I’ve sat in on a lot of meetings between industry players and startups targeting the residential real estate space. Something that surprises me is the frequency with which I hear the same pieces of feedback and “things you should understand” from industry professionals.
The following is an informal list of items I typically hear about that I believe every RE tech startup should know:
- Brokers – and brands – want to attract and retain agents. Everything they do is focused on this, and startups must realize this. The technology tools brokers and brands select should provide agents something they can’t get somewhere else and provide an unfair advantage to attracting and retaining agents. The best way to do that is twofold: make an agent more productive and drive more commissions, and always frame things in terms of attraction and retention when pitching to brokers.
- Top agents are bombarded with technology tools all the time. Companies must be strategic to get in front of the right people, brokers, and brands. If you build it…they will not come.
- Brokers are frugal. It’s incredibly hard to drive technology adoption from the top-down so brokers are unlikely to invest in a technology tool, service, or platform without seeing a clear ROI to agents or a clear indicator of agent attraction/retention. That said, brokers will spend when they see that story told.
- Only the top performing agents have a true ability to pay. They make the most in commissions and can afford more technology solutions. It’s worth noting that the 80/20 rule doesn’t explain commission split, it’s probably closer to 90/10. Selling to the “long tail” of agents is very challenging, at best.
- Technology should do everything that doesn’t require a personal touch for an agent. It’s said that residential real estate is a people business. Finding clients and providing value are very people-centric activities. Technology can, and should, do the rest – and assist in the people-centric activities where it can. The products and services that get the most adoption do this in the most intuitive way possible (from a UI and usability perspective).
- Agents use a lot of tools, and the compatibility between all of them is important. There are only so many apps and interfaces that people want to process and use every day. Integrated vs modular design is critical to understand to place a startup in a strong strategic position.
- Crawl before you walk. Brands, brokers, and agents tend to “try before they buy”…and the process can take a while. This time requirement must be taken into consideration. This is the reason why strategic partners and early adopters are so crucial: if they can reduce the time required to get a product-market fit right or enterprise-level sale closed, they need to be involved.
- Just because you aren’t venture-backed doesn’t mean you can’t be successful. A lot of products are built by people in the industry that have experienced a pain-point themselves, and did something about it. The problem VCs face is determining whether the problem is large enough to provide them venture returns, which means things need to be huge. Just because your product doesn’t solve everything doesn’t mean you can’t be a good company.
- Products must be easy to use. Agents have a hard time dedicating time to get up a learning curve when they know they can be cultivating relationships and building their network. Agents eat what they kill and the best ones are very efficient. Learning is an upfront cost that takes time to realize the benefits of – a challenging trade-off for some.
What these pieces of feedback and information point to is a real estate agent of the future that is tech-first and working for a brand that provides differentiated technology tools. These brands will probably pull business away from slower-moving incumbents. In a sense, I see some older brands trying to build technology tools for an aging real estate agent population that is resistant to change and slower to adopt new technologies. Brands that can attract younger agents to begin their careers and meet their technology expectations will be at an advantage – even moreso when those agents’ spheres mature to home buying ages.