Social media platforms were abuzz this week following the announcement from one of the country’s largest traditional property groups, Pam Golding Property, that they now own (and thereby gave a thumbs-up to) Cape Town-based online set fee agency Eazi.com.
Some agents said Pam Golding with this move had sold out their own agents, who’ve allegedly been taught to work on a commission rate of at least 7.5%. Others had concerns this move would increase pressure on smaller agencies already battling to survive the tough economic times, adding they expect the other major agencies will soon follow suit.
Some applauded the move as a wise business decision based on international trends observed in the property industry. One of the latter is Adriaan Grove, outspoken blogger on real estate matters and CEO of Entegral, a real estate technical provider.
Grove says when it comes to whether Pam Golding are shooting themselves in the foot or grabbing hold of a golden opportunity, he believes the latter applies.
“They took their competitors (traditional agencies) by surprise. They are clearly following international trends and decided to make a (risky) move that may or may not pay off. One thing I’ve learned in business, is that you need to take calculated risks to stay relevant. Pam Golding is doing this in a fast-changing real estate landscape,” explains Grove wrote in his latest blog.
Earlier this week Dr Andrew Golding said in a statement they had been keeping a close watch on global real estate industry trends, especially the advance of the hybrid model, which offers an online service with minimal agent “handholding”. He said internationally this model had started to gain a foothold, according to Dr Golding with specific applicability in the lower end of various key markets internationally.
Grove said by buying an existing set fee business Pam Golding saved themselves the hassle and expense of developing anything from scratch. Their company is also large enough to test the set fee model and use the feedback to improve their traditional percentage fee model and make it future proof. Having Eazi.com also allows them to expand their control over the property market.
The time was ripe for this to happen in South Africa continues Grove. He referred to the UK, where global real estate giant Savills recently invested millions into Yopa, a hybrid property start-up, and so strengthen their position against Purplebricks, one of the fastest growing online estate agencies worldwide. In SA, Leadhome is the local ‘Purplebricks’, says Grove, and with them gaining traction fast, sooner or later someone would have to make a move.
According to Dr Golding their agents will providing the personalised service on commission to the higher end of the property market with Eazi.com serving the lower end of the market. Grove has his doubts whether the upmarket clients won’t also demand set fees, being now aware that the option exists. Time will tell whether this move won’t also alienate some of their agents. It’s waits and see, bring out the popcorn says Grove.
PropertyFox welcomes move by Pam Golding
Pam Golding’s announcement was welcomed by Crispin Inglis, CEO of PropertyFox, one of South Africa’s original online estate agencies. Inglis said he believes the deal demonstrates that the traditional real estate industry in South Africa is starting to take the new digital way of selling property seriously.
“This is a strong endorsement from Pam Golding Properties that what innovative and consumer-orientated businesses like ourselves and Eazi.com are trying to achieve – giving consumers a more affordable, transparent and efficient way of buying and selling property – is gaining traction and credibility.”
Inglis said PropertyFox had itself been the first digital player to receive a substantial investment from a traditional industry player when SA Home Loans took a 49% stake in the business in November 2017. “Now this move from Pam Golding Properties represents another big nod from the established players in the direction of affordable, digital property transactions. We look forward to seeing how Eazi and Pam Golding work together to bring the message that there is a superior way of selling houses to more and more South Africans.”
Next week Property Professional will look at what SA’s leading, as well as smaller, traditional agencies have to say about this matter. You are welcome to also share your comments via email to email@example.com.