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Selling your house in the 21st Century has come a long way. Days where your only options were to go with an agency or fly solo are long gone, and yet entrepreneurs are still finding room for innovation. Property Switch, is the latest in a new breed of startups locked on disrupting markets with the help of technological innovation.
The startup, headquartered in Waterfall, Durban, is a virtual real estate agency — for the most part. Property Switch’s managing director, Graeme Tennant, and operations director, Jan Claasen, say their venture provides sellers with a full online estate agency service, while asking for greatly reduced commissions on successful sales. How? By counting on machines, not people, to sell your property.
“We offer a full estate agency service using the internet and technology to replace/improve many of the tasks that a traditional estate agent performs. Sellers show prospective buyers their property. They take a more active role in the selling process and are compensated by paying a reduced commission,” says Tennant.
Property Switch customers don’t get face time with flesh-and-blood sales agents. In fact, the only time you’ll see Property Switch staff in person, is when a consultant arrives to take pictures and capture details of your property. Oh, and to hand over a “For Sale” sign which you can set up outside somewhere.
While an office-bound Property Switch consultant will be assigned to you to arrange property viewings and guide you through the conveyancing, mortgage financing or insurance processes, there is no field agent to provide tours or access to your property — that’s up to you. For some that might be slightly unnerving, but for most, the more pertinent worry will hover around marketing.
Property Switch relies squarely on tech to market your property. It uses a really slick-looking search engine optimised (“Google friendly”) profile that holds your property details and photos. The startup also lists your property on other major online property portals such as Property 24 and SA Hometraders.
So while there isn’t a field agent running around punting your property, Property Switch is making your abode as visible as possible online. For the tech-savvy crowd it makes a great deal of sense as most traditional sales agents list properties online anyway. Property Switch’s own research show that in South Africa approximately 80% of property searches start online.
Still, some would argue that having a trained professional out in the wild doing what sales people do is more effective. They have skills, private networks, regional knowledge and relationships that they have crafted over the years to call on — but it will cost you.
Since Property Switch doesn’t employ agents, it can get away with charging a flat 2.75% commission on all the properties it sells. Compare that to the typical 5% to 7.5% plus VAT of the sale price traditional agencies choose.
This being a progressive era in business however, Property Switch works with an Open Mandate. You can employ the services of other estate agents as well — the startup welcomes the competition. Kudos. By the way, signing the form is completely paperless. Electronic signature software enables you to sign and send it back without printing or scanning. Double kudos for that.
Property Switch also offers listing statistics for your property’s online profile, as well as things you’d expect from a traditional agency such as comparative market analysis, property valuation and help with compliance certificates.
What this all comes down to is a service that provides an additional option for sellers.
“Up to now, Property sellers traditionally had two methods — traditional estate agent or private sale. We offer sellers a third option as an online estate agency service charging a reduced commission. Property Switch uses virtual means to make a ‘real’ difference in the ‘real’ world.
We will change the South African property market by offering people a new method to sell their property at a significantly reduced cost. We expect our service to cause disruption in the market that will ultimately force traditional players to either reduce their commission percentages or offer clients a better service that warrants a 5% to 8% commission. The ultimate winner? The customer.” says Tennant.
Tennant and Claasen tell us that Property Switch is 100% self-funded with the help of a third silent partner, but that they initially looked for external funding.
“Although investors liked our business plan, we found that they were reluctant to invest in a concept rather than a working business model. Thus we have decided to start-up on a shoe-string budget ourselves,” says Tennant.
Tennant has a background in financial planning with a BCom Ecos from UNISA, while Claasen has a background in IT with a BSc Information Technology from UNISA and a BSc Biochemistry from North-West University.
The duo says that Property Switch is only their first stab at disruption, and that they intend to branch out into other industries under the same brand.
“We are by definition a technology company; property is just our first target. We are currently setting up a company to operate in the financial services sector and there are also plans to start a recruitment operation,” says Tennant.
The team behind Property Switch also intend to make property information (big data) accessible to the public for informed decision-making.
Property Switch has no international expansion plans currently, but notes EMoov and House Network in the UK, and Redfin in the US as leading virtual real estate agents. Locally, the startup will compete head on with Steeple — another local virtual estate agent with low, low commission fees — as well as other online listing services such as Private Property, which operates under a monthly listing revenue model.