Could Rightmove, Zoopla or OnTheMarket ever buy and sell houses?

Whilst most UK estate agents have been keeping a wary eye on internet agents stealing their market share, few will have seen the growth of the iBuyer lurking around the corner.

This tech-centred business model has started to take off in the US and in one city – Phoenix, Arizona – now accounts for 5% of all transactions.

Companies such as Opendoor, Zillow Offers, Offerpad, Redfin and Knock offer cash for a quick sale, in some cases do a property up, then sell it for a profit.

Zillow even has its own property portal.

Imagine if Rightmove and Zoopla were to do the same – they’ve certainly got the cash reserves that this kind of business needs.

Although sellers get less for their property, they don’t have all the hassles associated with a lengthy sales process.

These models are emerging elsewhere, such as Properly in Canada, Homeloop in France and Casado in Italy.

Others such as Kodit in Finland will source residential properties for third-party buyers or institutional investors and undertake the property management.

It recently raised £11m to roll its services out across the continent.

We’re not short in the UK of similar options, whether it’s companies offering a quick sale for cash or an advance upfront, buying properties in part exchange, or even property auctions.

So what would lead to an increase in UK sellers accepting a lower price for their property for a quick sale?

Why would the iBuyer model take off here, not least because only one in ten enquirers actually go through with this sort of transaction, according to Zillow.

Brexit might be one good reason with many people becoming increasingly desperate to sell during this stagnant market.

Or chains falling through. Or people living in areas where it’s hard to sell.

There might even be an increase in properties going through probate and beneficiaries just want to get their hands on the cash.

It would be very easy to dismiss the iBuyer model as one that won’t get traction here in the UK – but if it’s gaining in popularity across the US, why won’t it take off here?

It’s just another little distraction that traditional estate agents would rather not have.

 Choose your prop-tech wisely

Recently, a hundred so-called “prop-tech” providers descended on South London to peddle their wares.

A whole industry, spawned from ours, is now big enough to fill a major conference centre.

Each of these businesses aims to solve a problem for either agents or customers; all profess to be the golden ticket to a well-oiled machine delivering unprecedented results.

However, there are now so many of them that it’s become a challenge to pick products that help both you and your customers and sit nicely together too.

EYE recently published a report from a digital agency MediaVision, which raised alarm bells about Google search traffic for property brands. It showed a drop in Google searches for many agencies, including haart.

In reality, our search traffic has decreased by 66% less than what they had claimed, our direct traffic was up by 39% and our valuation requests up by 11.5%, giving our brand a clean bill of health.

But it does get you thinking about us all relying on Google and explains our desire to find other solutions that will put us ahead of the game.
To me the whole ‘prop-tech’ industry is driven by one thing: FOMO (fear of missing out).

These businesses clearly articulate how their product can drive more leads, win more listings, sell homes faster or make agents’ lives easier. Without them you’ll be left behind, a Luddite and a laggard.

I’m very fortunate to have had a tech and digital team in place for many years and together we have a clear strategy on where we invest and how.

We will never stop reviewing opportunities to stay ahead and I’m committed to empowering my people with the best technology available.

I’m also wise enough to know that every time I choose to invest in a piece of technology, I simultaneously rule out investing in lots of others; not everything works well together!

So to the independent agent thinking about appointing a marketing agency or choosing a piece of prop-tech, I say: choose wisely, don’t get spooked by what competitors are doing or the latest ‘must read’ report, and focus on the partners and technology that you trust to drive value to you, your customers and your business.

Are estate agents falling out of love with franchising?

It’s interesting to see that the number of estate agencies affiliated with a franchise in the US has dropped by 2% over the past two years, according to the National Association of Realtors.

It could be because each agent sells far fewer houses over there, despite average sale commission of 6% to share between the buyer’s and seller’s agents.

As a result, many have second jobs to make ends meet.

These companies, some of which have operations in the UK, tend to charge a high fee to help prospective agents get set up.

They pitch themselves as technology and data management companies, giving them an incredibly high valuation – in many cases, I believe, way beyond what they are actually worth.

It’s a dangerous oversight. With estate agency, people should run technology – not the other way around.

I don’t decry the franchising model, though I wonder why prospective estate agents here would choose an American operation over a British one.

There’s no doubt that the face of estate agency here in the UK is changing, with increasing numbers becoming self-employed or setting up boutique agents without the franchising overheads.

With the hybrids failing to make a profit, where does that leave their Local Property Experts, going forward?

I predict a big shake-up in the industry over the coming years, as new models emerge and companies adapt.

It will be fascinating to look back in ten years’ time and see how estate agents have had to change. It really will be the survival of the fittest.

* Paul Smith is CEO of Spicerhaart