Information Systems Integration – Messina

Tech x Real Estate = Proptech

Image result for prop techProptech is the name of a race by investors to pour money into technology for real estate, or so-called by Silicon Valley. Until recently, the biggest tech innovations in the residential real-estate market have come, from only listing sites like Zillow and Redfin. Yet, in the new wave, the startups are up for a much wider range of areas — “appraisals, building management, financing, co-working, co-living, building amenities, and empty retail space”.

Opendoor, a 4-year-old startup that flips homes, attracted attention in June when it announced it had raised $325 million from a long list of venture capitalists with the financing evaluation at more than $2 billion. The company’s goal is to make moving as simple as the click of a button. While the reality is far from the expectation, Opendoor has simplified the process of selling a home. The company uses a combination of data, software and a team of 50 human evaluators to assess a home’s value. If a customer accepts Opendoor’s value for their home, the company will buy the property, charging a 6.5 percent fee on average.

Opendoor’s business model has not been tested by the majority of the housing market, causing some skepticism about its long-term growth. However, the skepticism often fades as people realize that Opendoor makes money by providing a service to home sellers, rather than on price appreciation.  So, even if the company breaks even on a sale, the transaction fees still bring in profit for Opendoor.

One Response to Tech x Real Estate = Proptech

  • Hi Chi,
    This is incredibly interesting. This is a universal trend, applications are become more of a ‘one stop shop’. I also think of the car industry when reading this post. There is a car rental mobile application that has recently come out, like Turo. On this application you just pick your car and it sends you a pick up location. That’s it. When setting up your profile, your application and information is saved and the application will show only the cars eligible. This takes the hassle of going to a rental shop out of the equation. Overall, this is a trend we will be seeing more. Applications will be more all in one to make consumer’s life easier.

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