PropTech and Real Estate Software M&A: A Founder's Guide to the 2025-26 Market
Introduction
The PropTech sector is in the midst of a record-breaking M&A cycle. In the first eleven months of 2025, 163 M&A deals were announced in property technology, surpassing the total of 134 deals in all of 2024 and on pace to exceed the ten-year record of 170 deals set in 2022, according to Corum Group's sector analysis. The total disclosed value of these transactions reached $6.8 billion, though the actual figure is substantially higher given that most deals do not publicly disclose terms.
Headline transactions have set the tone: Rocket Companies completed its $1.75 billion acquisition of Redfin in July 2025, creating an integrated homebuying platform spanning mortgage origination and real estate brokerage. CoStar Group closed its $1.6 billion purchase of Matterport in February 2025, bringing 3D digital twin technology and AI-driven property insights into the commercial real estate data giant's portfolio. Brookfield Properties acquired Divvy Homes for approximately $1 billion, albeit at a significant discount to Divvy's 2021 peak valuation of $2 billion.
For founders of PropTech companies, whether in residential CRM, transaction management, property management software, commercial real estate analytics, or MLS technology, the message is clear: the sector is consolidating rapidly, and strategic and financial buyers are deploying capital at scale. The Houlihan Lokey PropTech Public Market Index rose 32% over the past year, and venture funding showed resilience with $292 million in Q2 2025 alone.
This guide breaks down the M&A landscape, valuation benchmarks, and practical implications for PropTech founders evaluating their options in 2025-26.
Market Overview
The PropTech Software Landscape
PropTech encompasses technology solutions that serve the real estate industry across the full property lifecycle. The market was valued at $42 billion in 2024, with a compound annual growth rate of 16% through 2030, according to Fortlane Partners. The landscape can be segmented into several key categories:
Residential lead generation and search portals are dominated by large-scale platforms. Zillow Group operates the leading residential real estate marketplace in the United States, while CoStar Group (which owns Apartments.com, Homes.com, and LoopNet) has invested heavily to challenge Zillow's position. Redfin, now owned by Rocket Companies, combines search with brokerage services.
Real estate CRM and agent productivity tools serve the daily workflow needs of agents, teams, and brokerages. Follow Up Boss, acquired by Zillow Group, and LionDesk (acquired by Lone Wolf Technologies) are prominent players in agent CRM. Inside Real Estate (backed by Lovett Miller) provides CRM and website solutions to brokerages and teams.
Transaction management platforms digitise the contract-to-close process. Dotloop (owned by Zillow Group), SkySlope (acquired by Fidelity National Financial), and Lone Wolf Technologies are key players. These platforms handle document management, e-signatures, compliance tracking, and transaction coordination.
Property management software serves landlords, property managers, and real estate investors. The market includes players ranging from enterprise platforms like Yardi Systems and RealPage (acquired by Thoma Bravo for $10.2 billion in 2021) to mid-market solutions like AppFolio and Buildium.
Commercial real estate technology encompasses data analytics, deal management, lease administration, and investment management platforms. CoStar Group dominates commercial real estate data, while companies like Juniper Square and Dealpath serve the investment management workflow.
MLS and association technology provides the core infrastructure for real estate listing services and professional associations. This niche segment serves a mandated market with high switching costs.
Market Cycle Dynamics
Real estate software M&A is inherently cyclical, influenced by housing market conditions, interest rates, and mortgage activity. The period from 2020 to 2021 saw peak valuations driven by pandemic-fuelled housing demand. Rising interest rates in 2022-23 compressed valuations significantly, with several PropTech companies experiencing 60-80% declines from peak valuations. The stabilisation of rates in 2024-25, combined with rebounding mortgage activity, has reignited M&A confidence. Houlihan Lokey noted that the 1H 2025 PropTech market showed consistency with 55 M&A transactions and $2 billion in growth equity and debt financing.
M&A Activity and Deal Flow
Mega-Deals Defining the Market
Rocket Companies' $1.75 billion acquisition of Redfin (completed July 2025) represents the most transformative residential PropTech transaction in years. Rocket, the largest retail mortgage originator in the United States, acquired Redfin's digital brokerage platform to create an integrated homebuying experience. The deal includes a new initiative, Rocket Preferred Pricing, which offers buyers who finance through Rocket Mortgage a one percentage point interest rate reduction for the first year when purchasing with a Redfin agent. This vertical integration of mortgage and brokerage has significant implications for the broader residential technology ecosystem.
Additionally, Rocket Companies acquired Mr. Cooper in a separate transaction, further consolidating the mortgage technology landscape and creating a comprehensive platform spanning origination, servicing, and brokerage.
CoStar Group's $1.6 billion acquisition of Matterport (completed February 2025, first announced April 2024) brought 3D digital twin technology into CoStar's data ecosystem. Matterport had digitised over 14 million spaces globally, and CoStar's thesis centres on integrating this visual data with its property analytics platform to enhance how commercial and residential properties are marketed and evaluated. The deal highlights the premium acquirers are willing to pay for differentiated technology that enhances property data.
Brookfield Properties' acquisition of Divvy Homes for approximately $1 billion illustrates the correction in PropTech valuations. Divvy, which facilitated rent-to-own homeownership, had raised at a $2 billion valuation in 2021 but faced headwinds from rising mortgage rates and operational challenges. The Brookfield acquisition provided an exit for investors at a discount, reflecting the repricing that many capital-intensive PropTech models have experienced.
Strategic Consolidation in Real Estate Workflows
Lone Wolf Technologies has been a consistent acquirer of real estate workflow tools, building a comprehensive platform spanning CRM (LionDesk), transaction management, back-office tools, and analytics for brokerages and MLSs. The company's roll-up strategy, backed by private equity, exemplifies the buy-and-build approach in residential real estate technology.
Yardi Systems expanded into flexible workspace management through its acquisitions of Deskpass and Hubble, creating a unified platform for coworking and flexible office space. CBRE's acquisition of Industrious positioned the commercial real estate services giant as a leader in flexible workspaces, reflecting the post-pandemic shift in office demand.
Fidelity National Financial's ownership of SkySlope demonstrates how title and settlement companies are vertically integrating into transaction technology, capturing more of the real estate transaction value chain.
AI and Data-Driven Acquisitions
AI is reshaping PropTech M&A strategies. Moody's acquisition of Cape Analytics brought geospatial AI capabilities for property risk assessment into the analytics giant's platform. Companies offering AI-driven solutions in virtual tours, predictive pricing, property condition assessment, and tenant screening are increasingly attractive acquisition targets.
The Corum Group analysis identified AI adoption, data analytics, and digital transformation as the three primary drivers of PropTech M&A in 2025, with companies offering these capabilities commanding the highest valuations and the most acquirer interest.
Venture-Backed Exits and Down Rounds
The PropTech sector has seen a notable pattern of venture-backed companies exiting through M&A at valuations below their last funding rounds. Divvy Homes is the most prominent example, but smaller companies across the PropTech landscape have faced similar dynamics. For founders, this underscores the importance of building sustainable business models and considering M&A timelines relative to venture funding cycles.
Valuation Benchmarks
Current PropTech Multiples
PropTech valuations have stabilised in 2025 after the correction of 2022-23, though they remain below the peak levels of 2021.
| Metric | PropTech Software (2025) | 2021 Peak | Broader SaaS |
|---|---|---|---|
| EV/Revenue (Public) | 4x-8x | 10x-25x | 5x-8x |
| EV/Revenue (Private M&A) | 3x-6x | 6x-15x | 4x-7x |
| EV/EBITDA | 15x-25x | 25x-50x+ | 15x-25x |
| Revenue Growth | 10-25% | 30-80% | 10-20% |
Sources: Houlihan Lokey 1H 2025 PropTech Market Update; Fortlane Partners PropTech M&A Report; Vista Point Advisors Q2 2025. Ranges represent estimates across sub-segments.
The Houlihan Lokey PropTech Public Market Index's 32% increase over the past year reflects recovering confidence, but valuations remain at roughly 40-50% of 2021 levels for most sub-segments.
Factors driving premium valuations in PropTech include:
Recurring revenue quality. Pure SaaS models with monthly or annual subscriptions command the highest multiples. Transaction-based revenue (per-closing fees, lead referral fees) is valued lower due to its cyclical exposure. Companies with blended models are evaluated based on the proportion of recurring versus transactional revenue.
Market position within a workflow. Companies embedded in critical, daily-use workflows (agent CRM, transaction management, property management) command higher valuations than discretionary or project-based tools.
Data assets. PropTech companies that generate proprietary data (property condition data, market analytics, consumer behaviour insights) as a byproduct of their core operations receive data-platform premiums.
Interest rate sensitivity. Companies with revenue models that are largely insulated from housing transaction volumes (property management software, commercial real estate analytics) trade at a premium to transaction-dependent models (lead generation, mortgage technology).
Key Acquirer Profiles
Strategic Buyers
CoStar Group is the dominant strategic acquirer in PropTech, with a market capitalisation exceeding $30 billion and a stated strategy of building the most comprehensive real estate technology platform globally. CoStar's acquisitions span data (Matterport), listing portals (Homes.com development), and analytics. The company is well-capitalised and has demonstrated willingness to pay significant premiums for differentiated technology.
Rocket Companies, following its Redfin and Mr. Cooper acquisitions, has signalled an appetite for technology that enhances the homebuying experience. Companies offering complementary capabilities in home search, agent matching, inspection, insurance, or closing could be targets.
Zillow Group has been a consistent acquirer of agent-facing technology (Follow Up Boss, Dotloop) and could pursue additional acquisitions to strengthen its platform, particularly in areas such as AI-driven property valuation and buyer matching.
Lone Wolf Technologies, backed by private equity, continues its roll-up strategy in residential real estate workflow tools and is a likely acquirer for CRM, transaction management, and brokerage operations companies.
Financial Sponsors
Thoma Bravo (RealPage), Vista Equity Partners, and Francisco Partners have significant exposure to PropTech through existing portfolio companies. These firms pursue both platform investments and add-on acquisitions.
TPG demonstrated its interest in PropTech-adjacent hospitality technology through its $1.1 billion acquisition of Sabre Hospitality Solutions, seeking to accelerate digital innovation in that vertical.
Numerous mid-market PE firms are active in PropTech, targeting companies with $5-50 million in ARR and opportunities for operational improvement and platform expansion.
Adjacent Industry Acquirers
Title and settlement companies such as Fidelity National Financial (SkySlope), First American Financial, and Stewart Information Services are vertically integrating into real estate technology. These companies process millions of real estate transactions annually and seek to capture more of the technology value chain surrounding each closing.
Insurance carriers and insurtech companies represent emerging PropTech acquirers, particularly for companies offering property condition data, risk assessment tools, and claims automation technology. Moody's acquisition of Cape Analytics (geospatial AI for property risk) exemplifies this convergence.
Construction technology (ConTech) companies are increasingly adjacent to PropTech, with companies like Procore (which acquired LienWaivers.io) and Autodesk building platforms that span from project development through property operations. This convergence creates additional potential buyers for PropTech companies with capabilities that bridge construction and property management.
Consolidation Drivers
The current PropTech M&A surge is driven by several converging factors:
Digital transformation remains incomplete. Despite years of PropTech investment, the real estate industry's digital adoption remains below that of most other major sectors. Many brokerages, property managers, and commercial real estate firms still rely on fragmented or legacy technology stacks, creating ongoing demand for modern solutions and opportunities for platform consolidators.
AI is creating new value and new acquirer urgency. The application of AI to property valuation, virtual staging, document analysis, tenant screening, and market prediction is creating a new wave of valuable capabilities. Acquirers are pursuing AI-native PropTech companies to stay competitive.
Interest rate stabilisation has restored transaction confidence. As mortgage rates have stabilised (though remain elevated compared to 2020-21), housing market activity has partially recovered, improving the growth outlook for transaction-dependent PropTech businesses and making acquirers more willing to deploy capital.
Consolidation begets consolidation. As large platforms like Rocket, CoStar, and Lone Wolf grow through acquisition, they create competitive pressure for other players to consolidate or risk being marginalised. This dynamic accelerates deal activity across the sector.
The housing supply shortage persists. The structural undersupply of housing in most developed markets ensures continued demand for real estate technology, even during periods of elevated interest rates. PropTech companies that help developers, builders, and housing providers operate more efficiently benefit from this fundamental dynamic, and acquirers recognise the long-term tailwind.
Cross-border expansion opportunities are attracting international acquirers. European PropTech consolidators are actively expanding into the U.S. market, while U.S. giants look to enter European and Asian markets. This globalisation of PropTech M&A broadens the buyer universe for founders in any geography.
What This Means for Founders
If you are a PropTech founder considering a sale in 2025-26, several practical considerations should guide your thinking:
Position your recurring revenue clearly. Given the sector's cyclical nature, acquirers will place a significant premium on revenue that recurs regardless of housing transaction volumes. If you have a blend of recurring and transactional revenue, consider strategies to increase the recurring proportion before going to market.
Emphasise your data assets. PropTech companies that generate proprietary data as a byproduct of their operations are valued at a premium. Document what unique data your platform creates, how it is used, and its potential applications in analytics and AI.
Understand your buyer universe. The PropTech acquirer landscape is diverse: large strategics (CoStar, Rocket, Zillow), workflow consolidators (Lone Wolf), PE platforms, and adjacent industry players (title companies, mortgage servicers, insurance carriers). Each has different strategic priorities and valuation frameworks.
Factor in market cycle timing. With the PropTech public market index up 32% over the past year and M&A volume approaching record levels, the current window is favourable. However, PropTech valuations are sensitive to interest rate movements and housing market conditions. Founders should consider whether their business fundamentals are best positioned now or would benefit from additional growth before going to market.
Prepare for thorough diligence on unit economics. Post-2021, PropTech acquirers are far more rigorous about profitability, customer acquisition costs, and retention economics. Companies that can demonstrate a clear path to profitability (or existing profitability) will command meaningfully better terms.
A Maturing Market with Premium Outcomes
PropTech M&A in 2025-26 is characterised by record deal volumes, billion-dollar strategic transactions, and an increasingly sophisticated acquirer base. The sector has matured significantly since the exuberance of 2021, and valuations now better reflect sustainable business fundamentals rather than speculative growth projections.
For founders, this maturation is largely positive: acquirers are serious, well-capitalised, and strategic in their approach. Companies with strong recurring revenue, proprietary data, and defensible positions within real estate workflows are commanding premium valuations and attracting multiple interested parties.
The convergence of AI adoption, interest rate stabilisation, and ongoing digital transformation ensures that PropTech M&A will remain active well into 2026. Founders who prepare thoughtfully, understand their position within the broader ecosystem, and engage experienced advisers will be best positioned to capitalise on this dynamic market.