Online estate agent Hatched is using crowdfunding in a bid to raise £250,000 in exchange for a 5% equity stake in its business.
The investment will be put towards the recruitment of estate agents who will be working out in the field.
The aim is to recruit 35 in the first year and then ten per month.
They will report into their nearest Hatched regional office of which there are so far seven at Hitchin, Herts; Manchester; Birmingham; Reading; Maidstone, Kent; and Exeter.
The investment will also allow for the expansion of these regional hubs and further recruitment of regional managers.
The proposed model could see Hatched become much more of a hybrid online / bricks and mortar agent, say industry watchers.
Purplebricks operates a similar model using ‘local property experts’ with a call centre as key to its operations.
No call centre is envisaged by Hatched, which says that each new field agent will be expected to ‘manage’ at least 25 properties per month – the wording suggesting that it will not be enough for the agents simply to win a listing.
Hatched last week wrote to its previous customers giving them a 48-hour window to back it before going public with its crowdfunding launch.
Hatched says that those backing the crowdfunding campaign could see their investment grow by over 16 times in just three years.
According to co-founder and director Adam Day, investment in online estate agency is a “no brainer”.
Day said traditional estate agents should embrace technology to drive efficiency and convenience for clients, or risk failure.
He said: “An office doesn’t sell houses – Rightmove and Zoopla do.”
He added: “As an established and successful brand with solid expertise in the property market, I am confident we will achieve the target of £250,000 of investment.”
Competitor EstatesDirect, which has former Poundland boss Steve Smith as its chairman, recently successfully used crowdfunding to raise almost £500,000 from 195 backers.
Day said: “With almost 1,000 properties currently listed on Hatched, we are ten times bigger than EstatesDirect.
“As such, we are a much safer bet for those looking to invest in a business that knows what it’s doing and has the experience to ensure that it continues to get it right.”
By yesterday afternoon, Hatched had raised £19,150 from 26 investors.
Hatched competitor eMoov recently went down a different route, with investment from the James Caan vehicle Hamilton Bradshaw.
But Day said he had decided on a different way of raising funds for expansion.
He said: “Crowdfunding allows us to have quite literally hundreds of investors who are your man and woman ‘in the street’, rather than a wealthy individual or a small group of wealthy individuals investing.
“All of our investors will be talking about us to their friends and family as they will have a vested interest in seeing a return on their money. We are tapping in to the ‘people’ who could help grow our brand and business even further over the next few years. It’s a brilliant way of funding.
“It also allows us to keep control of the company and the decisions we will have to make over the next few months and years without any outside influences.”
"Day said traditional estate agents should embrace technology to drive efficiency and convenience for clients, or risk failure. He said: “An office doesn’t sell houses – Rightmove and Zoopla do.”
Oh dear – it was all going soooo well until the last line…..
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It will never change whilst we allow it Jam01 just having a rant on a forum will do nothing but make you feel good about yourself. Companies that exist by having a go at others have no ticket to the party in my view.
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Avoid budget models like the plague. We're seeing a current trend of more budget agents who's USP is cheap and often poor service. In 2/3 years many will be gone as more traditional models return embracing B2B technology out of reach of budget agents.
In 4/5 weeks INEA is relaunching after a total rebuild releasing a £1m new B2B platform. There's no way we'd allow hatched in and I'm sure AM wouldn't as a portal.
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“An office doesn’t sell houses – Rightmove and Zoopla do.”
An average open house viewing schedule…for a proper Estate Agency business.
Marketing commences a week or two before the scheduled open day. Applicants are qualified and viewings booked. A member of staff is on site for a 2-3 hour slot accompanying viewings and answering questions every 15-20 minutes. On Monday, on average, 7 offers are received, each requiring all the usual detailed and time consuming qualification checks in regards to ability to proceed. On average, it will then take another 7 days, after the inevitable toing and froing with offers, to get to the point of a sale being agreed for our client.
I'm sure a "field agent" within an online agency will be able to offer the exact same level of service…
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Hatched are saying they need more staff. So if properties at the moment we're 50/60 miles away and a few people wanted to view different times over different days. Then their fuel budget alone would take a good chunk of a budget agents fee and lots of travelling time.
Traditional agents nearby can often do many viewings at the drop of the hat many times a week/day.
I'd opt for a trained professional who was conveniently local who could network the listing out to a bigger local buyer set via more local agents. Budget normally restricts greater local coverage as RM and Z are only one element to proper marketing. Other bits like B2B budgets can't do as they don't have enough in the pot.
5-10 local agents selling. Or one distant that is Web only. 3 in 4 people move locally. So many local agents marketing is even better than a 1000 corporate offices where locally they have just 2 offices.
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£250k for 5%? Who valued that?
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The same person that values companies for those pitching on Dragons Den!
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At last the first signs of an online only model "cracking" if you forgive the pun.
I would say that Day realises he is the weak player in this self selling market place and is a little worried; he has to compete or collapse.
As mentioned previously though, his valuation must have been written down whilst listening to an album of Elton John's greatest hits!
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Ahhh…. Mr Day is finally doing what I suggested he ought to do –
"Bring.
It.
On."
😉
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There you go folks, proof that there is spread of news on Property Industry Eye.
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We are hosting a Roundtable debate on the topic 'online vs traditional agents' on the 3rd July in London. Our feeling is that online will always be (well) online, but that a High Street (or retail park) agent can also be "online with the right technology'. We have an increasing number of "online" clients and just recently some well established agents moving to that model. Share your opinion on our LinkedIn debate. http://tinyurl.com/qzq465t
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