Tech-savvy or coming for your job? Proptech’s True Role in Real Estate

Disruption has long been used in conjunction with proptech in real estate, but what has been the real impact? Livian CEO Adam Hergenrother breaks down the reality of proptech and where we’re headed.

Adam Hergenrother is the founder and CEO of Livian. He believes that business is nothing but a vehicle for personal growth and adheres to the company vision of Love How You Live. When he’s not leading and developing his organizations, you can find Adam either in the mountains or in the wilderness with his wife and three children.

The video killed the radio star. Then YouTube and TikTok killed off traditional music video platforms. And “radio” has come back strong with podcasting and iTunes.

Blockbuster went bankrupt once Netflix hit the scene. And Amazon decimated most physical bookstores. Business disruption is inevitable. And the real estate sector was a prime target for some disruption – but it looks a little different than expected.

Proptech comes into the picture

About 20 years ago, proptech (all the technological tools that real estate experts use to optimize the way people buy, sell, research, market and manage a property) have emerged, gaining even more traction in the last five years or so.

Many tech companies have entered the market with the goal of eliminating (or at least minimizing) the role of the real estate agent in real estate transactions. Others have promised an increase in productivity per agent in exchange for large investments in technology platforms.

Either way, proptech’s plan was to disrupt the realtor – reducing the need for agents overall and for those left behind, dramatically increasing their productivity. Fewer agents doing more business (often at a lower cost to consumers), which means more money in consumers’ pockets, more money for brokers, and a lot more money for tech companies, or at least that was the plan.

Instead, a Real Trends 10-Year Brokerage Study shows that if brokerages invested in technology, productivity per person (PPP) fell by 17.7%. Of course, technology has increased the productivity of some officers. But the data suggests that investing in technology on its own hasn’t improved the industry or the brokerages’ overall results.

Additionally, many real estate tech startups entered the hot market and quickly collapsed as mortgage rates rose and the housing market began to cool. Real estate technology is a valuable tool, no doubt. But it’s a valuable tool for talented real estate professionals to use – not to replace them.

Consumers want people

Real estate is still one of the most important and emotionally charged decisions and purchases an individual will make in their lifetime. A highly qualified real estate expert is always preferred over an application.

Proptech did not disrupt the realtor as expected. What will disrupt the real estate industry is a renewed interest in developing full-time real estate professionals with higher productivity per agent.

Technology has made consumers savvier and more informed, and they need a real estate professional who is up to the challenge of the rapidly changing market we find ourselves in today.

Consumers and industry are not looking for speed-based agents who will be the fastest to open a door for them. They want and need skills-based agents who are dedicated to opening the right door at the right time for their client while providing real-time advice and updates along the way.

The next wave

In addition to the increase in the number of highly qualified real estate professionals, there is an increase in productivity per agent. This is the next wave of disruption. We may see fewer agents in the industry, but those agents will do more transactions (yes, with the help of technology).

The increase in transactions per agent, with fewer agents, will increase the load on real estate teams and brokers (overheads, coaching, recruitment due to turnover). Profit margins will increase and additional funds will be available to invest in these agents, who, in turn, will be able to do even more transactions (while deepening their knowledge of a variety of real estate transactions).

This all equates to a more qualified agent to work with consumers, increased productivity per agent, and higher profits for teams and brokers.

In real estate, nothing beats knowledge and the ability to understand the influx of information, synthesize it, and use it to help consumers and clients make the best decisions for their families and financial futures. Technology will help, but it has yet to disrupt the need for a knowledgeable and compassionate real estate professional.

Adam Hergenrother is the founder and CEO of Livianthe author of The Founder and the Force Multiplierand podcast host, Business meets spirituality. Learn about Adam’s businesses and culture here.

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