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.

Finweek English Edition - - News - By Glen­neis Kriel

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.”

Ser­vice of­fer­ing

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.

Busi­ness side

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

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