Improving Sales & Marketing for Residential Sales

Published on
June 19, 2024
June 13, 2024

For the last decade, we have been preached a reality where the real estate agent could be replaced through SaaS, automation and varying digital platforms. However, the market demands more than just the automated digitized servicing seen in many current solutions.

Listed companies such as Zillow and Opendoor have seen declines in their valuations over the past 2-3 years due to a number of reasons, however a large component is due to lack of projected adoption and poor financial performance which has weakened investor sentiment. Although we cannot attribute the decline to a lack of adoption completely, we believe the shift in investor sentiment has become more aligned with the market sentiment.

We can see in the chart below that both companies experienced a spike during the COVID period, due to mandatory isolation which reframed possible expectations about residential sales without face-to-face interactions. Since this period as markets have returned to more normal conditions investors are faced with the reality that these models won’t have the scale of adoption as expected.

Opendoor and Zillow Historic Closing Prices
Opendoor & Zillow Historic Closing Prices

So why is there a lack of adoption for these modern residential multiple listing service platforms?

The challenges

Face-to-face preference

Home buyers invested interest is heightened due to the large sums of money involved and the significance of the property they end up with as it will end up impacting how they live. As such, much of the consumer confidence is built through face-to-face engagement with real estate agents. This point is further relevant because of the elderly populations mistrust of technology due to the wide variety of online scams targeting them.

Slow market adoption

The real estate space is quite conservative when it comes to technology adoption, especially in regard to residential sales. The purchase and sale of property has existed throughout human history and so the market is relatively content with conventional processes, while being slightly bearish about alternative or new methods.

Crowded market

The residential sales space is crowded with multiple entity types sticking their fingers in the pie. Large real estate enterprise, start-ups, agents and other large techs are all competing in the same markets. Scaling geographically is also challenging as market conditions, competition and regulations differ majorly country to country, with many local players in each market.

Looking ahead

We see a few areas for MLS platforms to drive automation and efficiency in the sales process while still providing the valued services the market demands.

To start with, it’s now clear that face-to-face engagement and assistance provides buyers comfort for significant purchases. Instead of replacing the real estate agent, MLS platforms and other digital solutions should empower real estate agents. It is well understood that the sales process is inefficient, so automation has key role in optimal solutions. However, at The Proptech Connection we believe much of this automation should remove the administrative work typically done by agents, so they can continue their in-person interactions, while the process is streamlined.

Buyers and sellers value speed of delivery, however they don’t need to see the automated processes occur. Future solutions should shift their go-to-market emphasis to B2B and strategic partners, targeting real estate agents and property groups with offerings around efficient and streamlined processes. Buyers are far more concerned with the properties they will potentially be moving into, rather than the process itself and will use a platform if there is quality supply available.

Overall, we see the optimal model using automation to processes like qualifying applicants, documentation requests, legal & financial checks, property valuations and virtual tours amongst others. However, even with solutions like virtual tours available, real estate agents will eventually be involved in engaging both parties in person to manage the delivery of the sales process and final transaction.

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