Rex warns of hidden costs of cheap PropTech solutions

Software provider Rex has warned estate agents of the hidden costs of adopting cheap PropTech solutions.

According to Rex, the most obvious but most significant hidden cost of cheap software is the replacement cost when it becomes apparent that a better product is needed, and of retraining staff on new technologies.

Anton Babkov, CEO of Rex, said: “As well as the costs of retraining staff, there is a risk of fatigue.

The role of proptech in the run up to stamp duty cut off

“They may become overwhelmed with information, lose interest and start making errors on the new system.

“Agents changing [customer relationship management (CRM)] providers also need to make sure they make the right decision due to the downtime associated with making a change.

“Replacing a failed cheap system doubles the business disruption cost.”

Two other hidden costs are the cost of time which could be spent working on other problems and missed business opportunities, in which poor software could reduce connections with prospects while staff are focused on working around its deficiencies.

Babkov added: “Poor software can also harm consumers’ perception of your agency if it fails to remind you of key dates or slows your response times. This ‘churn’ cost could be significant.”

For property sellers choosing which agent to use, it can be tempting to go with the firm which offers the cheapest fee and the highest valuation. However, taking this route could result in a more stressful selling process which takes longer to complete and achieves a lower sale price.

Babkov said: “When a prospective vendor tells you they’re going with a discount agent who is willing to lower their fees, it’s frustrating.

“When you consider the service levels, communication and little extras the best agents can provide, vendors can get a lot more for their money by paying a little more.

“The same thinking applies to CRM software and technology solutions. Cutting corners to save a small amount of money rarely generates the best results.”

He added that making improvements to the decision-making process when choosing technology, focusing less on those solutions with lower prices, will translate into a better service for consumers.

Babkov said: “This will subsequently be a contributing factor when it comes to convincing prospects why going with an agency that charges a fair fee and offers a comprehensive service is worthwhile.”

He went on to say that agents should make sure to understand the difference between a cheap supplier and an affordable or competitively priced one.

Babkov said: “Cheap CRM systems usually run on a ‘churn and burn’ business model. They need a high volume of clients to stay afloat, but you receive little to no attention or support and very few new features or updates.

“While both cheap and affordable products imply low costs, an affordable piece of software can actually add value to your business and ensure you don’t end up paying extra for the hidden costs associated with cheap products.”