The meta­mor­pho­sis of the es­tate agency

Mod­ern tech­nol­ogy is chang­ing the game, but some con­sumers still want the hu­man el­e­ment

Weekend Argus (Saturday Edition) - - PROPERTY - VI­VIAN WARBY

TRA­DI­TIONAL real es­tate agents are un­der fire, from ev­ery an­gle: at­tor­neys sell­ing property; real es­tate start-ups helping you save tra­di­tional es­tate agent costs by of­fer­ing a 1.5% commission rate; web­site and mo­bile apps that seek to con­nect land­lords and ten­ants to an auc­tion mech­a­nism for ren­tals; fast-mov­ing tech­nol­ogy.

But es­tate agencies say they have stood the test of time and will con­tinue to do so “as long as we con­tinue to evolve and in­no­vate our of­fer­ings, both to our clients and our agents”.

One of the big­gest chal­lenges tra­di­tional agencies face – dis­rup­tors who have come onto the market of­fer­ing huge sav­ings to the con­sumer as far as com­mis­sions go – any­thing from zero to 1.5% as op­posed to es­tate agencies’ com­mis­sions of up to 7.5% – of­ten cut­ting out the es­tate agent.

Ted Frazer, na­tional mar­ket­ing man­ager for Se­eff, says: “The rate of tech­no­log­i­cal ad­vance­ment, the ‘in­ter­net of things’, has had and is hav­ing, a pro­found im­pact on the real es­tate in­dus­try.”

He says any es­tate agency look­ing to remain com­pet­i­tive and rel­e­vant must em­brace innovation and “en­sure they con­tinue to move at the tech­no­log­i­cal pace de­manded by its cus­tomers, if not slightly ahead of it”.

Glob­ally, over the past decade, the real es­tate cat­e­gory has seen online property por­tals be­come the dom­i­nant search des­ti­na­tions of choice for property buy­ers, prac­ti­cally eclips­ing news­pa­pers, which were pre­vi­ously pre­ferred des­ti­na­tion for buy­ers.

Dis­rup­tive tech­nol­ogy, says Frazer, is lead­ing to the emer­gence of new online plat­forms that look to sig­nif­i­cantly re­duce the role and fees, of the tra­di­tional real es­tate agent.

Some plat­forms are look­ing to dis­in­ter­me­di­ate the agent al­to­gether (“FSBO” sites – “For Sale By Owner” – that al­low home- sell­ers and buy­ers to en­gage and trans­act di­rectly).

In South Africa, we have seen many emerg­ing players – Prop­er­tyFox, JVP Prop­er­ties, Lead­Home, Home­bid, Steeple, Share­prop, to name a few – “all of who of­fer the prom­ise of low to no com­mis­sions and re­duced agent in­volve­ment, sub­sti­tuted with greater online ef­fi­ciency”.

“It is clear that to­day’s cus­tomer is more tech-savvy, and will nat­u­rally look to en­gage with brands that are sim­i­larly aligned in terms of being tech­no­log­i­cally ag­ile,” says Frazer

“How­ever, lo­cally and in­ter­na­tion­ally, it is equally clear the ma­jor­ity of con­sumers still pre­fer to deal through an ex­pe­ri­enced es­tate agency brand and agent when look­ing to en­gage with the cat­e­gory.

An es­tate agency if not ahead of it

“Lo­cally, this new breed of es­tate agency may be gain­ing presence, but look at the num­ber of list­ings on their web­sites to see, at this stage, they are still in their in­fancy.

“This may also point to the na­ture and cul­ture of the south­ern African market, which is clearly still strongly favour­ing the es­tab­lished, tra­di­tional es­tate agency model.”

Dr An­drew Gold­ing, chief ex­ec­u­tive of the Pam Gold­ing Property group, agrees, say­ing as yet “there are no proven suc­cess­ful non- tra­di­tional mod­els”.

He says: “It is com­mon cause that newer low- cost ‘ non- agent’ and tech­nol­ogy driven mod­els rely on vol­ume and scale for suc­cess (namely a more con­sis­tent and higher level of service than what has tra­di­tion­ally been of­fered.

“Sell­ing one’s home still re­quires pro­fes­sional sup­port. We sim­ply ar­gue that it can be done better and for less,” says James, ad­ding the new kid on the block has ex­pert ne­go­ti­at­ing and le­gal skills avail­able to users via its #Of­fers­desk headed by a lawyer.

“With our model we have ex­pe­ri­enced mu­tual trust, with buy­ers and sell­ers of­ten being the rea­son for homes sell­ing and fair ne­go­ti­a­tions tak­ing place.”

Meyer de Waal, of MDW INC, a con­veyanc­ing at­tor­ney sell­ing real es­tate who has also been in­stru­men­tal in start­ing a hub for other at­tor­neys do­ing the same, be­lieves the 5% to 8% commission that es­tate agents charge could be re­viewed and re­duced.

“Mod­ern tech­nol­ogy can en­able an es­tate agent to work smarter and be more cost ef­fi­cient. One of the main rea­sons they have to ask for such high com­mis­sions is that their con­ver­sion rate in comparison to the time they spend to sell a property to an ac­tual sale, is low.

“Mod­ern property tech tools, such as an online home loan in­di­ca­tor, as well as vir­tual real­ity tours, are all avail­able to en­able an es­tate agent to work more ef­fi­ciently, spend less time on fruit­less view­ings and home­buy­ers who may not qual­ify for a home loan, or may not be in­ter­ested in the property af­ter proper view­ing.

“I be­lieve one of the key el­e­ments that re­mains is the in­volve­ment of a per­son with the re­quired skill to fa­cil­i­tate the clos­ing of a property deal be­tween the two par­ties.

“The seller and buyer must also raise this ques­tion if such ser­vices are avail­able when deal­ing with a low-cost sell­ing agency, or will they be left on their own, as in a DIY con­cept.

“An at­tor­ney ap­pointed by the par­ties is most likely to be a solution to as­sist with the draft­ing of the sale agree­ment and fi­nal ne­go­ti­a­tions.”

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