As a venture capitalist operating within the property sector, I am always on the look-out for great businesses to invest in.
Some are quite conventional, tried and proven; while others are new innovative business models that seek to disrupt the market. My latest venture, the online estate agency eMoov.co.uk falls into the latter category.
We have entered a digital age where creators can go straight to the end user without the need for an intermediary. The rapid rise of crowd funding sites means that the customer will soon choose which products reach the marketplace, services such as YouTube allow musicians to reach an audience of millions without the backing of a major record labels, and streaming services allow people to watch their favourite shows whenever they want. Whether we like it or not, things are changing.
For this reason, I believe we need more disruptive business models that empower the customer by offering a fully customisable service for a reasonable price. At eMoov the objective is to make selling a house as simple, enjoyable, transparent, and reliable as shopping on Amazon. With 95 percent of all house searches starting online, customers are wondering why it shouldn't stay online for the entire process. The technology is certainly here to do it (as the creators of online travel, insurance, and recruitment businesses have demonstrated). And tech-savvy consumers are ready to embrace it.
And as the technology improves, online estate agents are only going to get better. Customers can go online, post details of their house, upload photos, name their price and click enter. They can not only add the "list my house" service to their shopping cart, but also related services like conveyancing and boxes for moving. Or they can go on to their smart phone and download the mobile app and sign up in a seamlessly integrated process: no queues, no travel times, no waiting around. Customers can also customise the amount they would like to spend on advertising their property.
The price charged is thousands less than a conventional estate agent, and through emails and mobile applications, agents can keep customers in the loop throughout the process - offering complete transparency.
I believe that this money-saving option will encourage traditional high street estate agents to evolve their business model or cut their pricing. I expect some to set up their own online estate agencies, while others will seek to improve the range of services that they offer, thinking creatively about what it is that their customers need in the 21st Century.
Certainly, there will always be a place in the sector for the highly discerning consumer looking for a bespoke, hand-held end-to-end service, where full fees are justified. But it has to be a high quality service. In my view, that kind of service lends itself more to the top tier' of the market in terms of value. It is the rest of the pyramid below that is the most ripe for disruption, and where full fees are being charged for a mediocre service, smart consumers will look elsewhere.
Real estate is entering the digital age with the rise of fully interactive and integrated end to end property services. This can only be viewed as a progressive step forward in a sector that has been crying out for change. It won't be long before the tides turn and estate agency goes through a long awaited revolution. Don't wait for that to happen, start thinking outside the box' now.
Follow Faisal on twitter at @FaisalButt_ or learn more about him at www.faisalbutt.com
Comments
Erm... you've got me on that front, I'm afraid - I do not recall either spitting out a dummy OR bu99ering off. Feel free to correct me, of course.
And as far as putting more effort into EAT than EAT itself is at the moment - I'd hardly call that an achievement - would you
My six year-old grandson puts more effort into his composition, grammar and spelling than the 'journalism' we now read here - and gets better results!
Despite you spitting a dummy and buggering off a few weeks back, you are actually putting more effort into the new look EAT than the resident people who add a question to some PR to turn it into a story.
I would do for that Glen ackroyd, he has spoilt another clean sweep of Peebee trendings.
8=D
"Mr Butt is repeating facts that some PR bint has made up..."
Erm - then they aren't 'facts', are they
I haven't started with you yet... you might not be thanking me this time tomorrow ;o)
Thank you PeeBee :)
"I really don't care whose figure are being quoted, they can not possibly be correct."
Firstly - and most importantly, you were giving 'Hound' grief where it was not warranted - THAT was my point. He was quoting "official" Government figures - and quoted the correctly (something to learn from that, EAT...) - so I am afraid your claim that he was "talking 5hit" is, in fact YOU "talking 5hit".
Secondly - HOW can the figures "not possibly be correct"
You state "...86% can neve ever be more than 86%..." That is true - but surely it depends on what the "86%" refers to as to whether it is higher, lower, or same as another figure.
Instead of having a go in the manner you have chosen, give your reasoning... because I CAN'T see where the Hll you're getting your argument material from, and I LOVE pulling stats apart!
At the minute, it's YOUR maths that is in question as far as I am concerned, not that of 'Hound'.
Come on - humour me! ;o)
I really don't care whose figure are being quoted, they can not possibly be correct. 86% can neve ever be more than 86% but the ONS figures have been put together by a monkey. Because the UK education system stpped in 1983 there is a whole generation of people producing flawed stats to a gullible audience who do not have the wit to say err that isn't correct.
Mr Butt is repeating facts that some PR bint has made up and because of the self fulfilling nature of the internet, only people on the internet can be part of the sample, all of a sudden bull5hit is suddenly fact.
Mr Butt can claim to be whatever he wants to be, he can publish it on the internet and all of a sudden he is what he claims because the internet says so. Celebrity and Spivvery. I do look forward to a rise in interest rate rises, not long to go now employment rate is down to 7.1% with the declared trigger of 7%. Let's see how these sorts cope when interest rates double to just 1%.
It makes me laugh when i read emoovs google paid ads, they appear NO WHERE in natural results. 15 years experience, mmmm I must employ a retired estate agent on my books then I could have say 50 years experience!! My prediction - Gone in 2 years, when RM drop them or they burn out.
Thinking outside the box Perhaps look in you own back yard first.
I cannot understand Mr Butts interest and investment in emoov. If as he says online estate agency is going to take off all over the UK, surely this will damage Emoov's business. Someone in Scunthorpe is not going to use Russell Quirk and his mob in Essex when they can use a local online agent. Long term if online agents spread where will his leave EmoovTheir fees are poor. They make a bit of profit now as they stack them high and sell them cheap. It is not as though they make any money on other services. Having visited their website I note that they only charge 59 plus vat for an EPC. Not much profit there either! Be careful what you wish for Mr Butt. A good online agent in every major city will see your investment look decidedly dodgy!
I wouldn't trust a bloke with a name like Facial Butt no matter how much dough he had to invest. And what does he know about our business Ar$e by name, ar$e by nature.
To the poster named 'Hound-now you are talking 5hit' - you asked "How many of the UK population are adults when you start quoting stats make sure you at least have some grasp of numbers."
'Hound' is simply quoting 'qualified' statistics - namely the 2011 Census:
http://www.ons.gov.uk/ons/dcp171778_292378.pdf
Interestingly, ONS struggle to identify an "adult" - their age categories do not fit with common-sense values. It seems that they class 'Over 14's' as Adult. Or 'Over 19's - I'm not entirely sure. One way or another, the recognised parameters are ignored. Make of it what you wish.
@ Guest (Hound-now you are talking 5hit)
[i]'How many of the UK population are adults when you start quoting stats make sure you at least have some grasp of numbers.
86% of all adults can not possibly exceed the total number of adults.'[/i].....
No, sorry, lost me there! If you read my post, you'll see it was a response to someone below who was questioning the figure of 95% of searches starting online, and states clearly that only half the population have access to the internet! I merely quoted figures (copied and pasted) from the Office of National Statistics showing that last year, 73% of the [b]adult[/b] population accessed the internet every day, and 83% of households have internet access.
Perhaps you can explain your post
And Guest below, as I said, I've never worked in direct competition with Foxtons, so have to bow to the experience of those that have, but I think you'll find that promising a significantly higher price is a tactic that the corporates developed before Foxtons existed, but the reality is, certainly in my experience, that if they found a buyer mug enough to agree to pay well over the odds for a property, come the mortgage valuation it was down valued and the price renegotiated, and of course most buyers are savvy enough to have done their homework and have some idea of what similar properties sold for.
Spicer Haart et al are nothing like Foxtons - and I mean NOTHING like. "What would the reaction be of Foxton's sellers if it was actually explained to them that the real reason their fees are so high is that they are paying the marketing costs for the properties they don't sell!" - I can tell you exactly what the reaction would be. "We don't give a stuff - they will get me an extra 50k"
How many of the UK population are adults when you start quoting stats make sure you at least have some grasp of numbers.
86% of all adults can not possibly exceed the total number of adults.
"Journalists like Fasial Butt..."
Erm... I don't think he's a journo, actually. His website describes him as "...a Mayfair based entrepreneur and venture capital investor."
Make of that what you will.
The rest of your post is bang on!
How about the portals charge when a property is sold Now there's an idea!! Then we can all do no sale no fee.
Journalists like Fasial Butt would be wise to look at their own role in a digital age to secure their future before observing ours. Lengthy, boring articles like this one cost a website readership.
I certainly could get to the end of this disappointing and rambling piece; well done to those who did.
Attention spans are shortening, competition for time is greater than ever, so shorter punchy articles, more relevant to the readership will get people to return.
This site is much worse without Rosalind's editorial guidance.
@KBG, I've never worked in competition with Foxtons, but of course Spicerhaart, countrywide and the other corporates operate in a very similar way.
The up front marketing payment is a model that [b]has[/b] worked, as it was the norm before no sale-no fee. What would the reaction be of Foxton's sellers if it was actually explained to them that the real reason their fees are so high is that they are paying the marketing costs for the properties they don't sell! Whilst there are of course numerous industries where free quotes or estimates are offered, I cannot think of any other industry where successful clients are expected to pay for the failures.
You are of course correct that there would be undercutting on an up front fee, which is exactly why I said that it would become more about service.
40 years ago we didn't have the internet, so see little relevance.
@Hound - the issue is that ALL agents would have to change their model. If you have ever worked in a market against Foxtons - you will know that they work on the fact they convince a vendor they WILL get more for the property which is why they charge more than anyone else. It works. You can offer any cheap deal, up front or otherwise, but in the scheme of things, saving 1% or even 2% on fees has no bearing if the vendor thinks they will get 10% more on the sale price.
An upfront fee will NOT improve standards. It a model with has never worked. There will always be those agents who list list list and if it sells its a bonus. If the only fee you get is for success then I fail to see how you would do a better job by earning on everything.
But imagine it catches on - then one agent will undercut the other on the upfront fee, until it disappears altogether in to a 'No up front fee' marketing opportunity.
Perhaps we could ask HMRC to favour an upfront fee rather than a % of income as well. Or maybe Sotherbys.
@Yay for the internet
'with only half the population having access to the internet'...... Which planet are you living on then
From the ONS website.
In 2013, 36 million adults (73%) in Great Britain accessed the Internet every day, 20 million more than in 2006, when directly comparable records began.
Access to the Internet using a mobile phone more than doubled between 2010 and 2013, from 24% to 53%.
In 2013, 72% of all adults bought goods or services online, up from 53% in 2008.
In Great Britain, 21 million households (83%) had Internet access in 2013.
Broadband Internet connections using fibre optic or cable were used by 42% of households, up from 30% in 2012.
At Q1 2013, 43.5 million adults (86%) in the UK had used the Internet.
7.1 million adults (14%) had never used the Internet.
As I said below KBG, a shift away from no sale-no fee would have to lead to a marked improvement in standards, as it really would become all about service, and the 'As soon as they got my money, they lost interest' issue is easily addressed with a combination of an up front marketing charge and a commission on completion. This is the way agency worked in this part of the world if you go back 40+ years, and makes far more sense as a business model. The public have been re-educated before to expect no sale-no fee, so could in theory be re-educated again.
It won't of course happen, as the 'local' factor would be all the more important with that sort of business model, but it would, I suspect, be far less attractive to the corporates.
What a shame that anyone can make up anything and publish it as fact.
One has to wonder where Mr Butt get his facts from with only half the population having access to the internet it is very very unlikely that 95% of house seraches start on the internet.
The pity about this is that there is no educated editorial filtering to weed out 5hit like this.
I think that the main problem that VENDORS have is that they are married to the idea that you charge all of your fee at the end for success i.e No sale - No fee. If you charge an upfront fee, there follows a natural compliant opportunity 'They took my money and didn't sell my home' or 'As soon as they got my money, they lost interest'.
How much does it cost to be a 'Featured Columnist'
This website clearly has a hidden agenda.
Very sad indeed.
Although this is very biased (as you would expect), I wouldn't class this as a full-blown advertorial...
Well said Anonymous Coward. I've been banging that drum for a long time, but there are a majority here with heads buried in the sand saying that change will never happen. No sale-no fee is a complete nonsense as a business model, and of course, if you go back far enough, agents used to agree a marketing budget with a seller before a property went on the market, and the establishment of the time doubtless told the first agent to offer no sale-no fee that he was mad!
Sooner or later, the public will realise that the ones that sell pay for those that don't. An up front marketing fee and a reasonable percentage on completion seems to me to be the way to go, all sorts of advantages, not least of which would be increased client loyalty if they have parted with an up front payment, which of course is why you'll find the online agents claiming a much higher conversion rate from instruction to sale. There are the obvious advantages for cashflow, the lifeblood of any business.
I also believe that this model would make for a dramatic improvement in industry standards, as it really would become about quality of service if an up front fee is charged.
Yet another advertorial making little or now sense from someone with little or no knowledge of the marketplace, either physical or digital. I wish we could get back to have some useful market information.
I think the editor appears to have confused article with advert.
Paul - completely agree with your comments - BUT- don't give up on this charade of a 'newsfeed' website just yet.
Maybe... just maybe... the publisher will see the monumental error of his ways and revert to what it was - or alternatively, a better site will evolve, and as they haven't an inkling of a clue about what they are actually publishing, you will probably read about it HERE! ;o)
I think that the main problem that high street agents have is that they are [b]married [/b] to the idea that you charge all of your fee at the end for success.
The problem with this is that you have no choice but to overcharge the successful home mover because of all of the failure that goes on in the background.
Obviously the stats change from area to area and agent to agent, but as a rough rule of thumb you will complete on 3 moves if you agree 4 sales, you will sell 4 houses if you get 6 houses on the market and you will need to value 12 houses to get those 6 on in the first place.
So every one who actually pays a fee is paying for 25% wasted time chasing someone else's solicitors, 33% on viewings on other peoples' properties and 50% of the time it took to value your own house.
If you think about it like that, charging just a percentage on every sale is madness.
I see a lot of my fellow agents on here complaining about online agents and their set up fees, but it makes sense - both for the agent and the property owner.
The trade off is simple for both parties involved:
Either the owner gets overcharged and the agent runs the risk of failure;
Or the owner gets charged a fair amount and the agent gets paid for every step they take
Now I am not suggesting that a percentage is not charged, but you could agree a scale of charges above a certain price (that's true achievement worth paying for).
Seems very sensible to me and it also seems that this approach need not be restricted to online agents too.
"I believe that this money-saving option will encourage traditional high street estate agents to evolve their business model or cut their pricing" - How detached is Mr Butt.
This may be fine in Mayfair where average fees are in the tens of thousands and where every listing is placed on LonRes - a multi-listing site for the elite agents. Secure an instruction, list it, offer a fee split and sure enough you will get a call from an agent. Many sellers in this market rely on their agent to find another property - it works well because its commercially viable.
A 4m house in Mayfair will allow you split fees of say 30k+ each. The neg will earn around 3000.
Now look in the real world where fees of 1% are a challenge and property prices and a fraction of London. Negs get lower % commissions in many cases and these comms are linked to their ability to sell conveyancing and other income streams. You see, in many parts of the country, you cant have a commercially viable business without multiple income streams.
Mr Butt lives in a bubble. Online agents may be cheaper, but in many areas not so much cheaper that anyone in their right mind would sacrifice the personal service offered by traditional agents who can't afford gold Rolex Submariners displayed in the photo in his bio.
I admire his entrepreneurial flair and proclaimed success - but don't please insult those at the coal face who work damn hard for commission of 10's of pounds, not thousands and tell them they can cut costs.
Also, is this not an advertorial
Is there going to be an online agent story every update now as the stories are so weak, sorry EAT but this is my last visit to this site, total rubbish now.