Looking at ibuyer: Proptech won’t replace agents say expert
MAIN IMAGE: Berry Everitt, CEO of Chas Everitt, says traditional agencies that move swiftly to embrace the use of new technologies need not fear the future.
In the USA there are a number of estate agencies that use ibuyer technology to accelerate the process of buying or selling property for clients who are in a hurry to make the sale. At first it was only the online agencies that tapped into the ibuyer market but major franchise Keller Williams has just announced it is launching it’s own ibuyer programme.
With Keller Williams having local representation, it seems probable that, if successful in the US, adding ibuyer to their service offering in South Africa might be in the pipeline for this international franchise. And if not them, then other local role players might want to tap into this lucrative way of buying and selling property – what would that mean for the local residential property market already under duress from the economic slowdown and digital disruption?
Berry Everitt, CEO of Chas Everitt, says we need to distinguish between ibuyer-type programmes and digital/online agencies.
He explains that ibuyer and similar programmes like Opendoor, Zillow Offers and now Keller Offers (launched in May) in the US are specifically aimed at buyers who need to sell in a hurry, usually due to an urgent need to relocate or some sort of personal/ financial distress. Through such programmes, the agency itself will offer to become the cash buyer of the property right away, in return for a fairly large discount on the price. In due course it will then resell the property itself at a higher price, making a profit on the difference between the two prices, rather than the normal agent’s commission on the sale of someone else’s property.
“What is more, potential sellers who do not “fit” an ibuyer programme will in most cases be directed to a human agent to assist them with a normal sale. The primary reason for ibuyer programmes is thus to extend the offering of traditional agencies by using technology,” says Everitt.
Indeed, Keller Williams said their ibuyer programme, Keller Offers, will still pair users with an estate agent which is different to most of the other programs. What is also interesting is that the ibuyer-startup Opendoor, after running a fully automated service for years, announced in March this year that they plan to bring in partnered estate agents from outside the company for some of their seller clients whose property falls outside Opendoor’s requirements for all-cash offers.
Everitt continues that on the other hand, the aim of digital or online agencies (such as Eazi.com, Leadhome, PropertyFox and HomeBid) is usually to try to use technology to replace traditional agency services, so that they can charge a low commission or flat fee and still be profitable.
“In recent years we have observed the rise of many “online” agencies elsewhere in the world too, including Redfin in the USA, and Purple Bricks in the UK. Frankly though, most of these are just dressed-up versions of the low-commission or flat-fee agencies that have been around for decades and inevitably offer lower levels of service in return for their lower fees – and like those agencies, the digital companies tend not to do very well in declining or even static markets. In fact, we have observed that most of them around the world are “adding back” traditional agents to their offering in order to survive,” he says.
Everitt says the fact of the matter is that buying a home or investment property is a not the same as making an online purchase of a book, new shoes or a kitchen gadget, paying by credit card and then waiting for delivery the next day. Property sales and purchases are complicated, emotional and essentially “human” transactions, and the majority of buyers and sellers want a trusted human advisor that will not only guide them safely through the process, but also acknowledge their feelings. This is evident from the numbers: currently all the digital agencies together account for at most 3% of sales (number of units) in our market.
“What is more, low frequency, high value industries everywhere are much less susceptible to permanent disruption than any other type of business, so we believe that the future of real estate does not lie in the decline of traditional agencies per se, but is in the hands of those traditional agencies that are able to move swiftly and nimbly to embrace digitization (the use of new technologies) to enable agents to become more consumer-centric and continuously improve and expand the experience, advice and services they are able to offer their client,” he concludes.
Related article: We won’t follow Zillow says SA’s property portals
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