A new ‘quick buy’ service has been announced which would mean that sales could be completed in a week, providing a buyer was happy to accept a sum devised by an algorithm.
Giles Mackay - the veteran PropTech innovator who created Hometrack almost two decades ago - has launched a new business using the US-style “i-Buying” model.
He has raised £250m from investors for the service, called UPSTIX, which pledges to give buyers a cash offer within 48 hours after algorithms have determined a price.
Mackay has told The Times that the offer will typically be 11 per cent below the open market figure; as is the case in the quick-buy industry, it is thought that the most likely target audience would be individuals in divorces, probate sales and those defaulting ion mortgages.
Once an offer has been accepted, Upstix suggests it could complete the transaction in a week, although it acknowledges many sellers would not want a transaction to be concluded that rapidly.
In the US this i-Buying concept is more established; attempts to introduce it in the UK in the past have met with mixed success.
Mackay says: "While nearly every other facet of our lives have been improved by the use of technology, the housing market still functions much as it did half-a-century ago. This means that the biggest financial decision we take is often a slow, disjointed and uncertain experience. By leveraging data and technology, UPSTIX can offer a far faster and certain alternative.
“Divorce, probate, debt and the stress of chains breaking or deals that just fall away are all occasions where a quick sale can be vital. We believe creating a more democratic and transparent way to get things moving is precisely what’s needed.
“iBuying is a relatively new concept in the UK, but our track record in harnessing data to make informed decisions means that we will be able to offer fair prices for houses in return for speed and certainty of sale.”
UPSTIX - you can see its website here - has already bought nine houses and it is committed to buy another 97 worth £29m. By the end of the year, Mackay expects to have bought “very close to £600 million to £700 million of stock”.
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Does not factor in vendor greed!
Maybe the investors have not heard what happened to the behemoth American ibuyer Zillow in November 2021, when it stopped being an ibuyer overnight due to having $569 million worth of debt as it had bought properties in at the wrong value, and they had to make 25% of their workforce redundant.
In a buoyant market buying property assets is an easy gamble, the second the market fluctuates, and all housing markets fluctuate, the ibuyer gets stuck with a huge amount of housing stock at prices they can not afford to sell on.
Alogorithms are great, but they are just a set of rules and outcomes, as Zillow found, and it is the variables that are not factured in, which kills off a business venture, all of my property technology and fintech client founders of course use them, but the ibuyer model is a casino model, which pays out for a while, then makes all stakeholders a lot poorer.
For some vendors it is a great way to sell quickly, but when markets turn sitting on thousands of properties that drop in value by 5%, can mean huge losses for the operator, however good the original coding is.
If you have to sell quickly the chances are you'll have a month or so in which to start and complete, so go to auction with a reputable auctioneer, set an attractive guide price and sensible reserve - which will be more than these Proptech savvies will give you - and you'll be home and dry knowing you haven't been ripped off.
And if, for some reason, you can't sell at auction, then is the time to go to these people.
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