Investment in information technology used to buy and manage U.S. real estate — otherwise known as property technology or proptech — has been incredibly active in the past year. About $7.3 billion in equity and debt was raised across nearly 300 proptech deals in 2020, according to GCA’s year-end review.
Commercial mortgage brokerages have been more receptive to implementing digital solutions that better align with the technology used by their clients and lender partners. It has been a slow transformation, however. Large, established commercial brokerages are like large ships. They are typically harder to stop, turn and restart on a dime.
Digital technology was beginning to transform the commercial-property market prior to the COVID-19 outbreak, and the pandemic has accelerated this trend across all property sectors. But commercial mortgage and real estate companies that were late to the game and are now seeking to adopt proptech solutions should not jump in headfirst and implement every new technology that presents itself.
Mortgage companies should avoid deploying a proptech solution unless it provides real value. But how can you determine whether true value exists? Usually, commercial mortgage companies evaluate a new technology by looking inward. For example, executives will typically ask themselves whether they can find solutions that can benefit the company, lower costs or automate repetitive tasks.
Although these are good questions, they will not help you make the best technology investments for your business because they are not customer-centric. In other words, the answers won’t help you to better understand your client. Instead, the key in adopting technology is to look toward your clients’ problems and goals, then work backward.
For example, say that you are representing a property seller. This person will be primarily motivated to sell the property in the quickest amount of time with a goal of gaining as much cash as possible from the sale. Conversely, if you are working with a buyer, then their problem likely centers around finding a decent number of properties to choose from, and their goal is to add the most valuable property to their investment portfolio.
Only when you understand your clients and their biggest problems can you choose the best proptech solutions for your business. Here are some of the steps you should take.
First, know what your clients need. This is the most important step and it is not as easy as it sounds. Often, your clients may not be able to articulate their issues. Sometimes they’ll tell you what they want, thinking that it’s what they need, but the two often are not the same. For example, your client may want to attract more customers or employees, or otherwise gain some sort of a competitive advantage. But, in reality, your client may need a technology solution that helps them to cultivate their current relationships, which might open new doors in the future. Knowing what your clients need will help you decide which solutions your brokerage should purchase and deploy.
Second, you also should understand how your clients use technology. This could be done by using demographics and profiling tools to define your customer base, or by using 3D mapping technology to illustrate a future project. Do whatever it takes to discover how and where your clients are using technology. Take a look at tech use among your internal members as well.
Additionally, you should conduct a survey about which tools your clients want to use. This exercise is designed to imagine what’s possible. For example, brokerages could ask a client for their preferences in the listing agreement: “When we receive an offer, would you prefer to e-sign digitally, or would you rather sign a hard-copy document?” Once you have this data from your clients, take a look at how your in-house tools could conflict with their preferences. You may need to reconsider your approach.
Lastly, it is important to learn which tools your clients think are old-fashioned. If you and your clients are using outdated technology, you have an opportunity to replace them with more efficient alternatives.
Some organizations, especially larger companies, do not like change, but new technology makes all the difference in today’s world. In this digital age, we use technology almost daily. While it isn’t everything, the quality of a company’s technology is a good indicator of where it’s headed. Talk about technology internally and with your clients, and find ways to improve it.
The bottom line is that, before acquiring any proptech solutions, commercial mortgage brokerages should research their client needs. They should identify where their clients spend time with technology, what tools their clients would prefer to see adopted by the brokerages that serve them, and what tools they consider old-fashioned.
Although being first to use a new technology is not the most important goal, it is crucial to understand where your industry is headed. The best course for any mortgage brokerage to take is to figure out which modern technology solutions can help clients get past their problems and reach their goals. Only then will your technology align with your clients’ needs. ●