Estate agents warned of the hidden costs of cheap software and PropTech

Adopting cheap software or PropTech solutions could end up becoming a very expensive decision due to hidden costs, according to Rex.

The software provider says that at a time when many agencies are reviewing their structure and processes, making the right tech decision from the outset is crucial.

As the impact of the pandemic continues, agencies are understandably looking to cut costs. Taking the same approach when it comes to CRM providers and PropTech partners could save money in the short-term, but end up costing much more in the long-term.

Hidden costs of cheap technology revealed

According to Rex, the most obvious but most significant hidden cost of cheap software is the replacement cost when it becomes apparent a better product is needed.

There is also the issue of retraining cost. Training staff to use software is critical and can’t be avoided, so replacing cheap software will require additional budget spent on training.

“As well as the costs of retraining staff, there is a risk of fatigue. They may become overwhelmed with information, lose interest and start making errors on the new system,” explains Anton Babkov, CEO of Rex.

“Agents changing 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.”

Babkov explains that two other significant hidden costs of cheap PropTech are the time cost – the cost of time which could be spent working on other problems – and missed business opportunity costs, in which poor software could reduce connections with prospects while staff are focused on working around its deficiencies.

“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,” he adds.

Follow the advice you would give your vendors

When making a decision over which software and PropTech solutions to use, agents can benefit from following the advice they frequently give to prospective vendors.

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.

“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,” Babkov explains.

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

“Agents who practice what they preach when it comes to not making decisions based purely on price can benefit from better products and systems,” he says.

“These improvements can translate into providing an even better service which can be passed on to consumers. 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.”

The difference between cheap and affordable

Although it’s advisable for agents to steer clear of the cheapest suppliers, there is a big difference between cheap and affordable.

Cheap software services tend to skimp on quality in favour of a lower price, whereas an affordable supplier can provide an effective product for a competitive price.

“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,” explains Babkov.

“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.”