The local online estate agency PropertyFox are expanding their business. They announced this week that an acquisition agreement was reached with one of SA’s first online estate agencies, Steeple. In terms of the deal, PropertyFox will be taking on all 100 of Steeple’s clients.
Both Crispin Inglis, CEO of PropertyFox and Steeple CEO, David de Waal, said they are delighted with the deal between the two online agencies and expressed confidence that it would be beneficial to their customers, “more importantly, (we) would be able to sell despite the current poor market conditions,” said De Waal.
The announcement follows shortly after the news that one of SA’s largest traditional estate agencies, Pam Golding Properties, also dipped their toes into low commission waters with the acquisition of low-fee agency Eazi.com. Late last year SA Home Loans made a substantial investment in PropertyFox.
Read more about PGP’s deal: Wise move? Pam Golding stirs up industry
Commenting on the apparently growing trend towards low commission online offerings to the local market, Adriaan Grove, CEO of Entegral, a real estate technical provider, said he sees consolidation in the industry as inevitable given the current economic climate, whether traditional or online agents.
Grove explained that online agents have the challenge to drive listing volume for their business to work and to cover costs. “This is evident if you look at international models like Purplebricks in the UK,” he says.
“Every online agency will have a break-even point in terms of a minimum number of mandates to become profitable, and I suspect that with 100 listings, Steeple had quite a challenge to compete with the likes of PropertyFox, Leadhome, Homebid and others,” says Grove.
Property portals such as Private Property and Property24 are also responding to online agent models, thus presenting another challenge for low-fee property agencies to remain profitable. Grove says one can no longer advertise listings on a national basis under a single account.
On the other hand, “price is everything, and in the current buyers’ market, there are some clear advantages for low-fee agencies to position mandates at lower prices that makes them more attractive,” he adds.
“At the same time, some clients require a highly personal and specialized service, and this is where the traditional percentage models will continue to thrive in future. Average service is out, and highly specialised teams are in. Now is a golden opportunity to use technology to optimize your business, no matter which real estate model you run,” Grove concludes.
Grove’s conclusion that personal service excellence remains the main selling point of traditional agencies is in line with the thinking of many traditional property experts. In the end, only time will tell who was right. These are indeed exciting times, as Ted Frazer, Seeff’s national marketing manager recently said, “Ultimately, as with any service-industry, we need to provide value to our customers and I believe that these new entrants are showing us that this value perhaps needs to be redefined.”
Read more comments: Property leaders un-eazi about Pam Golding’s move
We live in a high-tech age, no question about that. What do you think real estate will look like in 5-10 years’ time? Share your opinions with editor@propertyprofessional.co.za.
