I loved the recent Inman story by Andrea Bramblia highlighting what technologies real estate brokers and agents were clamoring for and what they wanted to see from their technology vendors. Listening to customer feedback and what customers really want can be a challenge, but it is a critical exercise for any technology vendor that hopes to build a delightful product that scales and “wows” customers.
And in principle, I agreed with many of the points that the surveyed agents made. They want simple tools that are cost-effective, deliver a high return on investment and integrate well with others. They want someone (preferably the National Association of Realtors) to own the responsibility of providing independent reviews of these products and to tell them which ones to use for each functional area of their jobs. They want better training from their brokerages and the vendors themselves who supply the technologies.
Most technology companies do an excellent job of trying to meet the above needs of real estate professionals. As is often the case, however, doing all of these things is not quite as simple as it sounds. There are many challenges that technology vendors face in trying to provide agents with the items on their wish list. Here are the three biggest challenges that real estate technology vendors are constantly up against:
1. The real estate customer base is extremely fragmented across the United States.
2. Engineering talent isn’t cheap and is difficult to obtain (this is true in any industry).
3. Trying to integrate new technologies with other legacy systems is holy hell.
The biggest challenge that real estate technology vendors face when trying to build great products for agents — and the thing that I believe leads to the other two problems mentioned above — is that every state, city, office and even every agent has a different process and way of doing things. By their own admission in the survey, agents said, “Real estate practices change from state to state due to state laws and local customs.” Everyone wants something different out of technology vendors. Ergo, the real estate customer base (from a technology vendor’s perspective) is extremely fragmented.
Let’s take a step back here and examine what is required not only for a technology company to scale and thrive, but just for it to survive. In order for a technology company to survive, it has to build a turnkey product that meets 80 percent of customers’ needs and is at a price point that everyone can afford. A great example of this is Dropbox — it offers unlimited document sharing and syncing for a modest $99 per year. Until recently, when Dropbox started to pursue the enterprise market, you had to take the features and solutions that they offered at the price point they dictated or you didn’t use the product. (Dropbox isn’t going to build a couple of extra customized features for you for $500, for example.)
The other way that a technology company can survive is to focus on building customized solutions for every customer at a price point that warrants the time and resources spent on those customized solutions. A great example of this is Oracle. You’re not signing up for Oracle’s product and getting an out-of-the-box solution for $99 per year. Oracle builds customized solutions only for (generally) larger companies, and most of the sales contracts are in the six-, seven- and eight-figure per-year range.
Most real estate brokerages operate on a small scale, so most technology vendors in the real estate space opt for the first option, where they build out a turnkey solution that meets what 80 percent of customers need at an affordable price — or they’ll serve both small-business and enterprise real estate brokerages, but the distinction between services is very clear. Because of this, it’s critical for real estate technology vendors to focus on what the 80 percent of their customers need, lest we spread ourselves too thin and build something that doesn’t scale. (The need for technology companies to develop scalable products will be a topic saved for another blog post.)
So if every franchise, office, team and agent has a different way of doing business (yet wants and needs software to be affordable), you can see the conundrum that many technology vendors face — it’s easy to get caught in the middle of trying to build out customized solutions without receiving compensation for the extra resources and time spent required to build these solutions. That’s the no-man’s land that technology companies don’t want to inhabit, as it can mean a quick and imminent death. As a technology vendor, you need to pick one or the other (or very easily distinguish both services separately and have the resources to execute both) and make your value proposition as clear as possible to agents.
Some responsibility also lies with agents; they should understand that it’s simply not possible to build every customized feature that meets their needs or integrate every local form from their association for a mere $25 per month.
Tomorrow, we’ll examine the problems of engineering talent and legacy systems.
Mark Thomas is a serial entrepreneur and the co-founder and CEO of Reesio.