The battle in a real estate market eager for transparency and ethics

Mexico has become one of the ideal Latin American countries for the development of ecosistema proptech (real estate technology); However, this for traditional players has also generated unethical practices on the part of these new platforms, which fuels the debate on whether the innovations seek to gain market at the cost of affecting end customers or are actually a solution to inefficiencies that have not been solved for years in the industry.

According to Jorge Carbonell, president of the Real Estate Innovation and Transformation Cluster (CITI), in recent years, the traditional players that have been present in the real-estate market and have gained prestige, have been transgressed by certain players who present themselves as unique and innovative solutions within the real estate segment.

“They are wolves in sheep’s clothing. The associations (real estate) have seen that their associates are being transgressed by these platforms, especially those that come from South America, where there is no order in the market and seek to be brokers (intermediaries). real estate“, commented Carbonell, who is also director in Mexico of the real estate firm Keller Williams.

In March 2022, different companies of real estate brokerage came together to present CITI, in order to ensure transparency and ethics in this industry. The companies involved in this project are:

• Coldwell Banker.
• Keller Williams.
• Quality.
• RE/MAX.
• Realty World.
• The Smart Flat.

According to CITI, with the arrival of new technological players, acquisitions or mergers of the real estateunfair competition practices were detected, for example, those who were previously only suppliers became competitors to mediate a real estate transaction, or an uncontrolled exchange of customer data was generated.

For Carbonell, one of the bad practices that have been identified is that these new players take the photo of the property advertised by one of the companies in the cluster, advertise it on their website with a cheaper sale price, request a down payment of 10% for a purchase and the seller is never heard from again. “It’s not that they promote crime, but that they facilitate it.”

In this context, different associations have sought to join CITI, to combat these bad practices, such as the Association of Real Estate Marketing Professionals; Zona Poniente Real Estate Group; SUMA Inmobiliaria and the Mexican Association of Real Estate Professionals on their behalf in Mexico City, Toluca and Valle de Bravo.

Among CITI’s jobs is training its associates on issues of the digital transformation of the sector, as well as ensuring transparency and ethics.

We will win the market, proptech respond

In recent months, different technology firms that have had significant growth in other parts of the world, especially in South America, have come to Mexico in order to attack different branches of the real-estate marketsuch as the purchase and sale of housing (new or used), the rental of real estate and even aspects such as moving.

According to a count by Proptech Latam, in Mexico there are around 140 plataformas proptechwhich makes it the second country in Latin America with the greatest presence of these firms, only below Brazil.

Platforms that have arrived from South America, such as la house, Woven, Loft, FifthWalkamong others, see in Mexico a market with many inefficiencies, which can be solved with technology and thus gain participation in the country to catapult its international expansion.

For Andre Penha, co-founder of the Brazilian unicorn QuintoAndar and now leader of its subsidiary in Mexico, Benvi, the Mexican market is very bureaucratic, which slows down the rental housing process, which in turn represents a delay in the occupation of a property and liquidity for the owner.

“In Mexico it is similar to what still happens in Brazil, that is, they are very fragmented markets, very bureaucratic. For example, for a tenant to rent an apartment, it takes more or less 30 days, in Quinto Dar the average time is four days. That means that the money comes faster, the investment has a better return,” said Penha.

Questioned about the complaints of traditional players regarding protpech companies, Penha indicated that a similar scenario occurred in Brazil; however, firms that adhere to transparency, such as QuintoAndar, remain and gain a larger market, despite the noise that is made about it.

“When we started in Brazil, it was said that the market is not so ethical, that the real estate market is very complicated, people are not so ethical, we had an ethical attitude of compliance, everything is transparent and works. In the formal market and ethical, that we defend it, we are going to win in this sense,” said Penha.

For Carbonell, the same user will know how to choose the best option. “In the end, the customer rules.”