Q & A: Is a Mobile App a Good Investment?

A Great Article by Charles Muotoh

I’ll be the first to admit: There’s not a single industry on the planet that hasn’t been disrupted by the smartphone age in one way or another.

As more and more people move to smartphone devices, almost all businesses are looking to get a foot in. This is precisely why myriad real estate mobile applications are being developed and marketed to the real estate industry, and Realtors are investing in them as they try to keep up with a fast-growing mobile audience.

Following this same logic, you may be tempted to think that a mobile app will transform your real estate business by putting you in everyone’s pockets. After all, don’t the latest reports show that most people spend 60 percent of their time glued to the mobile phones?

Giving today’s mobile trends, it is absolutely critical for real estate agents to employ a mobile strategy — but is a mobile application the right mobile strategy for them?

As an owner of a mobile application development company, I’ve actually had to dissuade fellow agents from investing in their own real estate mobile app simply because I don’t believe they’ll be able to get a return on their investment.

Here are a few reasons why I think investing in a real estate mobile app isn’t the right mobile strategy for everyone.

Apps are a resource drain

If you already have a website up, then you know exactly how expensive it was to set up.

Well, that’s nothing compared to an app.

Mobile applications not only require more time to build, but they also cost more money to develop than a website.

First off, you need two different versions of your real estate app developed specifically for both Android and iOS. A basic app can cost up to $10,000.

A few more features and you’re looking at anywhere between $20,000 to $30,000.

Some mobile app companies offer custom real estate agent mobile apps for as low as $750, however.

Mobile app marketing and retention rates

Now that you have an app built, you have to get people to download your app. Unless you have the next Pokémon Go on your hands, you will have to invest in marketing the app to potential users.

According to Fiksu’s January 2016 Indexes, the average cost per install for iOS and Android were $1.88 and $2.42, respectively. Using these figures, it could cost you $940 to get 500 iPhone users to download your app and $1,210 for 500 Android users. Since your target audience is real estate leads, it is safe to say the cost per install for a real estate app will be significantly higher.

Now that you have spent all this money building an app and marketing it, the last thing you want is your newly acquired leads uninstalling your app from their phones within a few days of downloading it.

Unfortunately, there is a lot of churn when it comes to mobile app downloads.

According to a study conducted by Localytics, across multiple industries, the average mobile app retention rate was 25 percent after 90 days. That means 75 percent of app users churn within 90 days.

I strongly believe the retention rate with real estate agent apps is even lower.

Once they find out they can search for homes, estimate home values and use a mortgage calculator via a mobile website, what incentive do they have keeping your app on their phones? Chances are a large portion of the leads you acquired will be gone in a few days.

Apps are long-term investments

Even after the launch of your brand new application, the job is nowhere near done. Due to the need for critical operating system and security updates as well as new Android and iOS releases, the app will require constant attention and more resources.

Without these updates and bug repairs, your real estate mobile app potentially could malfunction.

As an agent, it’s safe to say that all your time and resources need to be focused on connecting buyers to properties, not maintaining a mobile app.

Fierce competition

Search the app stores for real estate mobile apps, and expect to find a number of them — including apps owned by real estate giants such as Zillow, Trulia and realtor.com.

Similar to how they’ve built powerful and dominant web platforms, these industry giants own the leading real estate mobile apps. Their mobile apps incorporate robust features like search filters, property estimates, mortgage calculators and market overviews.

Final words

While technology and advancement are the pillars of most businesses today, not everybody can reap the same benefits from it.

Sometimes, the effort and hassle involved in developing mobile apps far outweigh their benefits.

If you must strengthen your digital presence, you’re better off optimizing your real estate website to be mobile compatible. It won’t cost half as much and won’t involve a fraction of the trouble.

Some of the larger real estate companies have launched mobile apps that their agents can use. If you must have a mobile app, I advise taking advantage of a brokerage’s or another company’s mobile app before building your own.