Yesterday, we dug into an Inman survey to examine the first big barrier that technology vendors face when trying to meet the needs and wants of the real estate agents they served. That barrier was industry fragmentation, but it wasn’t the only (or the biggest) challenge that technology vendors must overcome — a lack of resources and the difficulty of integration are also huge problems. Let’s dig deeper into those issues.
Engineering resources are scarce
Any broker or agent who has ever chosen to build a customized technology solution on their own inevitably gets a quick case of sticker shock. Software engineers don’t grow on trees, and they aren’t cheap. For quality domestic-based engineering work, you’re looking at an average cost of around $100 per engineer per hour. Even just a basic product request that takes three months to build can run you $50,000 to $100,000.
Hiring engineers from a technology vendor’s perspective is no different. They don’t grow on trees; they’re not easy to find; and they’re expensive.
Someone in the survey mentioned that technology vendors should employ brokers to help them understand what to build. “Tech companies who solicit us should have professional brokers on staff to advise them. They are clueless, particularly since real estate practices change from state to state, due to state laws and local customs,” an agent said.
The problem, though, is not “not knowing what to build.” Almost every real estate technology company has team members who are currently or have previously been brokers or agents. These companies have dedicated customers from every region of the country that they can reach out to any time they need feedback, and overall, they have a very strong sense of what brokers and agents need from a technology perspective. The issue is that they don’t have the engineering resources to execute every single feature request.
The simple solution, of course, would be for technology vendors to offer customizable features and then pass those engineering costs on to the brokers and agents in the form of a setup fee (as discussed in yesterday’s post). Salesforce, one of the largest business-to-business technology vendors of our time, follows this approach, and it has been wildly successful in doing so. But Salesforce also doesn’t focus on the real estate vertical.
Technology vendors that do focus on real estate find that offering customized solutions for an additional cost is often met with strong dismay from brokers and agents. It’s understandable. Brokers and agents need to watch their monthly budgets carefully, and every extra penny they spend hits their personal bottom line. (Compare this situation with selling a technology product to Boeing, where a six-figure technology contract is peanuts.) Brokers and agents can’t or won’t pay for the engineering time needed to build customized solutions that they want, so they’re left with no choice but to use the technologies and features that vendors have created and perceive to be a blanket solution that meets most users’ needs.
In other words, it’s important to realize that the more customized you want your solution to be, the more expensive it’s going to be. If you want software that costs only $25 per person per month, then you’re going to have to use a solution that has been built for the 80 percent majority, not someone’s one-off office policies and procedures. I think that at the end of the day, agents understand this, but hopefully this sheds some more detailed light on why this is the case.
The nightmare otherwise known as integration
The third significant issue facing technology vendors that brokers and agents mentioned in the survey is software that doesn’t integrate with other software and systems. Integrations, partnerships and every other permutation of this concept require not only an extensive amount of dedicated engineering resources, but also maneuvering the political minefields that still exist within the real estate industry today. I would argue that navigating these political hurdles are even more difficult than the engineering work required to pull off partnerships and integrations.
The reality is that there are quite a few “old guard” institutions and companies within real estate that are acting as protectionists to their data and products, and they refuse to open up and integrate. These political challenges are very difficult to overcome; in the best-case scenario, they take years of time to conquer. This is especially true of startup technologies that have just arrived on the real estate scene in the past couple of years. Unlike their well-funded and more established competitors, who can afford to hire a vice president of industry relations to navigate these political waters, startups don’t have the resources to do this — instead, they’re laser-focused on building great products and selling to customers (which is how it should be).
A lot has been written lately about the need for multiple listing services (MLSs) to open up their data, for state or local associations to license their forms, and for legacy technology vendors to offer application programming interfaces to tap into their system. These stories aren’t lip-service rants being written by a radical few — they are real problems that technology vendors face in trying to offer a seamless solution to its customers (especially startups with limited resources). Brokers and agents are the dues-paying members to these MLSs, and associations and are the ones clamoring for integration, so what exactly is the holdup among these real estate bodies who refuse to open up?
To me, this is the most puzzling situation of them all. Even legacy technology products that continue to try to retain certain monopolies should rethink their strategies, open up their platforms and integrate. Memo to everyone out there trying to protect your position: Your paying customers are asking for these integrations — it’s time to listen to them.
Overall, the real estate industry has seen an influx of new technologies over the past couple of years, so it’s an exciting time to be in real estate tech. But the reality is, these technology companies need more time and resources to build out all of the features and finalize the partnerships and integrations that real estate professionals are clamoring for. It can’t happen overnight. Which is why I think in a few years from now, you’ll see more complete solutions and integrations because these young startups will have had time to grow and will have more to offer.
And in the meantime, please exercise patience toward your technology vendors in real estate. We are moving as fast as we can to build what you want!
Mark Thomas is a serial entrepreneur and the co-founder and CEO of Reesio.