leads.
“Many times, agents are cobbling together a bunch of different solutions,” Addressable co-founder and CEO Chris Tosswill said. “They have some company out there that they’re pulling a list with. They might hire a freelance copywriter. If you’re an agent and you’re just sending out postcards to do your lead gen, you have a number of different pieces that need to be dialed in to get the most impact.”
Few people receive a handwritten letter on a regular basis, which is something the company seeks to leverage. The sheer novelty of the mailings helps draw attention to the agents sending them out, putting them top of mind with former clients or helping to attract new business.
“It is a very interesting sort of break from the normal, and because of that, it’s not just the fulfillment of the handwriting,” Tosswill said. “It’s because we also think about the whole thing. You know the old adage, ‘The medium is the message,’ and the medium of the handwritten letters is warm, personal connection. We can help real estate agents or nonprofits or tech companies better connect with their current customers or clients or acquire new business.”
Moderne Ventures helps firms like Addressable reach the right audience and navigate a market that includes individual agents, brokerages, corporations and associations, some of which might provide their own, competing tech tools.
“Our biggest value is that we help companies figure out all of that, so they don’t waste cycle time and money and effort, because time kills all startups,” Hill said. “Especially when you’re going through downturns and capital isn’t as fluid as it is all the time. You don’t have time to waste 18 months trying to figure out your go-to market; it’s better to partner with a domain-specific real estate fund.”
Baldwin is among Addressable’s clients. “I try to adapt tools that are easy to use and have a proven ROI,” she said. “If it is difficult to understand or takes a lot of time to use the product, then I know it probably won’t work for me. The reason I was attracted to Addressable is because it is super easy to use, to understand and to track results.”
The company’s offerings enable agents to farm prospective clients and keep in touch with their sphere through regular mailings that can be scheduled throughout the year, but it does go beyond the typical CRM list. Addressable allows brokers to send mailings automatically to homeowners with similar properties in a given neighborhood any time an agent closes a deal.
Agents value connections and continuity, and Hill sees this tendency translating across their adoption of tech tools. That’s why developers can’t expect their new app to be an instant hit when agents have so many options to choose from.
“If you’re a technology vendor coming into the space or company coming into space, people have to see you for multiple years,” he said. “You can’t just come in and throw up a booth at the [National Association of Realtors’ annual convention].
Your booth isn’t going to get swarmed. There’s so much technology that they tend not to adopt anything because like next year, there’s going to be something else. They sort of stay with the tried and true and they really look to their peers and their coaches to weed through all of it.”
Despite that tendency to stick with more of the same, Shapiro encourages agents to work past their own misconceptions about technology and embrace the digital tools that are available to them.
“Right now is the time to do more with digital marketing tools,” Shapiro said. “While we recognize that physical distancing has affected business as usual, there are real opportunities in local real estate. The vast majority of the steps in buying or renting a home can already be done online. Even steps that were once in-person only can be brought online, like hosting a digital open house on Facebook Live and Instagram Live.
Digital tools can help you win mindshare. That mindshare can turn into market share. Generate leads, build your brand, establish yourself as a local market expert and lean into digital solutions to transform your business.”
For their part, tech developers need to remember that real estate remains a very personal industry that’s based on relationships, trust and reputation. “The best real estate tech offerings will understand that real estate is still a people-first business,” Baldwin said. “They will create user-friendly lead generation tools for agents, so you have time to be out meeting potential clients, going to lunch, dinner or attending networking events.”
Tosswill believes some may lose sight of the human element of real estate when they’re building tools. However, he noted that those who can embrace the intensity of real estate and translate that energy into a smooth transaction are the ones most likely to stand out as a trusted partner.
“It’s the biggest transaction that most people do in their lifetime,” he said. “This is their biggest asset. It’s emotional. And it can be scary, though hopefully it isn’t. The goal of the agent is to shepherd the individual through the process and make them feel taken care of. That’s what I think makes the great agent stand out as someone who has the ability to make everything seem calm. They’re cool and collected, even if there are a lot of other things going on.”