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By James Dearsley

Co-Founder, Unissu

TODAY'S OTHER NEWS

PropTech Today: Why the Guild’s iBuyer move will be a struggle

This week I fly to Spain to present at a conference called Immotechnia. I am opening the conference with a 45-minute address about the future of the property market and making recommendations of businesses I think are going places.

Given how I always want to contextualise the recommendations for the audience at hand, I felt it important to recommend some Spanish firms. I reached out to a number of contacts and asked for their advice. 

What are your favourite businesses in Spain, I asked? Which ones are showing the signs of success? Without fail, iBuyers were mentioned every time (in case you are interested, in Spain you have Clicpiso and Tiko). They are doing amazingly, I was told. Picking up market share in two or three main cities and really disrupting the norm.

Whilst I am a bear on the iBuyer model, I will be mentioning them at the conference because the narrative I am offering to the congregation is one of trends.

I will be highlighting the trends from the Venture Capitalists (VCs) that are all functional and prosaic. Looking at underlying technologies as their investment thesis (IOT, Smart Buildings etc).

The trends from the consumer (and therefore the industry) are completely at odds with this and feed into this iBuyer mention. Consumer trends are, at their heart, emotional.

They are looking for transparency, certainty, affordability, and control. They want to feel a part of the transaction. They want a sense of ownership and they ultimately feel they should be a part of the process.

I would suggest that iBuyers fit this model. They give the customer certainty, for sure. They give them transparency, too. You know the price. You know the timeframe. You know the process.

Ideal, you might think. For the consumer, yes. For the industry, however, it is potentially disastrous.

Let’s review the Guild for a moment. Back in 2017, we wrote a considerable piece about our scepticism of the relationship/merger/buyout. We said it was a clash of brands, it would damage the Guild etc. etc.

I might suggest it could be the same here...

Leaving to one side all the complications of the iBuyer model for a minute - this is an article in itself, but I will touch on some reasons later in this piece - there was one other HUGE issue for me. 

This is a quote from a Negotiator piece late last week:

“During the presentation by its Group Operations Manager Phillipa Legg, she asked the 400 or so delegates what an iBuyer model was, but just one stuck their hand up, highlighting the uphill task the Guild has to persuade UK agents to embrace this very American idea.”

Welcome to the reason things will never change at The Guild. On one hand, I applaud them. They are experimenting, they are trying to evolve and change. There can be no doubt.

First, they tried online agency. Well done. It wasn’t going to work and we knew that from the outset but you had a go. You tried something new.

It was flawed from the start, though, as their customer group is arguably more the estate agent than the end consumer. It didn’t make sense for them.

I might suggest the same is happening here. The Guild is obviously not listening to nor consulting its customers. If only 1 person in 400 actually knew what an iBuyer was, there is not just an uphill battle but a war to be won to make this succeed.

And this doesn’t even start to address challenges the UK market will have on the iBuyer market to begin with. With exceptions of busy city people who live in homogenous buildings, iBuyers will struggle from the outset. The AVMs will simply struggle to comprehend our housing stock. Oh, and by the way, no iBuyer has yet shown any significant sign of profit...

The Guild needs to work on understanding and engaging its customers - both of them. I admire its trials and tribulations. I even admire its failure. However, you should fail once and learn. You fail again there are serious questions to answer.

To review concluding comments in our article mentioned above, when the Guild was proposing the EasyProperty deal, it seems like a bit of a groundhog moment…

“On one level, the Guild ought to be applauded for trying something innovative. Digital transformation is, at its heart, about evolving a business model and the Guild seems to be trying to do this.  However, much like Countrywide, if you don’t tackle the problem with the correct framework then enormous pitfalls await you."

"True digital transformation can only properly succeed when a company takes a long hard look at its existing strategy, works with all stakeholders, draws up an action plan and appoints key people to oversee and implement the changes. Where is the evidence of this in this transaction? It looks like a fait accompli presented to Guild members with a “like it or lump it” approach. The message is “if you don’t buy it, we’ll sell it to your competitor.” This hardly seems conducive to good outcomes.”

Perhaps I am being critical. Some have asked me privately which model I would work with if I started my own agency. The answer is simple.There is no longer a ‘one model fits all’ estate agency business. That is the largest challenge we have as an industry. 

*James Dearsley is a leading PropTech influencer and commentator, and is co-founder of PropTech platform Unissu. You can follow James on Twitter here.

  • Simon Bradbury

    Hi James,
    Thanks as ever for your comments and thoughts which I usually agree with - but not on this occasion.
    I too applaud the Guild for trying innovative ideas, even if they do not work every time. It's important to try new things as you acknowledge.
    I believe that the fact that apparently only one person out of 400 estate agents had even heard of an "I-Buyer" is a massive advantage for those of us who are willing to lead the way in their local markets by offering the much vaunted "USP".
    At it's heart, the I-Buyer concept is very simple, As you say...
    " They give the customer certainty, for sure. They give them transparency, too. You know the price. You know the timeframe. You know the process. "
    As for your concerns about the AVM's, I feel sure that ( as you pointed out in your excellent article last week ) they will cope and improve as AI improves - particular if augmented by humans.
    The fact is, in my view, this will be seen as a solution to a problem that SOME prospective sellers face and the right estate agent with the correct approach will make it work.
    Again, to reference our own article and words from last week...

    "That is what you have to realise today. Humans can’t win on their own. Technology can’t either. Combine humans (even us lowly estate agents) with technology and you have a winning formula."

  • James Dearsley

    Hey Simon,

    Good comments and I am not sure we disagree on too much in reality.

    "this will be seen as a solution to a problem that SOME prospective sellers face" - completely agree. But this seems to be heralded as a solution for Guild members like it was when the Easy Property deal was done. It isn't and shouldn't be seen as much. It is one solution of many that should be being adopted.

    As for AVMs - agree but you never want to be the 2nd best AVM!

    As for the point about 1 in 400 knowing the solution. I do disagree. Change is about human mentality. You want them bought into a possible solution. The education part is the hardest and longest element of any transformation. It shows that there is a long way to go, irrespective of any solution being selected in reality. These agents need to be engaged in new methods of change. Therefore this isn't an iBuyer argument, but an education argument

  • adrian black

    i'd be very interested in seeing on a home listing what the iBuyer price is and what the agent thinks they can get in the market (which as a local agent we all know pretty well)

  • Andrew Stanton Proptech Real Estate Strategist - Journalist and Influencer Proptech-PR

    I-buyer - not making profit as a model, and a new model at that. In US average sale price 93% of market price, good luck with selling that concept. Margins are wafer thin also, so if the market drops, overnight someone (the financial backers) gets to sit on a lot of housing stock at the wrong money which will not sell.

    Sounds a lot like Russian roulette, and then tie it all into the Guild Brand. My suggestion do some deep research, before rolling it out on the UK conservative public, it could turn into a PR nightmare. I applaud the Guild trying to get a point of difference product or service but I know of some much better initiatives, and they will not frighten the horses.

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