Technology developed for the estate agency industry has advanced and expanded seismically over the past decade as software vendors develop their platforms to address the growing requirements and challenges of the UK’s biggest markets. Investment in PropTech has increased 15-fold in the UK since 2016, with 2021 representing a bumper year of quadruple growth with Pi Labs estimating £1.6 billion in investment by year-end.
Increased investment in the PropTech sector is what drives ongoing product innovation and a greater range choice for estate agents seeking to enhance efficiencies and growth throughout their business. There is now a very wide selection of competing vendor PropTechs and many agencies are using more than one to manage their operations. The average estate agency now utilises around 20 different PropTechs for various functions; often relying on multi-vendor solutions for sales, lettings, and increasingly property management, along with all the add-on PropTech services on top.
Now having choice is good, but there are significant disadvantages involved with using several disparate systems over having all of your solutions in one place on a centralised, end-to-end solution with some elements single-sourced and the others pre-integrated. Here are some of the top ones:
Higher costs – agencies using multiple vendors will have to negotiate the prices of services with each supplier separately, rates can vary, and your overall fees will likely be higher as you’ll be purchasing separate individual modules for your chosen solutions, with contracts running on different lengths and renewing at different times. Having all of your solutions in one place may have a higher individual cost than its nearest competitors, but it can generate wider savings overall with more optimised workflows, better compliance, and the ease-of-integration for third-party applications.
Resource administration – running multiple systems and coordinating with several suppliers simultaneously requires more time and greater resources to manage and oversee communication processes. This may mean you experience more issues in product quality assurance, process management, and general tasking. On an end-to-end solution, all data has a single source of truth, significantly enhancing workflow optimisation and enabling agencies to build communication processes only once to establish a much smoother flow of information. It also means a greater level of compatibility between components.
Integration difficulties – having multiple vendor solutions increases complexity when it comes to integrating and utilising different components. This can lead to communication issues and risks data duplication and integrity. Ultimately, having different teams work on different systems disrupts operational processes and will likely require more time and money in the long run to function effectively as more emphasise is place on maintenance over technology optimisations. This is much less of an issue with a centralised solution, where it is much easier to optimise and integrate systems as a single supplier owns the product knowledge, making it much easier to migrate from your pre-existing systems.
Compliance issues – managing compliance obligations is a necessity to avoid exposing your agency to unnecessary risks. Agencies must remain compliant to anti-money laundering (AML) and regulations, which do get regularly updated. For agencies using multi-vendor solutions there can be considerable challenges with managing customer due diligence and handling personal data. Whereas an end-to-end solution centralises and mitigates these risks, supporting automatic alarms and reminder workflows, and integrating all your supplies on one system to ensure your agency can remain compliant in a rapidly changing regulatory environment.
Security implications – following on from compliance, cybersecurity is also a rapidly growing risk centre for estate agents, something I’ve covered previously. Cyber-security is vitally important for almost any business, particularly for businesses like estate agencies that manage large amounts of valuable customer data, and the risks of a breach can harm both your customers and your business, with the added threat of fines for failing to protect personal data. Agencies using multi-vendor systems open themselves up to wider security risks and possible back doors, and the risk of a breach increases with every vendor you bring on board. With a centralised solution, all customer data is managed and protecting in one place, making it much easier to monitor all aspects of data security and to respond accordingly.
These represent just some of the top-level challenges of using multi-vendor technologies in your business strategy, as well as some of the key reasons why agencies should work with an aligned eco-system where integration is a standard and simplicity for the user is a prerequisite; you get all the choice without the complications. The digital transformation of estate agency is only going to continue and going back to my initial observation on the expansion of the PropTech industry, there will be an increasingly volume of technologies competing for your business. That certainly means more choice, but that also means greater disadvantages and risks for agencies using multiple vendors.
Certainly, here at Reapit we are seeing that agencies increasingly want solutions offering sales, lettings, and property management; and on top of having a complete solution with all of these included, there is increasing demand for all the add-on PropTech services that go with it. Property management in particularly is a steadily growing market with high demand for private rented properties, and with over 300,000 managed tenancies this has given us a strong perspective on the increasing importance of property management requirements for agents and landlords, particularly with regard to compliance.
Of benefit to agencies, one major shift in the past couple of years in particularly has been the rapid increase of M&A activity in the property industry. For technology vendors participating in this growth path, this means greater integration between solutions on one platform, of which our recent acquisition of Console in Australia is an example. The net outlook here for agencies is that increasingly in time, they will be able to get on the technology they need all from one place but without being locked into a single vendor, and without the disadvantages of using multiple separate systems. It’s a choice worth pondering for agencies that want to set themselves up best for success.