I get lots of requests for advice. But with a day job, I don’t have time to give it. That’s why I have this blog – to share some solutions for common problems agents have and suggestions for developers. So here’s my advice all in one convenient post.
Know Your Market
My experience in small-mid-sized markets. Institutional investors, big developers or national headquarters? Few to none. Agents can’t afford to specialize and they rarely work in teams like they do in major markets. Maybe half have national brokerage affiliation and most are full service. No boutique brokerages here. And million dollar deals don’t happen that often. They get leads the old fashioned way – through relationships – because they’d starve if they relied on the dearth of online user activity in these markets.
You just can’t count every brokerage or every agent as potential buyers in your pitch deck. Software solutions that work in larger markets don’t necessarily work in smaller ones. And while the technology might trickle down, it will have to include more and cost less.
Why is it so hard to find listing and comp info? Why, when you do find it, isn’t it free? Why is every solution to this a LoopNet clone with free search? Of course, they rely on agents and brokerages to submit the data – and to pay for those “premium” services. And when no one plays ball, they blame old/lazy/secretive agents for their failure.
Work on the problem of getting data without agents. Maybe you go direct to owners, though you’re likely to hit a wall. And who wants to do that kind of human to human research anyway? Think scrapers, robots, PDF data extraction, accessing APIs and algorithms. Look into emerging data sources and technologies – like smart building systems, location services and local sites.
And after you’ve done all that, you’ll realize that a free search marketing platform is not where the money is. It’s the data, stupid.
Younger agents are appalled at the idea of using emails, phones and network or local drives to do business. I’d mention faxes, but everyone is pretty much appalled about that. So far, CRE developers’ idea of more efficient is a standalone portal with file storage and fancy graphs. They’re totally missing the communication factor. And they’re totally ignoring generational differences. It’s rare that an established agent is going to change the way they work. So don’t include them in your revenue estimates.
Stop thinking traditional portal and think of communication platforms like Slack that let you keep in touch, collaborate and plug in the apps you need. Sure, you can add CRE specific functionality, but why create file storage systems when they’re already available and many agents are using them. You don’t have to reinvent the entire wheel. You’ll be able to offer more flexibility and functionality by integrating other people’s stuff.
Think Beyond the Agent
Few CRE startup founders have had any experience in brokerage other than working for one – one that they probably thought was behind the times/full of old people/didn’t understand the way the world works now. They also fall into the trap of thinking that change has to come from below. They think if agents demand more, they’ll get it…and the “it” is their app.
Brokerages are businesses so school yourself on how businesses are run. Accounting, taxes, compliance, HR, marketing and yes, resources for their agents. They’re going to use those back-office apps all the time but the resources they provide for agents – it’s 80:20. Agents are almost always independent contractors and can do their work however they please and that’s not always choosing to use brokerage resources.
What can you develop that can put whatever pieces a brokerage has together to provide meaningful insights? Things like income projections, market reports, predictions and trends or company and agent performance. And don’t even think of pricing your software by the number of agents. Value your software for its functionality. If the price is fair, if the app is flexible and if you can ensure that even if you go down the tubes their data can be used elsewhere maybe you’ll have a shot.
One tip. Once you sign up a brokerage in one market, target another market. A brokerage will give a referral but not to a competitor in any of their markets.
Think Beyond the Brokerage
Several CRE start-ups are targeting owners and users. They’re having some success with owners who want better oversight and control over their assets. There are also several platforms for smart building management and operations. As for users, they’re taking stabs at what a user might want. And by user, I mean buyers/tenants.
I’d say the market is saturated with the new breed of property management/transaction software. Agents understand this process, too, which made it easier to develop. So look elsewhere. Verse yourself in smart building technology, though there are quite a few platforms out there already. As for users, I’d proffer that no one really knows what they want. Maybe you should find out.
Bonus Idea – Millennial Users
For Millennials in general, the personal touch doesn’t involve talking on the phone or even meeting in person. They’d rather get to know you electronically, doing research online. They’re dismayed that there are no CRE agent rating sites so they’re left to trudge through social networks, blogs and websites.
Create an agent finder/profile site. Aggregate data from all those online sources. Add some local information – and reviews if you dare. But before you go here, figure out how you’re going to make money. Sell ads to agents or brokerages (haha…)? You’ll need to think outside that box. Ads/ad networks are an option, though ad blockers are slowly eating away at CPM revenue not to mention removing the clicks. So is selling data. If your site catches on and you get a lot of traffic, you can offer paid subscriptions for agents or brokerages to augment their profiles and respond to reviews.
Just one more thing. Developing software is the easy part. Selling it is hard especially if you’re creating something no one wants. I wish I could tell you what CRE wants or even doesn’t want. All I can tell you is what the chances are of selling your app to the brokerage I work with are. And it’s always based on their needs at the time and how much it costs. Find the common need for brokerages, agents, owners or users, price it reasonably and maybe you’ll have a chance.