‘If lettings agents spend all day dealing with tenant enquiries, who is dealing with your landlords? The answer is: not you.’
This was the insight that first pushed me from letting agencies into the world of proptech.
Six years later little in the world of property has changed: Rightmove still dominates, landlords still list with multiple agents (paying only the one with a successful let), and politicians/journalists continue to target the lettings industry for treating tenants poorly.
What has changed? The number of households in private rent has increased from 3m ten years ago to 5.2m last year.
The lettings industry has experienced a massive boom. Yet the experience for tenants is largely the same.
And it isn’t just me looking to change this: Alex Eid of Homie – who we were the first to write about in June 2017 — has raised significant venture capital to launch a buying agent for renters in the UK.
We spoke exclusively to Alex Eid to find out more about his aspirations for Homie and what he intends to do for both renters and lettings agents.
EYE: Let’s get straight into this: what’s the point of Homie?
Homie: There is a lack of knowledge in the industry and a lack of expertise — independent and unbiased experts who are able to find the best home for you in as little time as possible.
How do we remove that friction and improve the customer experience?
Today a renter does in excess of 20 hours of research and time spent looking for their home, with at least five to seven hours on viewings per week.
EYE: And the Homie experience?
Homie: Leave it to us and we’ll do it in two to four hours. Once they’ve found the property we’ll pass them on to agents. We’re not trying to hold on to the customer and increase the bureaucracy and friction.
EYE: So where does the Homie experience end and how much do renters pay?
Homie: The £49 Homie charges renters is for qualification — so we’re only working with renters who are engaged and serious. We bring agents fewer time-wasters and more serious renters. [Homie originally charged £88 but has since reduced the fee to renters to £49.]
EYE: Is £49 per let enough to make Homie a viable business?
Homie: The majority of our income comes from introductory fees from agents.
EYE: And what if agents don’t want to pay Homie for an introduction?
Homie: The real estate market in London has a lack of exclusivity. In the majority of cases properties are listed with more than one agent.
Over time, one of the many benefits is reducing time to turnover property.
Agents have to go through an inbox of thousands of emails via the portals they list with consisting of unvetted, unqualified customers. They spend a considerable amount of time on this on a daily basis.
EYE: How has the agent response to Homie been so far?
Homie: Agents who work with Homie call us to see what customers we are working with.
They don’t want to be speaking on the phone qualifying customers all day.
EYE: What would you say to agents who say that is their job?
Homie: Estate agents should be concerned with adding more stock to their platform. This helps them prioritise their landlord.
The industry needs more stock.
EYE: What do you mean?
Homie: If you look at all the online players that are coming about, slowly stock is being taken away from estate agency. There is a lot we can do as an industry to stop that switch from happening, by focusing on how estate agency can streamline and focus on the landlord. That service is a solid network that exists to cater for landlord – services cost money and not everyone wants to do it themselves.
EYE: What is the aspiration for your business?
Homie: To be THE platform for renters — the first real estate consumer brand for real estate services that isn’t a classifieds listing platform.
Portals were great ten years ago when everything was offline and needed to go online. Now that’s done, who is giving you real value?
EYE: Many in the industry fear online is stealing their lunch – what would you say about that?
Homie: Renting a home is not like going on holiday, most people want to see it –it’s their home, their abode. There needs to be a personal element. You are completely left on your own on a portal.
Searching on portals doesn’t help me, especially if I’m new to the area. Who do I ask about what is normal about contracts?
When it comes to real estate, trust is an issue. It’s about building on that trust.
EYE: And where do you see the long-term revenue opportunity?
Homie: We receive an average of 3% (on annual rental value) from agents as the intro fee.
For now we’re not looking to monetise anything else.
We do have ambitions to reduce the friction to renters by offering financial services – like deposits, warranties and insurances — we’ll find out over the coming 12 months.
EYE: Speaking of the next 12 months, what are the plans?
Homie: The core focus is to grow areas of coverage and improve the tech infrastructure.
Currently we cover London zones one and two. We want to complete zone two expansion and get out to zone four. Targeting the most densely populated areas in zones three and four, where customers struggle the most.
EYE: What is your personal background and how did Homie come about?
Homie: I was running a property consultancy to help international and local investors acquire development opportunities in London.
During that period I was helping a friend who was looking to move here.
It was unbelievable that that person had no chance of renting like a local. No single point of advice. That doesn’t make sense.
Today it’s the likes of Goldman Sachs and Merrill Lynch that can access a £5,000 service to help you move home.
But for the rest of us, we have to do everything ourselves.
The dream is to allow people to move home and live where they want, as quickly as the next day.
EYE: Has Homie had any struggles along the way?
Homie: The pricing was a huge struggle. What is a good price? Why £49, and not £100 or £200. It has to be something people can afford and take seriously, that is in-line with the brand. People (renters) can do this themselves, but it takes a long time and is a hassle.
You can walk to a restaurant yourself, you don’t have to pay £2 to Deliveroo.
Even the property sourcing, we started with showing ten properties but they wanted more choice. Now the system shows them all the properties relevant to their criteria.
EYE: We’ve seen the rise of services like Deliveroo and Viewber employing lots of people. Is it the same for Homie? How much are Homies paid?
Homie: All Homies are paid the same fee – whether a property yields more or less, they get the same fee, so they are incentivised to prioritise the needs of the renter. It’s a fine line.
Homies are on a basic salary, which increases every six months, plus transport and mobile phone. We pay a small fixed commission per deal of £50.
EYE: And how many people are in the business? What sort of people do you want as Homies?
Homie: There are 21 people at the moment, and that will be in excess of 40 by the end of the year.
They are university grads, people with service sector backgrounds (retail, hospitality, travel) and some people with a short period of time in the real estate space, which helps with ramping up training. But the idea is to provide great customer service to people.
The aim is to do between eight and ten properties in a two-hour time-slot — orchestrate all the viewings and transport viewers via black cab so we can jump from one property to another.
EYE: Do Homies not need real estate experience to help with negotiating?
Homie: Sign up to offer accepted is less than three days — search, viewings, putting forward offers — I wouldn’t say we negotiate on behalf of renters.
When you see ten properties, people come to a natural sense of value, which speeds up the process for agents.