3 Questions You Should Ask When Evaluating CRE Tech Products

I know it seems like there are an ever increasing number of new real estate tech startups emerging every day. Rest assured, it's not just you observing this. Last year, venture investors deployed over $5 billion in real estate technology, more than 150 times the $33 million invested in 2010. Needless to say, there are now quite a few new products on the market.

Everyone in real estate wants to leverage technology (or big data, predictive analytics, etc.) to improve their businesses, but even for the tech savviest of real estate professionals, it's getting tough to know which products are worth investigating further. Here are some of the questions I think you should ask when deciding which products to use.

Question #1 - Does the Product Have a Clear, Easily Explained Return on Investment?

Can you state what the product does in one sentence? Can you state how it will save you money or increase revenue in a single sentence? If not, there's a very good chance you should not use the product. Good products have a clear purpose, and a clear way to make you money. For commercial real estate, this money typically comes in the form of saving time, increasing revenue, or finding deals. If you're unsure of how the product is going to make you money, or if you can't clearly explain to another team member what it actually does, you probably shouldn't use it.

Question #2: Will (Most of) Your Team Willingly Use It?

This is important: There are many, many products out there that are foisted upon real estate teams by management, that are simply terrible. If the team wasn't forced to use it, they would abandon it without hesitation. A good product not only has a clear value, but is easy to learn and use. If it requires weeks of onboarding/training sessions or multiple calls to support to figure out if you're using it correctly, it's probably not going to be well liked by your team. Granted, there will always be the holdouts who simply don’t want to learn or use a new technology (this can be particularly true of seasoned real estate professionals), but the majority of your team should want to use the product if it’s truly a good fit for your organization.

Question #3: Will this company be around in a year?

This is often overlooked, but it can be very painful if you invest time and energy in learning a product and integrating it into your workflows, only to have the company go out of business soon after. This happens all the time with startups. Make sure you understand their current funding situation (i.e. months of runway) and the traction they have in the market before you buy. Traction can basically be summed up by number of users, monthly revenue (vs monthly expenses), and big names on the platform. Also ask about the size of the team and what level of customer service they provide. Having a good customer service infrastructure in place is a good indicator of the company’s acceptance in the marketplace, and it will definitely help you rest easier if you encounter any technical issues on the eve of a critical deadline.