A new national online estate agency is preparing to start up, going head to head with Purplebricks – but charging nothing, as reflected in its ‘free.co’ name.
Sellers will get their properties listed free on Rightmove via the new business, which will make its money by mortgage broking.
The new start-up is going after the 6% to 8% of home owners who do not want the services of a high street agency, but who do want a Rightmove listing.
The business will soft-launch in April and will then go properly live in August under the branding free.co
It aims to have 700 listings per month by December, 1,700 listings per month by the end of 2021 and 2,700 by December 2022.
Founder Ray Rafiq Omar said: “We will convince Rightmove that we are agents in the same way that Purplebricks and OpenRent did – but we will be a lot smarter.
“For example, we will check seller ID by getting Land Registry titles at an early stage to check that the owner is the same person as the one trying to sell the property. If not, we will interrupt the process.”
Rafiq Omar – former founder of Unmortgage and an early contributor to EYE on proptech – said that the new business will be wholly digital.
Unlike Purplebricks, it will have no local agents.
Rafiq Omar said: “In my view, Local Property Experts aren’t local and they’re not experts.
“We are not selling estate agency, but giving vendors the ability via technology to sell their own homes.
“Our new business is not aimed at the mass market but at those who feel perfectly capable of handling their own sales, as long as they have a Rightmove listing.
“We will make no money out of listings and although we will facilitate services such as photography, floorplans, EPCs and in due course conveyancing, we won’t be making money out of those either.
“Our sellers will be buying what they need and doing everything themselves, including their own viewings.
“I am considering using an outsourced service like Viewber, but the problem here is that it impinges on the main market – people who might be happier using high street agents.”
He stresses that free.co will not be in competition with high street agents – but believes that vendors who might go to Purplebricks could easily prefer a free option: “For £1,000 to £1,500 Purplebricks takes photographs and posts on Rightmove – and that’s it.”
Rafiq Omar says that as a digital platform, free.co will be able to upload Rightmove listings within five minutes.
It will be able to submit completed mortgage applications within 25 minutes, saying that the current process takes days even through the latest breed of online brokers.
All mortgages will be sold digitally, and the business will initially make its money in commissions from lenders – a £200,000 mortgage would mean a fee of £700.
Buyers will also be captured for mortgage sales even if they don’t buy a particular property. It is reckoned that each property listing would get an average of 20 buyer enquiries.
The business also has its sights set on other financial products to monetise its estate agency offering.
These include a financial bulk savings service where consumers will pay £10 and automatically get the best wholesale prices for insurances, mobiles, utilities, etc – saving them having to switch.
A National Tenants’ Helpline would also be set up, to get renters’ loyalty before they get to the mortgage stage.
Rafiq Omar believes his new business will not have to worry about competition.
“Purplebricks’ reliance on Local Property Experts precludes them from listing for free to increase volumes.
“High street agents have significant staff costs which also preclude this.”
Currently, the new business employs six people and is looking to recruit about a dozen more in the next year.
It is also looking to raise capital, but Rafiq Omar – who also helps run a family-owned lettings business, Holmes, in Streatham – says it already has substantial backing.
Comments (24)
So in summary a delusional person has started a free estate agent that doesn’t comply with AML regulations.
Cant wait to see how this turns out.
Free Co heck-what next !
Yeah right!
’new online estate agency’ not without complying with ALL of the legislation they’re not
’perfectly capable of handling their own sales’ yeah right until something goes wrong
‘upload Rightmove listings within 5 minutes’ written by whom exactly
‘substantial backing’ more mugs with money to burn
Do people lie in bed at night thinking up ideas as to how they can make money? Estate agency is hard work if it is to be profitable. ‘investors’ would be better having a flutter on the horses or buying a few high risk shares imho
Ray Rafiq Omar, is this the same chap that was going to revolutionise mortgages with his company “unmortgage”? He left sometime last year, what happened to that venture?
Currently listed as a director of an agency in London – Holmes Estates which has just 1 property for sale?
Just checked his Holmes business – he has 1 property for sale and 4 for let!
I wish these people were taken to account for calling themselves “Estate Agents”. They are not doing estate agency work, they are an advertising platform and as for going to make money from the DIY sellers by mortgage referral fees… dream on … soon to be banned and these types of vendors are at the opposite end of the spectrum when it comes to allowing a company control who they do the mortgage with. The Trotters could do a better job.
The industry would require some semblence of regulation before any particular model can be banned.
Speaking from financial industry experience, in order for a product to be banned, it must be shown to present significant risks to consumers or the market itself. I doubt that anyone could argue that this model does either of those things.
Where have you been hiding. Referrals within Estate Agency is a subject currently under scrutiny with the government.
There will be a place in the market for services like this. They are providing the least expensive product that could feasibly sell someone’s house. It will attract some people, but probably only a tiny proportion of people.
I doubt it’s a profitable business venture. I can imagine it being something that my Dad would run out of his office in the back of the garden for pocket money, as opposed to a business employing 6 people and looking to expand to 18.
This company needs to successfully source, refer and instruct 1000 people to make its first £500,000. If you assumed that the (planned) 18 employees are only on £20k a year, they only have £140,000 to spend on all of their other runnig costs.
I just can’t see how they could ever get enough foot-fall to stay afloat? The more I think about it, the crazier it seems.
So essentially they are offering what housesimple have been offering the past year but offering no Local experts? I don’t understand the advantages here!
surely house simple is proof people don’t trust free stuff
Their USP seems to be doing the same thing “Smarter”.
But then their example of being “Smart” was conducting the LandReg checks that they are legally required anyway?
Best to say nothing and hope it never happens…
Couldn’t find the laughing emoji so this will have to do HAHAHAHA
Dream on.
I don’t even know where to start with this?!
Is it for real?
More like freako, sigh.
Oh my, another disrupter joining not the race to the bottom but beyond. I think it best that we just stand back and watch this lot scrapping with burple *ricks. The end will be messy but at least we can hope that they are both mortally injured and some sort of normality can return to estate agency.
They seem to be saying “We aren’t disruptors”
Rightmove and Zoopla need to investigate models of such nature. Its equivalent to the seller advertising directly on the portals without paying the monthly portal fees.
If you are advertising on Rightmove or Zoopla you need to flag this up with the BDM’s and bring down these tin pot schemes.
Why, just because it’s an alternative business model, does it need to be flagged?
If this type of business became popular, and presented a significant income to RM and ZP, they would simply change their rules to accommodate them.
Congratulations on Most Contradictory Post of the Week!
“For example, we will check seller ID by getting Land Registry titles at an early stage to check that the owner is the same person as the one trying to sell the property. If not, we will interrupt the process.”
Actually he won’t be able to ‘interrupt the process’ he won’t be able to start it until ML checks are complete so not sure why he’s touting ‘early stage’ as this is a legal requirement before a business relationship has started! Oh dear!
……..April the 1st