Prop-WHAT?
Prop-tech. Although the word, a contraction of “property technology,” did not exist ten years ago, it has now taken the venture capital world by storm. But what it means, and to whom, varies widely within both the tech and real estate sectors. Is the goal to render the real agent obsolete, or to help her do her job more efficiently?
In the last two or three years a new sort of prop-tech company has arisen: one whose goal is to enable rather than remove the broker. This more recent group of entrepreneurs recognizes that, while some lower priced sales and rental transactions can be handled with minimal agent involvement, most people who are making the biggest financial decision of their lives (and almost all the very rich who possess multiple homes) want an expert advisor with them to contextualize and troubleshoot the process. In times of stress, most humans want the insight and interaction which another human provides!
This new generation of prop-tech creates tools which enrich the agent/client relationship. This may be as simple as facilitating an exchange of market data around a particular property or neighborhood, or streamlining the process of generating a comparable report to aid in pricing, or as complex as a platform which offers buyers rich neighborhood data, real estate tax histories, and block by block insights into a specific area’s benefits and drawbacks. At the same time, a number of tech entrepreneurs have committed to creating systems which better enable search capabilities and data aggregation for both agents and consumers, while listing syndication makes comprehensive listing information available on an ever-growing number of on-line platforms.
On the one hand there are those investors for whom prop-tech means the opportunity to disintermediate mortgage and real estate brokerage; they aspire to either knock out the broker altogether or vastly reduce her role by using technology algorithms to automate much of what listing agents and buyers’ agents currently do. This was the original thinking behind prop-tech: minimize the agent’s role and let the consumer do it himself. The disintermediation in the travel and stock brokerage industries were frequently cited as models.
Purplebricks or Redfin, companies which charge reduced fees to consumers in exchange for less day-to-day agent involvement and a more technology-heavy approach, exemplify the current face of this trend. Enabled by the democratization of listing information (which is now publicly available everywhere), these companies and others with similar aspirations strive to remove “inefficiencies”, especially from lower-priced markets in which homes are more a commodity than a specialty item. They attract hundreds of millions in investment dollars each year and capture a small but growing segment of the national marketplace.
Like attorneys and personal wealth advisors, real estate agents are here to stay. We perform a vital function within the transactions we facilitate, providing guidance, market knowledge, and judgement of a sort that even the most advanced tech algorithm cannot duplicate. The best technology enables us to service our clients faster and more completely by placing deeper and more targeted sales and marketing data at their disposal. In the end, in high value markets like New York, our tech enables us. It makes us faster and more efficient. But no amount of machine learning can reproduce the intuitive grasp of market subtleties which we offer our clients every day.