The first wave of the digital revolution hit in the early noughties – soon after that Rightmove and later, Zoopla, were born. But 15 years on, the next giant leap has arrived which, if its proponents are to be believed, will have an equally profound effect. You may have noticed it. Everyone is now talking about ‘proptech’; the community of small to medium-size new companies that are launching online services into the property market both for agents and consumers.
But rather than monolithic giants like Zoopla, proptech firms are a swarm of smaller businesses changing the way property transacts, bit by bit, with no less potential impact.
In the past 12 months we have witnessed a significant proliferation in the number of start-ups entering the market. Some of the digital world’s best minds are fixing their brains on making the property game more seamless, not only for purchasers and vendors but also for agents, investors and developers in the sales market.
“The property market is an industry steeped in history and, to a certain extent, set in its ways but, perhaps later than other sectors such as retail or transport, technology is starting to have a real bearing on the property industry,” says Richard White, CEO of Goodlord, a consumer and business-to-business app and online platform that helps agents manage the process of setting up a tenancy more smoothly.
“But we’re only at the start of this process and I think there’s so much more to come yet,. We’re in an extremely exciting time.”
The reasons for this wellspring of digital creativity are numerous. Millennials (born after 1980) expect everything to be a few clicks away, while mobile and tablet ownership is near saturation point (93 per cent) and usage levels are not far behind, 66 per cent of us use a mobile device to go online. There are also more industry-specific reasons, including the threat of online agents and increased competition for every sale. The most common is the widespread use of agency software, where suppliers now integrate proptech services into their suites and, increasingly, using open APIs (the online equivalent to a USB port) which enable suppliers to ‘plug in’ their services without significant geekery.
Our approach is to offer a core product of fundamental services that agents expect, then hook into all the proptech companies that they want. Justin Morris, Dezrez.
This gave proptech start-ups direct access to thousands of agents in a way that would have taken years for them to achieve. “The IT that we used to build our software meant that the effort required to integrate with third parties was onerous,” says Justin Morris, CEO of Dezrez. “This was a key driver to us spending four years developing a completely new product, Resi.
“Our approach has been to offer a core product of the fundamental services that agents expect and then ‘hook’ into all the proptech companies that agents now want.”
WHO LEADS THE WAY?
Almost every corner of the property industry now has at least one proptech company launching a solution into what it sees as convoluted and highly manual operational areas: conveyancing, valuations, property development and investment, document handling, lead generation, key management services and planning, to name a few.
“There is a rush to digitalise everything,” says Nick Hubbard, Sales Manager at Estates IT. “Some software houses are more willing than others, it boils down to how much time you have to complete the integrations, and if clients are asking for it.”
Estates IT has 35 integrated proptech partners and put up a webpage explaining who they were, “so many agents were phoning up to ask if we had this or that service,” say Nick. These include Adobe Sign, Growth News, Mail Chimp and BriefYourMarket and 24X.
Justin Morris believes the modern agent is looking for a “different proposition and wants to exploit proptech services to give them a business advantage,” he says.
“There are a lot of proptech companies and because the property sector is a large vertical market it has lots of niches which these companies look to exploit.”
“CRM suppliers are really waking up to the fact that they need to open up to these innovative proptech companies and have as many of them plugging into your system as possible and enriching their customers’ dataset,” says Richard White of Goodlord.
Olly Culverhouse, CEO of Signable, the electronic signature company, created the software to cater for a sectors including legal and recruitment, property is now his fastest growing market, handling 60,000 documents for 2,000 clients every month.
“Property is very operationally heavy and the rise of mobile phone usage and remote working means there is a demand for more flexible software and technology that can ease the agents’ burden,” he says.
“We’re also seeing property companies who are setting out to put technology at the core of their operations; the best example of that is Purplebricks. They really use technology as the foundation for their business rather than tacking it on to differentiate them from their competitors.”
Homeshift, a company only recently out of incubator mode, has a more unusual offering for sales agents. It was set up by 20-something Kenny Alegbe after he bought his first home and then had enormous problems setting up the utilities.
“Not only was the sale process painful, but trying to get services set up, my address changed and visibility over my usage and spend was a nightmare,” he says. “Anyone who ever tried to set-up internet in a new home knows what I’m talking about. So like any restless soul I couldn’t help but find a solution to what I thought was such an obvious problem and Homeshift was born.”
The company helps people set up the main utilities in their new homes and then enables them to manage them for best deals. Homeshift offers agents who introduce clients participation in future revenue when clients move utilities as well – as an ability to keep tabs on former customers and capture instructions at a later date.
The company has already signed up five sizeable agent networks including Andrews and Northwood. “I think agents have feared technology because it’s always presumed to be a threat, but the mood of the market is changing and agents now recognise that technology can give them an edge, in our case it’s also a great way of maintaining a relationship with their past, current and future customers,” says Kenny.
But in the sales environment, proptech firms aren’t just about doing the heavy lifting. Several new start ups enable agents to add depth to their expertise, rather than their operational speed.
Agents must compete based on the value they offer, more than price. Our system gives the opportunity to manage clients in a quantitive fashion. Gavriel Merkado, REalyse.
A good example is REalyse. It was set up a year ago by former City and Quintain data brain Gavriel Merkado, who realised that there wasn’t any ‘pure’ data in the property market and that was a gap that REalyse could fill.
“The estate agency market is being transformed with low-cost competitors coming in, while transaction numbers remain low,” he says.
“Agents are having to compete, based on the value they can offer, rather than the price and our system gives agents the opportunity to manage clients in a more quantitative fashion.
“Rather than just telling their investment and developer clients what they know about the market, they can show them what’s happening using our data.
REalyse includes 167 datasets such as house prices, sales history, per square foot prices, property types and areas of the country. “We can also provide data on how people search for property online and about local demographics including mortgage debt,” he says.
Daniel Mohammed, on the other hand, has recently launched Urban Intelligence, a clever system which aims to enable agents to identify the most likely planning permission to be given to a plot of land and help them to identify suitable clients to buy that land.
Urban Intelligence enables agents to identify the most likely planning permission to be given to a plot of land to help them identify suitable clients. Daniel Mohammed, Urban Intelligence.
In the past developers and agents working in new homes departments would have to trawl through different council website to determine planning practice in that area.
Now, users of Urban Intelligence have this information at their fingertips.
Daniel says that his company is an example of the “the many start-ups looking to tackle very select challenges in the property sector.”
But its not just about fresh-faced startups offering new services, or ‘disrupting’ existing ones, established companies are getting involved as well.
Landmark, the parent company of Metropix, one of the leading floorplan providers, has launched SmartVal, a home valuation tool designed to drive leads to agents via a button on the agent’s website linked to Landmark software and data.
Spokesman Brian Farrell says the service is proving to be a good sales generator despite agents’ nervousness about accuracy.
“It’s understandable, if a valuation pops up on the screen that is different to the agent’s final valuation after a visit, they’ll be worried about having a difficult discussion with the prospective client if the screen valuation is much higher than the face-toface one,” says Brian.
“But there has been a huge sea change in attitude to this because the SmartVal data is based on the Average Valuation Model (AVM) that lenders use for low loan-tovalue mortgages, and that very often is based on our data.”
Brian says that, because the valuation tool captures contact information, the agents that have used it so far have been able to contact prospects via the tool and use it as an introduction to gain a valuation appointment – and hopefully an instruction.
Of all the proptech spokespeople interviewed for this article, it was clear that what they like about the industry is that agents are prepared to give new ideas a go and that, after the US, we are the best place to launch an innovative new idea.
Which of these proptech companies become tomorrow’s Rightmove? That’s down to “which start-up has the right idea and will make the lasting impact,” says Gavriel Merkado.
I’m sure all the aspiring Ed Williams and Miles Shipside wannabes would agree.