Lower real estate costs make a huge difference
With its scalable business model, PropertyFox has been giving home sellers more bang for their buck since launching in 2016.
when finweek interviewed PropertyFox four months after its launch in 2016, the online property sales platform had just made its fifth sale and closed its hundredth listing. Its biggest attraction being its 1.5% commission fee on sales, or a minimum flat rate of R35 000, compared to the traditional 5% to 7% charged by traditional agencies.
Various other companies have come up with similar fee structures since then, resulting in greater competition in the market. PropertyFox is nevertheless still ahead of the pack in terms of affordability and its service offering, according to Crispin Inglis, who founded the company along with Ashley James.
Inglis identifies the scalability of the PropertyFox business model as one of its main advantages in the market, which is becoming increasingly data driven: “Unlike other companies, our services are not concentrated in one province or city, but designed to be steadily expanded to accommodate anybody in any corner of the country at the same rate.”
PropertyFox has done a lot to refine its service over the past two years. Unlike the traditional model, where estate agents only make money when they sell a property, PropertyFox charges a R2 500 flat fee when home owners list a property through them in areas where they do not have permanent staff. The fee is refunded when the property is sold, but kept if the property is taken off the market or sold by another agency.
“We will grow the areas where the fee is waived as the company expands. Our biggest reason for having this fee is to recoup costs from unsuccessful sellers, rather than to transfer this burden to new clients,” Inglis explains.
Also, instead of having one person valuating, photographing, marketing and listing the property – and facilitating open days and sale legalities – PropertyFox employs a team of specialists, each with their own field of expertise, to manage specific parts of the process.
Home owners list their property on PropertyFox by filling in a 10-minute online questionnaire. The information is plugged into the company’s valuation algorithm, which uses, among other things, historical sales data and live market data to arrive at an accurate market value for the current climate.
“Pricing has to be as accurate as possible, as it has a huge impact on the time it takes to sell a property,” Inglis says.
Marketing specialists use search engine optimisation to ensure listings are easy to find on the internet, while freelance photographers from the company’s extensive database are contracted to photograph these listings. The properties are listed on all major platforms.
“The back-end and front-end value we are adding to listings is resulting in us having 30% more views than traditional agencies. FNB recently estimated that properties in South Africa, on average, are sold within 150 days after being listed. Ours are sold within 30 days,” Inglis says.
PropertyFox does not employ any agents on the ground, so property owners have to facilitate viewings themselves. “We have been warned that meetings between buyers and sellers could jeopardise sales, but have found quite the opposite. In most of our cases, the owners actually strengthened the team, as they know their home and the area where they live better than anyone else,” Inglis says.
To ensure viewers are above-board, all prospective buyers are screened before being allowed to view a property. Once an owner accepts an offer, the legal desk of PropertyFox takes control of the rest of the process.
Its huge potential has been spotted by SA Homeloans, which has acquired a 49% stake in the company.
Inglis says sales have grown by at least 30% over the past four months, while the worker corps has grown from him and James doing all the work alone to a team of 24 full-time employees. The company started out in Cape Town and had its first sale in Gauteng, but has since established a footprint across the country.
The biggest initial, and remaining challenge, is to create awareness of the service. “The problem with real estate sales is that most people only do it a couple of times in a lifetime, unlike Uber, which people may need a few times a month,” he says.
The company’s main focus had initially been on refining the service, to ensure it is the best in SA. Marketing was mostly done via word of mouth, but efforts have since been stepped up to also include social media and mainstream media.
“We are taking consumer experience so seriously that we have created a Trust Pilot Account, almost like Hello Peter, where clients are able to complain and rate our service. Our average rating so far has been 9.7 out of 10,” Inglis says.
The goal is to grow the company to represent 7.5% of sales in the real estate market within the next four to five years. “We have built a sound, scalable business model, so there is no reason why we won’t be able to reach this target. The market leaders only represent around 11% to 12% of the market,” Inglis says.
What Inglis likes most about their business is that it can make a meaningful difference in people’s lives, as it reduces sales costs: “One elderly couple saved R153 000, resulting in them paying R5 000 a month less on a new property in a retirement village.” ■ edito[email protected]week.co.za
Crispin Inglis Co-founder of PropertyFox
Ashley James Co-founder of PropertyFox