Digital Networks & Tech Enablement in Real Estate
13TH April 2021
Over the past few months, we’ve seen significant developments across real estate tech companies and digital real estate networks in Europe. The two standout developments include IAD Group securing over €300m in investment from Insight Partners and eXp Realty expanding its presence into France and Italy.
To better understand these trends and how this space is shaping up, we had an insightful discussion with Florent Couty, a leading expert with 20 years of experience in digital transformations, new technologies and information systems. Florent is currently the CEO of Alpha Vista, a consulting company specialized in digital and organizational transformation. Previously, he served as Chief Innovation and Product Officer at IaD International.
Florent feels that digital networks of real estate independent agents, which are mostly based on a Multi-Level Marketing (MLM) or via a sponsorship scheme, are enjoying a strong growth in France and are starting to prove their worth in broader Europe as well. He also states, “Despite the obstacles raised at the beginning by the traditional real estate industry, IaD has demonstrated that entrepreneurship, adapted fees and a fair distribution of profits was possible. Of course, the latest fundraising reinforces its European leader position and could set new operations within the industry.”
To dig deeper into the tech and operational side of this space, we asked Florent to help us understand the main aspects around building & running such information systems. At the outset, he emphasizes on the essentials, i.e. business introducer tools, CRM system with shared database, integrated transaction systems, electronic signatures, and if possible mobile application or a web ERP platform, supported by high availability environments. He also highlights that once the business reaches a certain size, Process Automation plays a critical role, i.e. from lead collection to the sale through invoicing or property advertisement diffusion. Lastly, the User Experience is vital in order to optimize transformation rate and productivity, this includes digitalization, intuitive user interfaces, etc… Furthermore, Florent concludes – “There are mechanisms that enable sharing and leveraging MLM (business, sponsorship, agents mobility) for a unique and fluid experience of running the business, including crossed offers/demands matching system, consolidated turnover follow-up in real time, adviser orientation and e-learning integration, Key Performance Indicators (KPI) for real estate managers, and the analysis of internal and external data to support an effective growth strategy.”
Speaking on the impact these tech enabled businesses would have on traditional real estate agencies, Florent says – “The competition and market shares won by real estate digital networks will push traditional agencies to evolve to stay in the race. They will have to succeed in gradually lowering their fees for equivalent service, either by grouping together in shared business centers or in larger branches to reduce fixed costs. However, as trust and reputation are key in the decision-making of sellers, it is possible that well-established historical players will eventually survive in this competitive landscape.” According to Florent, data plays a key role in the digital real estate space so as to be more efficient in terms of performance and development. He also believes that at the moment, execution around lead acquisition isn’t fully developed. However, when the competition gets tougher, these systems would have the advantage to reduce fees while supporting consultant activity because they will combine capabilities of the low-cost system for online automatic mandate taking and real estate agents covering the country. “What is certain is that once balance has been found among private sells, traditional real estate agencies and agent networks, the ecosystem will concentrate and become even more competitive because MLM networks are essentially based on the promise of growth to recruit and will have to find other strategies (individual performance, acquisitions or international) to continue their development”, says Florent.
Upon asking Florent to evaluate the chances of new players arriving in this market and dominating the market, we learnt that he is quite doubtful of the same. He notes that some attempts were already made in the past without success. Without a thoughtful strategy concerning development and competitive remunerations, it will be difficult to catch up to the current leaders which are benefiting from huge effects of scale. Moreover, it is a bit soon to consider possible consolidations in this market during the coming months in France or abroad. According to Florent, acquisitions will become a profitable solution in a few years when structural growth in market share will arrive at the inflection point.
To wrap up this discussion, we got Florent Couty’s concluding thoughts on how this space is evolving – “Many networks are now doing MLM, even without outrightly saying it. It is a fundamental trend. Compensation for business input and a culture of business sharing will also become a must. Finally, the technical and functional devices which will improve the productivity of agents and contribute to the timely service of clients, fully support the leverage effects of MLM. Fortunately for the market and for customers, there are many opportunities to improve the professional functions of this space, given that the digital disruption took place only a decade ago”.
We thank Florent Couty for his valuable time and inputs for this discussion.