Where I live in Camden, for example, there are 14 estate agencies within 90 seconds’ walk of my house, ranging from local independents to big players like Chestertons and Foxtons – and that doesn’t include the rest of Camden and Primrose Hill, which have perhaps 100+ agencies between them.
All of these agencies will be pitching to local landlords and developers at least monthly. This leads to fragmentation, which is bad for the industry. Put simply, the more options a human being has, the more time they take to make a decision.
This translates into days or weeks of pitching, quoting, finalising terms and conditions, signing sole or multiple agency contracts, negotiating commissions, etc.
On the flip side, remember that tenants and buyers have multiple options, so aren’t typically in a rush. They also want a deal - after all, they’re the ones doling out the cash. They’ll shop around, visit multiple agencies, conduct viewings, roll out offers and negotiate with supply owners.
When an offer finally goes through, there’s the lengthy conveyancing and mortgage processes (for sales). This elongates the lead time to close deals to weeks or even months.
The situation is worsening: Home reports a 23% increase in time on market between July 2018 and July 2019. In London, the medium time on market ranges from 84 to 125 days.
It’s a no-win situation. The supply owner would rather have their money ASAP, the agent would rather have their commission ASAP and the tenant or buyer would rather have a good deal quickly and move in ASAP. Clearly, the market needs enhanced speed.
Many innovative businesses have tried and failed to fix the London real estate speed problem. Now it’s time for a proper solution – and the answer lies in ‘deep tech.’
Agents need intelligent platforms that reward the best-performers with more volume and more premium instructions. For example, agents sign up to our platform, Houzen, and receive a few instructions instantly, based on a pre-built profile. Those who close deals quickly get more premium instructions; the more they close, the more they receive.
We are now delivering tenants in under five days and buyers in under 50 days – in all the neighbourhoods in which we operate. And we’re not stopping there - one day we’d like to be able to close deals in under 24 hours (after all, it never hurts to be ambitious).
Let’s do the maths
At any given point in time, there are about 150,000 London properties listings on Rightmove. These between them receive around one million unique views. Thus, for every property, there should technically be six takers.
This imbalance means that it’s easier for estate agents to find tenants or buyers than to find suppliers. It’s also fair to say that the more suppliers an agency has, the more demand they will receive, with cross-selling enhancing efficiency as a result.
Imagine that Fred has just started an agency has won 10 rental properties from property owners. He received 60 applicants for these properties from Rightmove, found four takers and closed four deals. Now he has six properties and 54 applicants on his books. He hires a sales person who brings an additional 100 instructions. For these, Fred will now attract 100 x 6 = 600 applicants.
And so it goes on. The higher the number of instructions, the greater the competitive advantage over smaller agencies. This is why most premium instructions go to the corporate agencies. This is the issue we’re trying to solve for smaller agencies.
We bring thousands of instructions straight from developers and landlords, using intelligent algorithms to instruct the best-performing smaller agencies. The quicker the agencies close deals, the more instructions they receive.
Our mission as a supply-side platform is to drive up the market’s performance in terms of speed while also supporting agents to win previously inaccessible premium instructions. We’re turning a no-win into a win-win.
*Saurabh Saxena is Founder of Houzen, the fastest supply-side sales and lettings engine on the market