A new London-based online estate agency called Nested says it has had a “superb start” to trading, using its unusual business model based on a guaranteed price offered to sellers.
Nested offers vendors an interest-free loan for a guaranteed amount; this is the price at which the property is marketed by the agency. If it does not sell within 90 days then the agency will guarantee to pay that sum to the seller, allowing him to continue with his chain.
Nested charges a commission of 1.8 per cent including VAT. It currently operates in selected parts of London and concentrates on properties priced below £1m.
In detail, its business model works like this. Would-be sellers enter their address online and receive an initial valuation; this can be refined depending on the scale of details given by the owner.
Then, normally within 24 hours, a ‘guaranteed sale price’ is given. This is subject to a physical inspection of the property by a representative of the agency, but Nested says the guaranteed price is typically around 95 per cent of its market value.
“With us you will receive at least the guarantee price and funds are available as soon as you need them” explains the agency - which emphasises that its USP is that it allows sellers to make their own purchase thanks to the payment from Nested, even if their existing home has not found a buyer.
The agency then continues to market the property and gives the seller 80 per cent of any sum the property sells for, above the guaranteed price.
“We kick off checks and searches on day one instead of waiting to find a buyer. This means we can highlight and solve potential problems earlier. We also carefully vet all buyers up-front to eliminate time-wasters” says the company.
One of the agency’s first clients was selling a Streatham flat for £460,000: Nested offered a guaranteed £430,000 plus the ‘four-fifths extra’ deal. The seller took the £430,000 to allow him to meet a deadline on another home, and later got four-fifths of an additional £32,500 - because they property eventually sold, two months later, for £462,500.
“The 80 per cent paid by professional buying firms is quite predatory but their business model means it’s got to be like that” Nested founder Matt Robinson has told the Sunday Times. “We work differently. We’re not dealing with distressed sellers but people buying their perfect home and need to sell pretty much immediately to achieve that. We’re helping them achieve their dream.”
Nested’s parent company, Nextday Property Ltd, was one of the start-up company’s given support by the Financial Conduct Authority’s ‘Project Innovate’ PropTech and FinTech initiative.