Collaboration is the way forward in PropTech
The property market can be incredibly stressful. Contacting a traditional estate agent is just the first step in a long and uncertain process that involves multiple different parties and processes. The rise of personalised, accessible alternatives like PurpleBricks, Settled and Housesimple.com have seemingly made life easier for consumers when it comes to buying, selling, renting or letting property. However, digitalising property services has far from solved underlying issues in the market. Consumers now have to source conveyancers and mortgage brokers themselves, who then chase each other to finalise details. In an attempt to simplify this process, a new breed of PropTech company has emerged. Instead of eating the lunch of incumbent agencies, they aim to work alongside them. But how will this disrupt real estate?
The emergence of a collaborative approach within the property market is no more apparent than at London based startup OneDome. OneDome represents a different approach to property technology. “We are one of the first PropTechs who are trying to join up the entire property transaction process,” says Rachel Dipper, OneDome’s VP of Marketing. “With the advent of the internet, consumers don’t feel the need to go to high street agents any more. This means they now have to go off and find their own conveyancer and mortgage broker. They have to communicate with three different people who are then all chasing each other to find out what’s going on.” OneDome’s approach is simple – equip estate agencies with the necessary tools to ride out digital disruption. According to Savills, the property sector was worth £1.29 trillion in 2016 and has grown by 55 per cent in five years. Even after embracing digitalisation to an extent, the industry faces considerable setbacks. “When it comes to property transactions, consumers will still tell you it’s a challenging process. Making the process completely visible makes it much easier. Everyone’s connected,” says Rachel. One of the key challenges for PropTech startups is convincing agencies to invest in technology. Nonetheless, Rachel is confident that this issue can be resolved. “People have this massive misconception about hybrid agencies. The way to overcome this is to have really good tech, and give it to really good estate agents.”
How will the hybrid PropTech model disrupt the market?
Merging the high street estate agency with property technology is an ongoing task, but could be a wise move for both legacy and emerging businesses. Incumbent businesses could make use of innovative techniques, whilst new PropTechs could benefit from access to extensive networks and market experience. Possibly the most transformative technology is big data. OneDome, for example, has developed a tool that allows users to see what an area is like based on data points. Data is collected from multiple sources and then crunched by an algorithm to condense information about education quality, crime rates, lifestyle and other categories. With 160 data points per post code, it’s easy for customers to compare areas. Eventually, most if not all property companies will use data to better inform their customers – not to mention themselves. Another integral part of the industry which could be effected is payment. Unlike traditional agencies, digital services like PurpleBricks charge an upfront fee. A hybrid model could encourage integrity within the market, luring customers away from the original PropTech companies. But what about bricks and mortar businesses? PropTechs have undoubtedly disrupted legacy companies, but there’s still merit in the long standing firms that continue to influence the sector. In fact, a cooperative approach to PropTech is likely to be beneficial for them – if, of course, they’re willing to accept change. It looks like the real estate market is about to face yet another wave of disruption, but the adoption of a collaborative attitude could be a lengthy process. Around 60 per cent of the market is still dominated by smaller, regional branches. “It’s a very traditional industry. I think embracing technology is going to be a challenge for some agents,” says Rachel, and after having worked with agencies even before joining OneDome, she would know.
It looks like three different camps have emerged within the real estate market. Firstly, there are traditional agencies. Secondly, there are digital replacement services like PurpleBricks. The third camp comprises companies with a focus on collaboration. This co-operative, hybrid strategy aims to improve rather than remove existing services. But even without the help of PropTechs, traditional estate agents are unlikely to disappear due to their market dominance and established business model. However, as more and more services are brought into single platforms, digitalisation will gradually lessen the need for human interaction. Either way, competition is heating up. Ultimately, the future of PropTech looks bright – especially from a consumer’s perspective.
Do bricks and mortar businesses need to invest in PropTech? Will collaboration between legacy companies and PropTech startups become an important trend in the industry? How might companies like PurpleBricks, Settled and Housesimple.com respond? Share your thoughts and opinions.