“Like most industries impacted by disruptive technologies, I believe we’ll see a massive reduction in the number of estate agents operating in South Africa. The best agents will continue to thrive and do extremely well financially, and the rest will become redundant,” says Marcel du Toit, CEO of Leadhome.
A hybrid between traditional estate agencies and online property platforms, Leadhome aims to change the way we buy and sell property. “I think the property industry will fundamentally change over the next few years,” he states. Key changes to be expected, says Du Toit, include the way in which the traditional franchise estate agency operates: “The current asking commission of 5%-8% is unsustainable, and only this high because of the inherent costs built into that business model – after all, the franchisor, franchisee, and estate agent all have to get paid from the commission of each sale, which is what drives these unjustifiably high commissions.” Furthermore, unnecessary expenses such as branded cars, luxurious offices, and newspaper advertisements (even though the vast majority of properties are seen by buyers online) all contribute to costs that, ultimately, must be absorbedly the customer.
The main difference
There are several online property platforms operating in South Africa, so what makes Leadhome different? “The initial idea came from my good friend and now co-founder Harry Hattingh. While working as a commercial real estate broker in Johannesburg, he thought there just has to be a better way to sell properties than the status quo, and approached me in 2014 with an idea to set up an online platform to deliver excellent customer service at a lower cost. We quickly realised that estate agents are the glue at the center of a residential sale, and after almost 18 months of intense research, we developed the Leadhome model. Our model combines the best of estate agents with technology to streamline the process of buying and selling saving both clients and agents time and money,” says Du Toit.
Leadhome is very much on the opposite side of the spectrum to online estate agencies, who have no agents, never visit clients’ properties, and provide a call center service. Our agents, like those in the traditional model, visit every property, perform a market-based data-driven valuation analysis, drive each property’s marketing, and are responsible for the negotiation and closing of each transaction.
Born out of a love for property, the platform aims to extend its services beyond Johannesburg and Pretoria. “We still have a lot of work to do to educate the market as to our offering, as well as further developing our technology and processes to ensure we continue to delight our customers,” says Du Toit. Rather than attempting to replace estate agents, the platform offers both buyers and sellers a more effective and affordable option. As for the future of prop tech in South Africa? “I think we’ll see a large number of new entrants across the whole industry value chain (sales, rentals, bond origination, home loans, insurance, home services). The opportunity is just too big to not see innovative new players enter to take a slice of the pie. Ultimately developments in the next 5 years will be driven by a focus on the customer, who will rightly be offered a better product & service at a lower cost.”
By Monique du Toit