Founders, technologists, investors and other leaders are often hyper-focused on the next big thing, the game changer or the crucible moment. But speaking as someone in proptech at a time when the entire real estate sector is facing a once-in-40-years transition, we could also benefit from honing in on reinvention strategies that may actually be working. Now is the time to push the envelope and consider new approaches that can truly help our customers.
Here are four key themes and trends that I believe will be integral to the future of the proptech industry.
4 Proptech Trends
- Increasing digitization.
- Seamless transactions.
- Data-driven decisions.
1. Increasing Digitization
Gen Z and Millennials are now the two largest generations, which means 81 percent of first-time home buyers are between ages 23 and 31. These digital natives are hungry for home ownership and expect to buy a home the same way they get their groceries delivered.
Virtually every proptech company would lead you to believe they’re bridging the digital divide that’s existed in real estate for the last century, but that misses the point. Virtualizing the home tour or aggregating more options to buy and sell on a website is fine, but that doesn’t really change the way people transact.
The problem in real estate is that the traditional transaction is broken. Bolted-on digitization doesn’t fix that. Selling a home is a months-long process full of hassle and uncertainty — homeowners usually endure months of listings, open houses, repairs and negotiations. And buying a home is just as fragmented. Customers have to search through limited inventory, navigate multiple bidding wars and manage the complexity wrought by dozens of steps and multiple middlemen.
Despite increasing digitalization, 99 percent of home transactions happen offline. So, a massive opportunity exists for both digital and analog products and strategies to truly address the fundamental pain points people experience today.
2. Seamless Transactions
Consumers increasingly want best-in-class solutions for common experiences like authentication, messaging, video conferencing and document sharing. No matter which company they’re dealing with, they expect the functionality and performance of recognizable third-party brands across interactions. That means video conferencing and connection speeds should always be as seamless as Zoom, and document signing should be as intuitive and fast as DocuSign.
Companies need to develop in-house solutions that meet this level of quality or integrate best-in-class third-party services. And to reach the quality your customers expect, you need to have the right roadmap and capacity. Strategy needs to be proactive, not passive. Instead of waiting for customers to complain to persuade you to add a new feature, constantly iterate and push boundaries to reach the highest quality possible.
For example, when the pandemic hit in 2020, our customers were worried about allowing strangers inside to inspect their homes. At the same time, they couldn’t imagine someone buying their home without physically entering the home. With safety top of mind, we developed new ways to gather data and accurately inform our pricing models. We virtualized the inspection process, making it better and faster, while maintaining the certainty of selling to Opendoor. Our customers hadn’t asked for this functionality at the time but were delighted when we launched. And now, it remains a core part of our selling experience.
People want to be able to customize based on their desires, especially younger people. That goes beyond merely adjusting setting filters or checking boxes. If they are to provide their data, people generally expect businesses to match their evolving preferences, which are rarely static, with useful and actionable recommendations that can spur preference evolution.
This principle should apply to both the desired asset and the services customers use to obtain it. For example, someone may easily set preferences for a particular home, but we should also provide features that improve the overall experience.
Even if customers are facing the same challenge, they could have different preferences, which is why it’s important to offer bespoke experiences and prioritize continuous product innovation. For example, our core product, Sell Direct, resonates with homeowners who value certainty and speed the most. Other sellers may have time on their side, however, and want to prioritize the highest price. Opendoor Exclusives, our newly launched homes marketplace, is a better product fit because it not only provides sellers with an Opendoor offer but other offers to consider from our network of buyers, too.
4. Data-Driven Decisions
For most home buyers, purchasing a home is the largest financial decision of their life. So, it’s only logical that people seek real estate expertise in the form of data and insights to understand all of the details, especially the nuances of their neighborhoods and cities, to understand what they’re buying. But attaining a data-driven view of the property remains difficult.
While some indications of home value have become widely available, for example through an Opendoor offer or a Zestimate, there is much more data-driven information that can be immensely empowering. Sellers may wonder, how many weeks or months is it likely to take to sell my house? When will I get an offer? And on the buyer side, how many offers should I expect to make in order to win a home? What differentiates a winning offer? And the list goes on.
These questions can be answered at a neighborhood or city level using detailed transaction records and listing histories that are either public or widely available to organizations with brokerage licenses, which many proptech companies have. So, it’s not a question of raw data availability; most of the challenge lies in translating this data into tools, trends, and takeaways that resonate with consumers in real-time. Data science and engineering have a major role to play here, as do design and storytelling.
For example, we provide a Home Improvement Value Calculator, allowing our customers to select from a “renovation menu” specific to their market and home, which helps them learn how much value certain renovations could generate. From a data perspective, the underlying information could have all been put in a simple (albeit large) table. But what makes this so engaging is how design, engineering, and data science came together to deliver a unified experience that led the consumer to a single data point relevant to them.
The Future of Proptech
Since Opendoor specializes in simplifying the home transaction, such examples are top of mind for me. But the suggestions I mention here can be applied more broadly than just to home sales. Connecting virtual and physical experiences, supporting multiple communication channels, personalizing product flows, and educating through data storytelling can benefit people from renters and landlords to service providers and investors. These recommendations can help to simplify decisions ranging from “should I renovate” to “should I refinance.” Ultimately, they can make real estate better for all of us.