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Residential PropTech
Overview
Tools to streamline management and transaction workflow of residential properties
Powered by technology such as cloud computing, machine learning, and big data, property management and transaction tools enable property owners and real estate companies to handle larger portfolios of homes and improve user experience during transactions or while managing residential properties.
Despite the sheer size of the US residential property market, it has been one of the last sectors to implement technology.
While many of the top-funded property startups have focused on connecting buyers and tenants with sellers and landlords, tremendous opportunities still exist for innovation in other areas, given that renting and buying/selling properties involves a series of manual tasks. Moreover, the Covid-19 pandemic expedited the widespread use of technology across different segments in the property sector.
Industry Updates
Market Sizing
The US market for home improvement, rental management, and agent tools could reach USD 15.4 billion–24.2 billion by 2028
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Market Mapping
The majority of startups have focused on developing rental management solutions and agent tools (buying/selling and renting). Many of the rental management tools are built for individual landlords due to the incumbents’ strong foothold in the enterprise segment. Meanwhile, the agent tools help real estate agents obtain referrals, respond to leads, generate leads, and search for properties collaboratively with clients.
The buying and selling tools for agents segment has a notable incumbent presence followed by the rental management and transaction closing tools segment. Matterport, on the other hand, has a strong foothold in the virtual viewing segment, where there is no incumbent presence. The industry is dominated by a large number of expansion- and go-to-market-stage startups, indicating the relative maturity of this space.
Rental management
Buying and Selling Tools for Agents
Transaction closing tools
Home Improvement
Valuation and appraisal
Virtual Viewing
Online marketplaces
The Disruptors
Home improvement startups lead funding, followed by transaction closing tools
Among our disruptors, the residential proptech segment comprises a few public players such as Zillow Group, Appfolio, and Compass, while also featuring a vast number of smaller, privately funded companies. In terms of private funding, the top two categories are home improvement and transaction closing tools. Each segment is characterized by the presence of a few players with substantial funding as of June 2024, such as Thumbtack (USD 698.2 million), Houzz (USD 613.6 million) and Notarize (USD 213.3 million).
The rental management segment has the highest number of startups followed by buying and selling tools for the agents segment. Many rental management startups have focused on providing their services to individual landlords that manage smaller residential property portfolios. An increasing number of newer startups have also focused on offering full-service property management rather than providing only a part of the service (e.g., only rent collection).
Aside from rental management, many startups have also emerged to equip the property sector with tools for agents that enable them to market homes (lead generation, agent matching, etc.). Public companies such as Zillow Group, Redfin and Compass are the dominant players in this segment, while HomeLight and Knock are the top private players in the space with USD 742.5million and USD 654.5 million in funding respectively, as of June 2024.
Funding History
Competitive Analysis
Incumbents
Collaborations and acquisitions, two of the most popular methods to enter the space
Incumbents in the property management space (rental management and home improvement tools) comprise real estate investment companies, property management companies, digital home improvement companies (Amazon Home Services, IKEA Systems, and ANGI Homeservices), and high-end property management software companies such as Yardi Systems and RealPage. Many property management companies, especially industry leaders, tend to use these two software solutions.
Meanwhile, in the real estate transaction space, the incumbents are real estate brokerages, title and escrow companies, and home appraisal providers. Brokerages appear to focus more on equipping their agents with marketing tools and streamlining business operations with transaction management tools. The top title and escrow companies, Fidelity National Financial and First American Financial, seem to focus mostly on expanding their digital closing capabilities. Data and analytics provider CoreLogic has been a leading player in the property valuation field for around two decades.
Many incumbents have collaborated (i.e., integration with third-party systems) with startups to provide digital offerings, as it allows them to adjust to changing market demand quickly. One of the top five real estate brokerage companies, RE/MAX, has integrated its system with a digital signature management tool, DocuSign; and real estate investment trust (REIT) AvalonBay has collaborated with the artificial intelligence (AI)-powered leasing assistant MeetElise.
Acquisitions are another popular method for entering the space as they allow incumbents to capture market share quickly. For example, RealPage has made mergers and acquisitions (M&A) part of its growth strategy, with recent activities including the acquisitions of Buildium, SimpleBills, and Modern Message.
Some real estate brokerage companies have developed their own proprietary technologies to gain a competitive edge and prevent data sharing with third parties. For instance, Keller Williams has launched an agent-to-agent referral tool, Referral, while Coldwell Banker has developed a similar tool, Exclusive Look.
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Overview
Tools to streamline management and transaction workflow of residential properties
Different types of tools for managing and transacting residential properties
