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Real estate startup Leadhome thinks South African real estate is stagnant and believes it has what it takes to shake it up with a melange of traditional and innovative services.
Launched late November, the company was founded by long-time friends Marcél du Toit (pictured left) and Harry Hattingh (pictured right). The pair met in 2001 when they were studying undergraduate degrees at the University of Stellenbosch and have been friends ever since. Du Toit was previously the vice president in Corporate Finance and M&A at Deutsche Bank, and Harry Hattingh was a founding member of In2Assets Gauteng.
The initial idea came from Hattingh while working as a commercial and residential real estate broker in Johannesburg. He thought he had a better way to sell properties than the status quo and approached du Toit in 2014 with the idea. The plan was to set up an online platform to deliver excellent customer service. Since then the idea has changed but it’s now turned into Leadhome. Du Toit says the pair have stayed true to their mission, which is “to provide our clients with the best possible service and outcomes for the lowest possible fee.”
The self-funded company operates on a fixed fee instead of traditional commission. The amount charged is R29 995 (excluding VAT) and is charged regardless of the size of the property being sold. “In our experience it takes as much work to sell a R100 000 home as it does to sell a R10-million home; just because your home is worth more, you shouldn’t be penalised in the form of a high commission. Likewise, you shouldn’t be shortchanged on service because you don’t live in a Sandton penthouse,” adds du Toit.
When asked what sets Leadhome aside from other smaller estate agents, that can operate like startups in order to make sales, du Toit said smaller players need to charge higher fees in order to cover high fixed costs. Their small size means they’re also limited to how many properties and potential customers they can handle at a time.
The founders see every estate agency in South Africa as competition, which is quite a number of competitors. These range from national agencies like Pam Golding and Seeff, to locals such as Firzt and Jawitz.
Aside from the pricing, the company operates on a digital platform, which is a core part of Leadhome. Besides listing all of the properties currently available on the startup’s books, the website offers some freedom to its users. The system allows the user to schedule times to when they’d like to see a property that suits themselves and the seller. Sellers can also book meetings with someone to meet you and evaluate the property. The platform has been designed with a clean and mobile interface in mind.
Once booked, a Leadhome member will visit your property to compile a comprehensive evaluation and explain the process to you. Once the property advert has been compiled it will be sent to the seller for approval and listed. All properties are listed on major estate agent portals, such as Property24, IOL Property, and Gumtree.
“Additionally, client service standards continue to be more suited to the 1970s than the 20-teens; limited operating hours mean that clients struggle to get hold of their agents, resulting in unnecessary stress and confusion,” says du Toit. He goes on to say, “Almost everybody has a negative story about their experience with estate agencies—resulting in estate agents being one of most disliked occupations in the world.”
Their online platform has a live chat service function with staff assisting users at the drop of a hat. Staff are available from 6am to 10pm each day, which is more than most estate agents offer. Staff are employed with a fixed salary and are incentivised for customer service as opposed to making a sale at all costs.
The biggest challenge faced is convincing clients not to accept commissions charged by traditional estate agents and that this is a new, viable way of working.
Leadhome is currently only available in Johannesburg. The company will be expanding its coverage to service Pretoria by March 2016, and Cape Town by June 2016. It will also be expanding its offerings, such as rentals and standalone businesses along the lines of property management and property technology.