Edited & published by Rayhan Rafiq-Omar

Prop\Tech Weekly #45 – Henry Pryor gives agents an ouchie

| Rayhan Rafiq-Omar

This week’s commentary owes inspiration to the indomitable Henry Pryor who posed:

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In case it’s not clear one of the most respected moderate voices in property just gave Eye readers an ouchie.

So what are you going to do about it? I, for one, am inclined to listen and follow through with his logic.

I’d start by looking at the myriad of articles telling of how buying and selling a home is a living nightmare. Are there any obvious problems agents could solve?

How about chains? There’s a problem that’s painful for everyone: seller, buyer, agent, conveyancer.

If someone could solve chains and bring certainty to selling a home, you’d bet that sellers would flood that person’s inbox.

Step in Matt Robinson and Nested.

Nested offers a guaranteed price – approximately 95% of their valuation – which is the amount they’ll provide an interest-free bridging loan for if your home doesn’t sell after 3 months – it’s worth checking out the calculator on Nested.com

The result is simply no more chain. No more worries about losing the home you’re buying. And even better: no more underselling your home because you’re stuck in a chain.

I’ve spoken to Matt a few times and the conversation continuously veers to one topic: he wants to help people sell their home for the most money, and put them in the same position as a cash buyer would be.

The way he talks about helping people is the closest I’ve come to hearing any form of estate agent offering what Henry calls a ‘Rolls Royce service’.

And his service makes sense: like traditional bridging loans enable developments that otherwise wouldn’t get built, Nested’s service enables homeowners to trade over to the home they’d otherwise lose out on.

But if Matt’s model works, it’s not just sellers who’ll flood to him: it’s distressed sellers and developers too. No more fire-sale to WeBuyAnyHouse.com and hopefully an end to the Below Market Value (BMV) industry.

There’s always been a quiet and lucrative new build part-exchange industry. Nested could bring much needed transparency, which in turn would give homeowners the confidence to pick up the phone.

It makes you think that if focusing on solving genuine problems leads to an industry outsider coming up with something so simple and potentially effective – they’ve just launched and have a decent pipeline of vendors – then what could industry experts come up with if they cared more about their vendors?

Before I move on, there’s one last thought about Nested’s future and the future of agency.

If Nested works, wouldn’t it be better for them to offer ‘Nested-Guarantees-as-a-service’ to agents – that way all chains can be solved and Nested just needs to deal with a few thousand agents?

It seems that the future of agency is increasingly services-for-agents: Fixflo, Viewber, Apply.Property, and Acaboom to name a few. What besides ‘Nested Guarantee’ could be next?

Notice they’re all ‘unbundled’ like Facebook and whatsapp and instagram aren’t all in the same app.

That’s why I don’t think – as Russell Quirk pointed out in last week’s comments – that Zoopla’s strategy of a one-stop-shop for agents is going to fly.

Consider the Zoopla Property Group products in isolation:
– Zoopla is massively inferior to Rightmove,
– Vebra and CFP are embarrassingly dated vs apps like Goodlord, Apply and Fixflo and
– uSwitch doesn’t really move the needle for agent revenues.

Agency business owners are entrepreneurs. Zoopla is betting on agents making the easiest decision of choosing one supplier. I’d like to think agents will make the best decisions for their business and customers.

Comments

  1. agency negotiation limited

    Henry knows where the Rolls Royce agents are! There are plenty of great agents, such as Nick Crayson, Adam Walker, John Pace etc just letting their actions speak for them.

    Creativity, integrity and perseverance are the hallmarks of a great agency. Nested isn’t going to make good agents into great agents. That requires deep work. Something the average agent isn’t prepared to do.

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  2. Moolamarkie

    Whilst the Nested is an interesting concept, are vendors prepared to pay £50,000* to solve the perceived challenge of chains?
    This article is actually misleading in as much as chains are not eliminated, only broken.  There is still the likelihood of a chain ‘above’ the seller’s property.  Back in the 1980’s, Parkers Estate Agents would regularly buy a property if it meant saving the chain and turning a profit on the acquired home.
    You’re right to reference how new homes have adopted a similar model based around offering a part-exchange deal which can be 95-100% of valuation.  This is however slightly artificial given the 5-10% mark-up for a brand-new property against its identical second-hand version.
    The Nested model only works in an upwardly moving market and with certain types of predictably sellable properties.  Heron Homes, one of the original pioneers of part-exchanging properties went into receivership with a portfolio of properties losing money in the early 1990’s.  This could be why, for now at least, Nested is focusing on London and expressing a preference for property up to £1,000,000 which is not “…unusual, rare or extremely expensive…”
    There is no proof that Nested’s ‘chain-break’ offer is the Rolls Royce Service either.  For the right property, in the right location, at the right price, it guarantees a below market figure.  And if you want to be really cynical, that’s not a whole different from the BMV gang.
    If you’re a savvy buyer, you’ll offer 5% below whatever Nested re-lists at on the simple premise that the market dictated that only weeks before what the value was.  In fact, if you run the scenario to the end, Nested will drive prices down as their own future price calculations will incorporate their own below market transactions!!
    I do question your PropTech and business knowledge if you’re going to reference Facebook, WhatsApp and Instagram as being unbundled.  ZPG products are totally UNBUNDLED!  Zoopla is separate from Jupix, Vebra, CFP which is separate from uSwitch and MoveIT.  In this scenario, the agent is only 33% of the product set.  The consumer in terms of portal use and price comparison sites is the bigger influence of who or what will be successful.
    My final point is on “…uSwitch doesn’t really move the needle for agent revenues…”  It depends how much you want the needle to move and the agents understanding of technology leverage.  MoveIT, which is ZPG’s price comparison tool for all the products and services associated with moving home, generates for Jefferies down on the south coast, in excess of £100,000 in introducer commissions.  There’s no cost.  This is money straight onto the bottom line.  Pure profit!
    The point that is missed is that the traditional agent only sees the property that comes to the market as the revenue opportunity.  MoveIT and uSwitch sees every interaction as a revenue opportunity.  That’s every valuation and each and every applicant REGARDLESS of if they instruct or buy from you.  That’s the clever and more importantly, profitable, passive revenue generating opportunity that’s already out there, already proven and already paying out.
     
    *5% of £1,000,000 is £50,000 and the remaining 95%, £950,000 goes to the seller.

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