Spotting Fact vs Fiction in the Buying Process

Why Shopping for a New PropTech Solution is a Headache

PropTech is a movement. It may have started with a few startups offering better property listings or online maintenance requests but now it is pumped with venture capital. Those billions in investments mean we now have a tech solution for what feels like every bit of the real estate lifecycle. From acquisitions to retention, we now have a way to “revolutionize” everything we do.

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The problem? All of the information is so loud that it’s easy to get lost in the noise.

Everyone’s promising smarter leasing. Predictive analytics. AI-powered building ops. Automated underwriting. You name it, there’s a product (or fifty) that claims to do it. For the exhausted property owners and managers, these promises are enticing. Who wouldn’t want fewer vacancies, more accurate valuations, or operational efficiencies delivered via sleek dashboards and machine learning?

There are lots of great products out there. But for every high-performing platform, there are five others that are well-funded and just getting started. The buying cycle is getting longer to account for the dreaded due diligence process. We all know someone that hates their software, but the thought of changing it is even worse.

Here’s How to Effectively Evaluate PropTech

Step 1: Know Where the Fiction Frequently Flows

To become a savvy PropTech evaluator, you need to know where to dig in.
Lucky for you, we have outlined a few of the key areas below:

Feature Overload:

One of the initial traps in the PropTech buying process is feature overload. And it makes sense. When we see more options than others, it can seem impressive. But chances are, just like that black tie outfit you keep in your closet “just in case,” several of these features will rarely be utilized, and will ultimately contribute little to your daily operations. It’s easy to be drawn in, but you must understand the practical application and integration into your existing workflows, or it’s likely to gather digital dust.

Integration Illusions:

Reality often strays from the sales pitch when it comes to integration. Many vendors promise “seamless integration” with your current systems but the actual implementation often involves significant effort. Instead of a smooth connection, you might encounter clunky interfaces that require manual data manipulation or need costly and time-consuming custom configurations. The initial promise of seamlessness can sometimes hide fees associated with integration or the ongoing costs of maintaining these connections. How much does it really cost to turn on an API? Is that really custom?

Scalability and Limitless Potential:

The promise of limitless capabilities can also be a red flag. Generic language and expansive claims about what software can achieve without providing concrete evidence or a clear roadmap can be a real problem. It’s important to be wary of promises that seem too good to be true, especially from newer companies without a significant track record. Be curious. Inquire about company history, their experience in delivering on similar promises, and demand examples of their capabilities in action. Be diligent in understanding the pricing structure and any potential escalations in your bill as your usage grows or as you adopt more of these so-called “limitless” features.

AI-Powered Claims:

Everything is buzzing around “AI-Powered.” While AI is a powerful tool, it is important to use caution as the term may be a marketing tool. AI is often slapped onto basic automation features without any real underlying intelligence. You need to understand the actual functionality being offered. Is this truly an intelligent system that learns and adapts, or is it simply a rebranded set of predefined rules and workflows? Don’t hesitate to press vendors for specific details on how their AI algorithms work and, more importantly, how they will benefit your operations. If they struggle to provide clear explanations, it’s likely that the “intelligence” is more in the marketing than in the actual software.

Security:

And finally, security. Interestingly enough, security often receives attention only after initial discussions. That’s strange considering all the PII our industry has access to. Typical sales teams offer vague assurances about data protection that are insufficient when dealing with sensitive resident, tenant, and financial information. You must ensure the vendor demonstrates a clear understanding of and adherence to relevant industry compliance standards. Your data is a valuable asset and a significant responsibility, so due diligence in this area is non-negotiable.

Step 2: Determine Fact vs Fiction

Know Your Core Needs

The first line of defense in analyzing PropTech solutions lies in a deep understanding of your own company. Before engaging with vendors, know your company and its business needs. This often means getting feedback from all stakeholders to compile a complete list. Resist the temptation to chase after the latest technological trends or accept a meeting just because. Focus on clearly identifying the specific problems you are trying to solve. What are your company’s operational inefficiencies and areas where technology can provide the most significant impact? Based on that analysis, create a prioritized wish list of essential features (by position or department), focusing on functionality that directly addresses your identified pain points.

Unleash Your Inner Detective

Now that you have a clear understanding of the company’s needs, it’s time to adopt the mindset of an investigator during demos. Don’t tune out and accept vague descriptions or hypothetical scenarios. Ask for real-world examples of how their software has solved similar problems for other clients and press for specific details. Don’t shy away from asking questions on the technical parts. Move beyond the marketing jargon and inquire about APIs, data migration processes, integration methods, and system architecture. Involve your IT team for a more in-depth technical evaluation. Remember, we are used to dealing with assets, not algorithms. Ask all of your security questions or ask to see a copy of SOC II certification. Your data’s safety and regulatory adherence are non-negotiable. Meet more than just the sales and client advisory teams. Request meetings with implementation specialists, support staff, and even product development representatives to gain a more holistic understanding of the vendor’s capabilities.

The Wisdom of the Crowd

The wisdom of the crowd (experiences of actual users) offers invaluable insights that go beyond the perfect presentations. It’s time to find paying customers. Don’t shy away from asking the uncomfortable questions! Inquire about the real downsides of the software, the challenges they’ve faced, and how responsive the vendor has been in addressing them. Speaking of downsides, don’t forget to ask about downtime. No one has time for a system that is frequently down no matter how amazing it is when it works. Explore other online forums and see what the unfiltered chatter is. These platforms provide raw feedback about different PropTech solutions, revealing both their strengths and weaknesses.

The Demo: Your Chance to See if the Solution is Real

The ultimate test of a PropTech solution lies in its real-world performance in your environment. Ask for a custom demo that addresses your company-specific needs and challenges. To maximize the value of this demo, clearly define the problems you are aiming to solve and ensure the demonstration focuses on solutions tailored to your unique experiences, rather than a standard, off-the-shelf presentation. Before setting aside time for a demo, set clear goals. Define specific, measurable, achievable, relevant, and time-bound (SMART) objectives to evaluate the software’s effectiveness in addressing your needs. During the demo, pay close attention to how responsive their team is when there is an issue. Do they know the answer to your questions? The quality of support you receive is an indicator of their long-term partnership potential.

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The Fine Print: The Devil is in the Details

Finally, the fine print of the contract holds crucial details that can significantly impact your experience. Read the agreement carefully to understand the vendor’s commitments regarding uptime, performance, and support response times. Uncover hidden fees and limitations before you’re locked into a long-term agreement. For significant investments, get a lawyer involved to review the contract and ensure your interests are protected. Clearly understand who owns your data, what is considered your data, and the vendor’s data portability policies. Consider future scenarios and know what happens if you sell a property or lose management. Understand the terms and conditions related to data transfer and any associated costs in those cases.

Step 3: Identify Green Flags: Signs You Might Actually Have a Winner

Keep your eyes and ears open to positive indicators that signal you’ve found a promising solution. The first encouraging sign is when the sales team listens and speaks clearly. They articulate their value proposition and explain complex features in a straightforward way.

A vendor that relies on a vocabulary filled with substance rather than just buzzwords demonstrates a genuine understanding of their offering and prioritizes clear communication. Consider the company values and views. There is nothing wrong with being socially conscious and making sure a vendor’s ethical stance and overall company culture matches yours. A strong alignment in values may be what fosters a more positive and productive long-term partnership. A forward-thinking vendor will also demonstrate that they’re not stuck in the past but are constantly evolving and improving their platform. A company with a history of adapting to market changes, incorporating user feedback, and investing in research and development is more likely to provide a solution that remains relevant and effective over time.

Perhaps the biggest green flag is when you have found vendors that feel like true partners. They are flexible, not dictatorial, and they understand that your business needs are unique. They should be willing to work with you to tailor their solution to your specific requirements and act as a collaborative partner invested in helping you maximize their software.

Finally: Maintain a Big Picture Perspective

PropTech presents an abundance of opportunities to reshape your property management, but like any other business, the market can be saturated with misleading claims and over-hyped solutions. If you are ready to take on finding new tools, be diligent, ask probing questions, and have a healthy skepticism towards claims that seem too good to be true.

The ultimate reward for your diligence is the confidence and peace of mind that come with choosing PropTech that actually works for you. These solutions may come at a higher initial cost, but the long-term benefits of improved efficiency, streamlined operations, and enhanced resident satisfaction far outweigh the potential savings of a cheaper, but ultimately ineffective, alternative.

Now, you face a critical decision: start shopping or stay with what you have? If you are ready to start shopping, stay on track with this PropTech Evaluation Must Ask Checklist.