We talk to startups and investors, you get the value.
The real estate industry seems to be something solid, monumental and unshakable like the most luxurious houses in the premium class. But technological progress is changing it too: there are emerging more and more real estate startups that are using new technologies. Just remember how the very concept of “renting a home” has irrevocably changed thanks to AirBnB service, and in the same way, there are new startups that will change the way we think about working with real estate.
We talk to startups and investors, you get the value.
Of course, many conservative players in the real estate market are wary of change, but that hasn’t stopped entrepreneurs from all over the world. This area is called PropTech — the use of innovative technologies in real estate. Today we will have a look at the most promising startups in this area, analyse trends and give recommendations to entrepreneurs who want to launch a start-up in the real estate industry.
Every year, YCombinator, a famous (or even iconic) accelerator, forms a list of top companies, who were working with the accelerator through the years. In 2021, the list includes several startups from real estate: they are not only becoming an influential power on the market but also perfectly reflect PropTech trends. So to say, you can rely on YCombinator’s choice: this is the place where Airbnb, a startup that takes TOP-1 in the list and entered the IPO in 2020, was created and developed.
PlanGid is an app created specifically for constructors. It allows to store all the documentation for an object in the “cloud”, correct and modify drawings on the tablet and edit one draft by several users at the same time. Tracy Young, the founder of the company, has worked as an engineer in the construction field herself, and she knows very well how the paperwork delays the construction process; according to her, there were situations when they had to re-do 50 drafts because the engineer decided to change the position of the wall.
PlanGid startup appeared in 2011, having advanced the time since using tablets and “clouds” wasn’t that widespread back then. However, now these technologies are a common thing and PlanGrid slowly but surely conquers the construction market.
Snapdocs service helps to automate and digitalize the process of closing mortgage deals. In the United States, where the startup appeared, this is a very sore point: in the US, the registration of a mortgage transaction can take 45 days or more. Snapdocs significantly reduces this time: the service processes all numerous documents using artificial intelligence, determining where an electronic signature and where a manual signature are going to be needed, helps automate the exchange of documents with a notary and a lawyer. According to David Yegen, a venture capital expert, the niche of services that help to close mortgages is just emerging, in contrast to the niche of digital tools for selecting a mortgage, which is already overflowing. From an expert’s point of view, Snapdocs is one of the most promising startups in this niche.
Guesty helps to simplify and automate the work on leasing several real estate facilities with the help of specialized software. The idea of the startup came to two brothers from Israel. When they were leasing their flat to the tourists via Airbnb in Tel-Aviv. Preparing the apartment, creating adverts and especially communication with potential lessees took too much time, so the brothers started thinking about how to automate the processes. The startup helps to manage multiple rooms at once, which are leased through Airbnb, Booking and TripAdvisor. The service collects all messages from third-party websites that host real estate, add all the reservations into the calendar, calculates all prices for rent, costs and revenue. With the help of artificial intelligence, Guesty can collect information about the demand on real estate in a specific place and at a specific time of the year, automatically changing the price of the corresponding property. So leasing becomes a much less headache for the apartment owner.
The major clients of Matterport startups are real estate agencies: the company helps them by creating 3D-models of the rooms and online tours in the buildings with the help of virtual reality, which real estate agents add as an additional service for their clients. And this actually works! For instance, RE/MAX agency has increased the percentage of closing deals from 60% to 95% by adding the possibility of virtual tours in the buildings for potential buyers. Leading agencies in the USA and throughout the world are striving to take advantage of the startup’s services. The startup has developed several products for virtual review of buildings: a 3D camera, a special “cloud” for models, a player that allows users to view 3D models in a regular browser.
Mighty Buildings startup has Russian roots: it was founded in 2017 by Viacheslav Solonitsyn and Dmitriy Starodubtsev. The production is placed in California but the whole development team is in Russia. With the help of 3D printing, Mighty Buildings creates residential modules of various sizes and types: studio apartments, 3-room and 4-room houses. With this printing, the house is built 2 times faster, and production requires 95% less working force. All processes, including sanding walls, plastering and applying thermal insulation foam, are done by robotic mechanisms. Also, during construction they use composite material, which the startup developed themselves; it received high marks from American experts for its environmental friendliness and energy efficiency.
Real estate experts highlight the most perspective directions for creating PropTech startups:
In 2021, any real estate company should have its own website adapted for smartphones, and possibly its own mobile application. Photos and descriptions aren’t enough for you to stay competitive. You need a good design, business card websites and the ability to provide all the information about the place “in one click”, where is the apartment of buyer’s interest, where are shops and parking lots nearby, what is the level of crime in the residential area. Consider integration with street view services as well.
Now, when the real estate market is full of offers, a customer-oriented and understandable service is becoming a big advantage. Users who are accustomed to the ease of use of digital solutions no longer want to check the mail regularly, call somewhere and communicate with agents, invite contractors to assess repairs, etc. The most popular are solutions that combine all parts of the process in one service: the more information and actions the buyer will be able to perform without leaving your website/application, the better for you.
Automation of processes allows you to gain time and reduce the cost of the final service, which is an important advantage in the market. Try to automate all processes that can take up unnecessary customer time, as well as your own. Automate meeting scheduling, creating documentation and reporting, agent-broker communication.
With the help of blockchain, one can develop purchases in parts, which are in high demand concerning highly liquid objects — for example, business centres. This is a promising field where technological solutions already exist, but the practice of using them is still minimal: there is no intelligible legislation on the blockchain. This process should be closely monitored: as soon as the possibility of the legal use of the blockchain for such transactions is legally confirmed, the demand for such startups will go off the scale.
Real estate experts predict that the PropTech sector will be actively developing and the number of services will grow by 3–4 times by 2022. At the same time, taking into account all the specifics of the real estate market and a certain conservatism of the target audience (homeowners are most often people of the older generation), they are unlikely to occupy more than 20% of the total agency market by this time. Nevertheless, progress cannot be stopped: gradually the share and importance of these startups will grow.