By Frederick Peters, Warburg Realty
Proptech. 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 estate agent obsolete, or to help him or her do their job more efficiently?
In the past several years, a new sort of proptech company has arisen: one with the goal 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 people want the insight and interaction which another human provides!
This new generation of proptech 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 deep 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 online platforms.
On the one hand, there are those investors for whom proptech means the opportunity to disintermediate mortgage and real estate brokerages; they aspire to either knock out the broker altogether or vastly reduce his or her role by using technology algorithms to automate much of what listing agents and buyers’ agents currently do. This was the original thinking behind proptech: to minimize the agent’s role and let the consumer do it themselves. The disintermediation in the travel and stock brokerage industries were frequently cited as models.
Some companies charge reduced fees to consumers in exchange for less day-to-day agent involvement and a more tech-heavy approach, and exemplify the current face of this trend. Enabled by the democratization of listing information, 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 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.
Frederick Peters entered the real estate business as a residential agent in 1980. After working as a sales director at Albert B. Ashforth for a number of years, he acquired and renamed the 95-year old firm in 1991. Since that time, Peters has expanded the company from 40 to 130 agents and from one to three locations.