Dear valued clients, friends, and not-yet-but-soon-to-be-friends,
Happy 2017 from all of us at Leadhome! We hope this year will be a highly successful one for you and your family.
A year ago I wrote a blog post about my expectations for the real estate agency industry in 2016: investment in technology, clients moving away from traditional (expensive) real estate agencies to modern, lower cost competitors, and a renewed focus on the client – in other words, a fundamental shift in an industry that for far too long has seen very limited innovation.
2016 in memoriam
As has been widely reported by now, 2016 was an uncharacteristically volatile year – highly destabilising international events including Brexit and the election of Donald Trump, and the too-many-to-name scandals plaguing our wonderful country – with flat economic growth and consumers taking a huge amount of strain.
Unsurprisingly this filtered through to the residential property market: 2016 saw a decrease in buyers qualifying for financing, resulting in flat property value real growth and a drop in sales volume (according to some sources down 15% nationwide).
This had significant repercussions for the estate agency industry. Desperation by agents for mandates, limited access to qualifying buyers, and clients (rightly) demanding modern service in-line with the on-demand economy has meant that only the best agencies (and agents) are surviving.
Despite these industry challenges I’m incredibly proud to say that Leadhome has been (and continues to be) one of the fastest growing privately held companies in South Africa today.
Over the last 12 months we:
- invested heavily in technology;
- recruited some of the best people around, increasing our headcount 7-fold;
- enabled strong customer engagement through our online platform, allowing sellers to book meetings with our highly qualified Area Property Experts in minutes and buyers to book viewings of properties through four simple steps (Leadhome is the first and only estate agency in South Africa with these facilities, and will continue to focus on improving the client experience);
- launched our new brand and logo.
With people of all stripes and ages embracing technology and consumers keeping a keen eye on costs, 2016 also saw the launch of a number of new online-only estate agencies who remove the estate agent from the process altogether while, like Leadhome, charging a fraction of the price of traditional agencies. We think this is great for the industry: it encourages traditional agencies to step up their game and consumers to ask hard questions about what actual value they are getting from their estate agent. The online-only players have had mixed results so far, with some of the early players already closing their doors.
Leadhome takes a different approach. We believe a skilled agent is a vital part of most real estate transactions and whose experience and insights cannot be replaced by algorithms. We started Leadhome with the belief that costs can be driven down, not by removing or compromising on essential parts of the estate agency service, but innovating through technology, automation, and streamlined business processes. In 2016 we proved that this works. As a result of our investment in human capital, Leadhome is able to profitably provide a service far superior to traditional agents; passionate, tertiary educated estate agents supported by an incredible client service team, as well as state-of-the-art technology. Homeowners who have used our service couldn’t be happier (here are some of our client reviews).
My predictions for 2017
Unfortunately for estate agents and agencies, the pressure on the industry will only increase as our economy lags, the cost of doing business increases, and new low commission players enter the market. However, I believe this will be a seminal year for the consumer experience – competition between companies tends to focus attention on better products, services, and technology – and predict that this will be the lasting hallmark of the year. Specifically, I think:
- the residential property market will, with a few exceptions, continue to be a buyer’s market, driven by slow macro-economic growth and a strained consumer;
- we will see a sharp decrease in the number of smaller estate agencies, driven by technology and client service requirements that require scale, as well as a significantly higher cost base;
- the acquisition of PrivateProperty by Property24 (with a combined ~95% market share of the SA property portal industry by lead volume) will result in both higher advertising costs as well as an attempt by the industry to establish an ‘estate agency owned’ property portal;
- we will see a move to transparency and proliferation of data within the SA residential property market; and
- as mentioned previously, a number of new low commission players will enter the market to disrupt the established players.
All in all, it’s going to be a year that fundamentally shapes consumer expectations within the residential property sales industry, and one where large industry players will realise that the traditional model of selling homes no longer cuts it.
At Leadhome, we could not be in a better position to take these challenges head on: we have incredible clients who understand and believe in our model; our industry-leading technology continues to improve every day (with a large number of exciting products to roll out this year); our model of selling properties has been proven to work (we sell on average 14x the volume of properties per agent than that of our traditional peers, and many more than online agencies); and we continue to retain and recruit brilliant technology and sales people (we are hiring; email us!).
When we started Leadhome in November 2015 we believed we could solve a very simple problem – clients being overcharged and underserved when selling their properties – and deliver a better solution. Fifteen months in, we have a clear vision for building and delivering the best product and service – not just in Johannesburg and South Africa, but on a global scale. We look forward to taking this journey with you and promise to continue to keep our clients at the centre of every action we take.
All the best for the year ahead; it’s going to be a busy one!
This post has been edited to accurately reflect our current business model.