Is Tech About to Shake up the Property Market (Finally)
Another day, another proptech story…
Trade press – and sometimes mainstream press – are full of the latest developments that will solve property problems once and for all. They usually focus on new portals that try (and fail) to take on the behemoth that is Rightmove, the most dominant of all property portals, much despised by estate agents who pay ever increasing fees for what they see as the same service. Investors disagree, Rightmove revenue has nearly doubled in 6 years.
Other innovations include ways to speed up the conveyancing process which has only recently come blinking out of the world of posting letters and signing cheques, property management tools and specialised cameras that allow agents to prepare floorplans and virtual tours more easily – essential in the post-COVID world of course.
One innovation so far flying under the radar is making its way from America to these shores.
Enter The iBuyer.
An iBuyer is a hybrid of estate agent, property portal and crucially, property buyer. A solution particular neat as it may one day do away with the need for cash burning property portals and , where a property sale is problematic the buyer arm will step in and buy directly from the seller, albeit at a knock-down price.
So is it really a new innovation or, like so many new ideas, simply the best of existing products?
Who better to ask than property veteran Jonathan Rolande, Director of House Buy Fast, a sell house fast company located in Worthing, West Sussex. Jonathan went from agent to property buyer when everyone else was getting out quick in the 2008 recession.
So Jonathan, what do you think of iBuyers, are they the new kid on the block?
“Well kind of” says Jonathan. “Firms like Zillow and Offerpad have been trading for years in the US and there’s no doubt, they have made a name for themselves and it’s easy to see why the UK seems like a good bet. But they will find a pretty crowded market already. Although not usually known as iBuyers, the cash buying sector already accounts for billions of pounds worth of transactions every year. Sellers are attracted by speed, transparency and of course the certainty of a sale and many will accept the fact that the price they’ll receive will be less than full value – sometimes 15% less.”
Is their imminent arrival a threat to estate agents or existing buying firms here in the United Kingdom?
“I don’t think agents have much to fear, although the market is huge in monetary terms, it is still pretty niche with most sellers opting for the traditional route. That said, even a few sales lost could be the difference between profit or not for some agents. If the newcomers have deep pockets they could chip away at estate agent’s margins. Existing buyers such as my firm, House Buy Fast will see an impact in an already competitive field. Most enquiries are generated online so anyone with big cash to spend on ads, will get the phone to ring. However, new names are not well received by sellers already very cautious about scams and dodgy dealings. It takes years to build the reputation people feel they can rely on.”
There’s no doubt, the UK property market is a tough nut to crack, especially for foreign owned businesses outside the capital but if they do arrive in these shores, expect the status quo market to be shaken to its core. Possibly no bad thing.