Prop tech is making clients smarter and forcing older agents to adapt.
Property technology is hardware or software that makes processes involved in real estate easier. It’s getting harder for some millenials to see a future where they’re working with a realtor.
After a mediocre condo buying experience and a lackluster case of an agent listing one of his other properties last December, Varun Kochar, a 31-year-old consultant, says the process left a bad taste in his mouth.
“I wasn’t convinced that he had my best interests in mind,” said Kochar, citing a lowball bid for his one-bedroom property in Etobicoke that he was skeptical of accepting at his agent’s advice.
“The first offer I got was something super low, like $630K for my condo. He tried to convince me to do it. ‘You should sell. This is amazing. This is the highest you’re ever going to get. This is the highest per square foot,’” he recalls his realtor saying.
“I didn’t believe him.”
Kochar, like those millennials able to afford property in Canada’s hot real estate market, did his own homework through the use of property tech. He decided he could do better.
“I did an easy search on Condos.ca to see the average per square foot in my condo building was going for and I could do the math in my head.”
Property technology, or prop tech for short, is loosely defined as software or hardware that makes real estate dealings less of a pain. While many programs are designed for real estate agents and brokerages in mind, others have become online platforms compiling and publishing real estate data. It’s effectively opened the floodgates of information – once solely in the hands of those in the industry – to everyone else.
Properly.ca, a website that offers free property appraisals using artificial intelligence, is another example of prop tech Kochar says is making agents less useful.
“I was telling [my agent] ahead of time that this property sold for this price and he was like, ‘oh, I didn’t even know that. My system’s not updated yet.’”
Canada’s prop tech industry isn’t particularly new. A February 2021 report by PropTech Collective found that of the 300 companies they analyzed, 67 percent were founded after 2014. While nearly just as many are start-ups in the early funding phases and only a few like Ecobee, BuildDirect, or Properly.ca, have become recognizable names, the industry’s overall usefulness has become more apparent following the fallout of the Covid-19 pandemic.
THE NEW KIDS ON THE BLOCK
In some ways, 3D visualization and VR became the new reality for Christ Stapleton and Jenny Bui. Stapleton founded Coral Realty in early 2020 with partner Pawel Parafianowicz, with Bui joining the team shortly after.
She noticed buyers and sellers in Toronto were coming to the table better prepared.
“Clients will know what they want to sell for based on what they’ve seen online in terms of sold prices. They are well-informed.”
Part of that surge of smarter clients also had to do with the adoption of 3D virtual tours and staging.
“It made buyers even more informed because they were able to thoroughly go see it online before they even went in person. They knew what exactly to look for or what they didn’t like. They’re able to compare prices more from the comfort of their home with more time, rather than being rushed like from one showing to another showing.”
For Stapleton, he’s seen 3D visualization go from a nice-to-have feature to a necessity for many resale condos. It’s also highlighted how prop tech skews towards certain groups of clients more than others.”
“I don’t want to say it’s going to push older people out of the markets because there are older agents who have the right team to support them and utilize technology but I would say that the appeal of this technology, unsurprisingly, skews to a younger demographic,” he said, while cautioning on age being the only factor.
“We’ve had listings where the sellers have been in their late 50s and they have been sort of like, ‘oh, that’s cool’, but they’re not really engaging with it too much. Whereas we also have sellers who are in the same age bracket and happen to be in an industry that uses technology and they go, ‘Oh, this is amazing! I don’t believe it.’”
While clients of all identities are readily adopting prop tech as part of their real estate journey, that’s not always the case with some realtors.
A CHANGING OF THE GUARD
Asif Khan remembers the surprise he got when he took over a downtown Toronto brokerage in November of 2021.
“Of about 30 agents, about seven of them are on Facebook. Because [most] don’t believe in it,” said Khan of the social media platform as a means to reach new clients.
“There’s such a generational factor because a lot of realtors are old. We’re starting to get some younger ones coming into the business but the average age could be 55, 60.”
The typical real estate agent in Canada is a 54-year-old white female who attended college, according to Real Estate Magazine, citing 2020 data from the National Association of Realtors. While that doesn’t mean they’re incapable of using prop tech, it can put them at odds with younger clients who, as Khan puts it, value “instant gratification”.
“They’re not going to wait for a realtor to call them back or anything like that. They want the information and they want it now and if they don’t get it, they move on,” said the owner of RE/MAX Prime Properties brokerage in Markham, Ont.
For Khan, it’s less about the fear of prop tech replacing realtors, and more about the job of realtors in the first place: helping clients.
“There’s a lot of people that are very old-school and they believe we should be the gatekeepers and that’s not where the industry is. That’s where we’re having the disconnect: Being able to come up with solutions for people that would satisfy their need for information.”
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‘WE CAN’T GO BACKWARDS’
When asked about prop tech’s potential to make real estate agents redundant, Stapleton isn’t too worried based on what he’s seeing.
“It’s adding value to it but it’s not replacing it. I honestly think it’s making the whole experience better. It’s making it a richer, more engaging, sort of informative experience.”
He gives the example of how virtual tours can complement an in-person showing after the fact. If potential buyers want to revisit a room after they’ve left the physical space, property tech can help. “Augmenting [the experience is] probably the perfect way to put it.”
“I do think moving forward, technology is going to be a necessity in the industry. Covid-19’s really created a sort of fundamental shift. We can’t go backward.”
It’s a sentiment Khan echoes. “We’re not trying to reinvent the industry, but we’re trying to make it more efficient. If there are tools that help us make this more efficient then that will help us serve our clients in a better way.”
“There are a lot of people that are very old-school and they believe we should be the gatekeepers and that’s not where the industry is.” — Asif Khan
As for Varun Kochar, he’s taking a temporary break from the real estate market but doesn’t foresee agents joining him the next time he’s looking to buy or sell.
“Millennials are going to take over this market. While they might not be able to afford a house right now, when dual incomes come into the picture or when baby boomers pass away, they’re either going to sell that property or use that equity to buy something else. And they’re not going to use realtors. They’re going to use these technologies that are coming out.”
3D CityScapes is a Toronto start-up specializing in building digital twins and 3D visualizations. Interested in building a digital twin? Get in touch with us here or give us a shout at +1 416-477-6846