Pam Golding’s motivation to purchase online agency Eazi.com
BY GAYE DE VILLIERS
In a strategic move the Pam Golding Property group recently purchased the online estate agency Eazi.com. Andrew Golding CE of the Pam Golding Property group says that this move was made as a result of the increase of internationally, residential real estate sales industries and businesses being reorganised across at least two different and separate types of business models. Customers come in two offerings in specific market segments. He says the actual effect of newer modalities have yet to really gain a dominant foothold in any market, and it is still too early to tell with any real accuracy what the long-term effect will be on the markets.
The first of these services is the so called ‘bespoke’ service model which is the traditional high ‘touch’, high service, strong agent/client relationship model which is the cornerstone of the Pam Golding Property group and which will continue to be their core offering. Secondly there is the so-called ‘hybrid’ estate agency model, which comprises a digital offering plus less agent handholding and involvement but importantly still has an ‘agent’ involved.
The hybrid agency model has a technology platform that enables buyers and sellers to conclude real estate transactions including: book valuations, change prices, arrange viewings, collect feedback, review marketing data, send messages, make offers and agree sales 24/7. This model uses technology to reduce costs and pass savings onto consumers in the form of lower, flat fees.
There is a third model which disintermediates agents completely and effectively allows buyers and sellers to engage solely through a technology platform without any agent involvement.
A view being widely expressed internationally is that there could be applicability for the pure technology model in the lowest end of the market, some traction for the hybrid model in a price segment above this (the so-called mid to lower end) while the consensus view is that the traditional model will continue to dominate the market above this – time will tell if this segmentation is correct.
Internationally the hybrid model has started to gain traction and has specific applicability in the lower end of a number of key markets around the world where it is estimated that it has the potential to become a significant sales modus operandi in the future.
From a South African perspective, while in no way detracting from the personal and professional service and high agent involvement of the existing Pam Golding Properties offering, this investment into Eazi.com broadens the group’s access to the South African and African residential property sector by enabling the group to take an interest in the high-volume segment of the market, which comprises over 100 000 transactions annually in South Africa alone. This is particularly relevant in the price segments between R500 000 and R2 million, to which the Pam Golding Property group has traditionally had limited exposure to date.
Andrew says, “This is not a disintermediation or cannibalisation play but rather a recognition that in specific market segments it is possible to give consumers a choice between a low-cost, fixed fee, low agent involvement, technology-enabled online service or a traditional agent-enabled, high touch, personal service with all its inherent advantages.”
Eazi.com has a well thought through on-line, scalable platform and a sound business model that they are confident will add significant value to consumers in the South African and African real estate market. It is a Cape Town-based, technology-enabled, fixed-fee service with call-centre support which enables consumers to buy and sell residential property for a fixed fee of R29 500 plus VAT which is only payable on sale of the property.
While Eazi.com is currently focused in the Cape Town Metropole, and will continue to be managed and branded separately from Pam Golding Properties, given the international trends in real estate Andrew is confident that the two models will co-exist successfully and enable the company to expand the full service offering of the Pam Golding Property group locally, nationally and globally.
Andrew says that there is no doubt that technology will continue to play an ever increasingly significant role in the residential real estate industry and as a consequence the role of the agent continues to evolve but certainly for now, the traditional agent model has a value proposition which continues to be compelling in many ways.
The residential real estate sale is very seldom simply a linear transactional process. It is often characterised by complexities that require the experience, wisdom and insight of a real estate professional to navigate what is often a protracted journey, as the purchase or sale of a property is usually at least a six-month process from start to finish and can often be complex, is frequently nuanced and is usually the single biggest transaction clients undertake.
As the industry has developed over the last 15-20 years and residential property has more and more become respected as an asset class, it is now a highly-demanding vocation requiring, in addition to specialised knowledge across a range of parameters including legislative matters, a professional skillset which is well-versed in the art of negotiation, project management, conflict management and financial acumen, not to mention human empathy and intuitive skills. It is for this reason that there are now stringent qualifications required before a real estate agent is able to formally commercially engage, advise and assist clients to sell their homes.
This is particularly the case when the various market cycles pose even greater challenges. Consider the so-called ‘sellers’ market’, where there is a shortage of stock and yet many buyers competing for this stock – creating high demand, which inherently bodes well for a smoother transaction. Now consider a less buoyant market where there is excess stock and fewer buyers, this characterised by waning consumer confidence and sentiment, political uncertainty and economic challenge (somewhat akin to current South African trading conditions) – this requires a completely different set of professional real estate skills to successfully conclude a sale – for instance, to close the sometimes 30% gap between asking price and the buyer’s offer. This requires very sound market understanding and adept negotiation, as well as intricate understanding of human behaviour.
Fundamentally, the risks associated with selling what is more than likely someone’s most valuable asset are significant – in all market cycles regardless – particularly given that it is likely that the average client will not transact more than 3 or 4 times in their lifetime and will therefore not be that well-versed in the nuances of the transaction. The role of the astute estate agent is to mitigate this risk and ensure absolute comfort.
The advent of the now globally-ubiquitous property portal has evidently levelled the playing fields as far as gaining access to buyers’ leads is concerned, thereby purportedly minimising and devaluing the role played by estate agents as far as their proprietary marketing and networking is concerned regarding their ability to attract buyers. This too is somewhat of a misnomer. Yes, the property portals – which incidentally are also utilised by all professional traditional estate agencies as well – do in fact drive quantity, but what of quality? Any top-producing professional estate agent will tell you that they would far rather have fewer yet more qualified buyers than more unqualified buyers. It is therefore integral to an agent’s service that their personal network has the ability to access the ‘right’ buyers for a property and that these buyers are then strategically managed to ensure the most lucrative offer is brought to the benefit of the seller. In fact, this is the fundamental benefit of awarding an agent an exclusive mandate. In other words, it gives the agent the ability to properly manage the potential buyers on a property, rather than having agents competing with other agents in order to try and close the deal first and, in the process, not putting the best interests of the seller at the heart of the service transaction.
It should also be borne in mind that, as the price range of property increases, so obviously the number of qualified buyers reduces, by definition. Certainly, as the value of a home increases, there are increasingly fewer buyers available. It is therefore incumbent on the agent and their brokerage to be able to have access to these discerning buyers and to introduce them to the client’s property. This is then where the key skills of the estate agent kick in – to close the deal. This includes having the skills to get the offer in writing and to guide them at that moment to elicit the best price and then to close it with the seller i.e. closing the proverbial ‘gap’ and then to create a watertight document set. It’s about knowing how to read clients, understand their layman’s requests and to formalise them in a legal agreement by ensuring that all bases have been covered and any issues dealt with which could potentially create disputes down the road. And that both the seller and buyer’s minds have actually met entirely and completely. This is central to the real value that the individual agent adds to the process. Remember, in the South African context the estate agent is in fact managing the tension between what are ostensibly two diametrically opposing desires i.e. the seller, who wants the highest price and the buyer, who wants the lowest. This ‘dance’ requires extremely adept human skills and an understanding of sales psychology.
Another critical dimension of the estate agent’s consulting skills is that of pricing strategy, bearing in mind that, while any property will sell if the price is right – how do you maximise the price so as to ensure a maximum return to the seller on his/her most valuable asset? This is then not only about the price itself alone, but the positioning of the property correctly in the market place, viz a viz competing properties, so that it stimulates quality buyer leads.
It’s a fine balancing act – get this wrong and the property simply sits on the market and runs the risk of becoming ‘stale’ or stagnant. Incorrect pricing creates a long, arduous process and causes fatigue and a great deal of seller discontent. Also, the property invariably sells for far less than it ordinarily would have had it been correctly priced at the outset. So it’s very much a case of instilling confidence in the seller at the start that the estate agent is at the forefront of what’s happening in the specific sales territory. Online information and valuation mechanisms can serve to provide scientific analysis as to pricing – but it is then the intuition and skill of the experienced and professional agent that further positively influences this price in the seller’s favour.
In conclusion, it can be said, to use a somewhat cliched adage, that you get what you pay for. Certainly, there is room in the industry for discounted service offerings, but these translate into a discounted version of all the factors noted here (most particularly service) – meaning that the mitigation of the risk inherent to selling any residential property plummets with the price charged for the service. Clients who choose these ‘lesser offerings’ need to be aware of this. It should also be noted that the points mentioned above pertain generically to the concept of utilising the services of the so-called traditional (commission-earning) estate agent. However, it is only those agents who are in fact indeed able to provide the value as defined, who are really worthy of their premium commission.