In today’s ever-competitive real estate market, top-of-the-line software has gone from a nice-to-have to a must-have — especially in the bustling pre-construction industry.
It’s no secret that the real estate industry has been slow to adopt new customer relationship management (CRM), marketing, and management technology. In recent years, however, dedicated solutions – for everything from marketing and consumer contact to closing and sales tools – have become the name of the game.
When deciding to switch up “business as usual” and employ new software, companies must determine whether it makes more sense to build the technology in-house, or to outsource and buy it.
Build Vs Buy
The great “build vs. buy” debate is a common crossroads faced by real estate developers when looking to develop or upgrade existing software applications to stay up-to-date (or even ahead of the curve) in the industry. They must weigh the pros and cons between developing a product or service in house, or outsourcing from an external vendor that specializes in building – and maintaining – such systems and features.
Like many business decisions, the choice can be a subjective one.
“Both building and buying have pros and cons, and the best option depends on the goals and resources of the specific company,” says Simeon Garratt, CEO and co-founder of Vancouver-based real estate software company Spark. With a mission to transform the way new development real estate is sold, Spark offers the leading digital sales, marketing, and management solution. Launched in 2012, the company’s platform now powers the world’s most successful real estate launches and sellouts, from Toronto to New York to Dubai.
Over a decade ago, Garratt was faced with the build vs. buy decision himself while working at a real estate brokerage. Because there was no suitable software to purchase, he and his co-founders decided to fill the market gap and build such software themselves – but he quickly learned doing so was a lot harder than he’d expected. Today, Garratt says that there are a handful of factors that should be considered when deciding which direction to take.
“I had no idea how difficult this 10-year journey would be. The idea was simple, but the technology and operations to enable that idea are incredibly complex,” he explains. “Looking back, building is the easy part. Maintaining, supporting, and growing are the biggest challenges.”
Building Software Internally: Pros And Cons
Building software internallyoffers the benefit of customization, enabling firms to craft a perfect match for their specific business, says Garratt. If a company has existing software developers on staff, then they can sometimes get a platform up and running for cheap.
“If you have a particularly tech-savvy person internally, you can get a bare-bones software off the ground,” says Garratt. “If you’re a developer with an internal software team in-house and experience in building, then it might be manageable to do it internally.”
So while there are some situations where it makes sense to build software internally, Garratt explains, there are many more scenarios where outsourcing existing software is the best move.
Garratt says that building software requires more time, over a longer period, than one may assume. Often, organizations overlook ongoing maintenance costs and requirements – the biggest drawbacks to building software internally. Tech-forward solutions require ongoing research, development, and maintenance, making it less likely for companies to develop new features after the initial build in the absence of an in-house software team.
“Many developers are used to project-building timelines where there is a defined beginning, middle, and end,” says Garratt. “Software is different. There is no finish line.”
Rather, it involves a constant evolution – especially considering how quickly tech is changing in today’s climate. The bottom line is that companies need to keep up.
“You need to be performing ongoing research and development,” says Garratt. “Anytime you need to integrate, that represents additional costs. The initial build costs are only 10% or less of the total lifetime costs, depending on how long you expect to use this software.”
In short, software building costs really only represent the tip of the iceberg in total expense.
“You need to consider the lifetime costs of maintaining and upgrading it,” says Garratt. “For a developer, it’s sort of the same as having to do warranty changes and upgrades every single day for as long as people continue to use the software; you really need to be supporting it and improving it.”
Buying Software: Pros And Cons
For most in the real estate industry, it will be the most effective and less expensive option, over time, to outsource software to leading industry professionals.
Buying software offers a shorter time to market and more of a turn-key solution compared to building in-house. There are fewer resources required. And, companies like Spark offer customer support and training, while adhering to regional and federal Security & Compliance regulations, offering added assurance. This means that Spark has all the boxes checked when it comes to a reliable and compliant software that’s safe for users to navigate.
Buying software also offers the added benefit of quality maintenance throughout the product life cycle, resulting in fewer dollars dished out over time.
This isn’t to say buying software isn’t without its drawbacks. But, with a deep understanding of both the latest technology advancements and the development industry, Spark has covered all of the essentials – plus more – for today’s forward-looking developer.
Spark is an end-to-end platform for all stages of the new developments sales program, from pre-launch to closing. The company provides all the tools you need to sell out your project: CRM, inventory, parking and storage management, marketing, contracts and reporting.
“Our main value prop is the interconnection and exponential value of having multiple different tools under one roof,” says Garratt. “People who don’t use Spark typically use one software for their CRM, another for contract signing, and a third for email marketing. Every time data passes from one system to another, it takes time and mistakes happen. But it’s not just about mitigating risk. There [are] also really valuable insights and actions you can take from having everything in one place, and being able to see the performance of your real estate portfolio and conversion of different types of leads.”
Many of Spark’s customers have shared their own accounts of building software in house before making the switch, ultimately affirming the benefits of buying.
Vancouver-based Hestia Marketing Group, for example, was experiencing growing pains as a result of trying to sell real estate from a generic CRM. In her nearly 30-year career of selling new developmental real estate, Roxanne Reid, president and CEO of Hestia Marketing Group, had used nearly every type of sales and marketing software. Prior to using Spark, her team managed projects and sales through a wide variety of systems, including pen and paper, house-built solutions, and CRMs like Hubspot, Microsoft Access, and Salesforce.
“When customizing an enterprise CRM like Salesforce, people often don’t consider the human capital costs in addition to the initial financial capital outlay,” says Reid. “It can give you major headaches to perform all of the customizations necessary to match our industry's sales process. Building a CRM is only half the battle, maintaining and supporting the platform is a hidden cost that usually isn’t considered until it’s too late.”
Since switching to Spark, Hestia has been able to reduce their CRM and other related expenses by 80%, while expanding their team’s CRM adoption and capabilities.
Indeed, the choice of whether to build or buy comes down to the specific needs of the company – but for most, outsourcing is likely the most viable option.
“Building, marketing, and selling residential new development is difficult enough without also becoming a tech company on top of that,” says Garratt.
In short, it may be wise for developers to stick to building communities – not software.
This article was produced in partnership with STOREYS Custom Studio.
