The property market has been through one of the toughest times in the wake of the Covid-19 crisis that has seen the prices fall for the first time in eight years.
Is tech about to disrupt the property market for good?
This is one of the questions that every stakeholder in the property market is seeking answers to. This article tackles some of the truths about technology and the future of the property market.
For a long time now, there has been extensive coverage of developments in the property industry from both the trade press and in some instances, the mainstream press.
Notably, the focus of this has been new portals that are seen as competitors to Rightmove, an industry heavyweight. This platform is the industry’s market leader though many estate agents do not use it, with reports of increasing fees for the same service rendered. Yet, investors disagree and the company’s revenue has nearly doubled from six years ago.
Other tech-driven solutions include innovative ways of speeding up the conveyancing process that has been necessitated by the need to expedite the process of posting letters, signing cheques, accessing property management tools and the use specialised apps that have made it possible for agents to not only prepare floor plans but also conduct virtual tours with so much ease. After all, these are all necessary in the post-Covid world.
Will iBuyer Shake Up the Property Market?
iBuyer is one of the latest innovations to take on the UK property market. It is not entirely new as it already enjoys a reasonable following in America. So what exactly is iBuyer and how will it shape the property market?
iBuyer is a hybrid solution of property portal, estate agent and most importantly a buyer. This innovation is billed as one that will most likely eliminate cash-burning property portals. In cases where a sale becomes problematic, a buyer can easily swing in and buy the property directly from the seller even though at a knock-down price.
The big question here is ‘Is this a new concept or the best of what other players are already offering?’
Here are 5 reasons why iBuyer may not dominate the property scene in the UK just yet:
- The market is crowded
iBuyer and other firms have been trading in the United States over the years and have made a name for themselves, it is clear why the UK market seems like a good opportunity. However, in reality, knowing they will receive an amount that is less than the full value of the house by about 15%. This is largely attributed to transparency, speed and the certainty of a sale.
- Most sellers prefer the traditional route
While the property market in the UK is massive in terms of its monetary value, it is still an attractive niche as most of the house seller opting to sell through the traditional route. Even then, it is important to acknowledge the fact that the loss of a few sales to iBuyers may be the difference between making a profit and not making anything for some of the agents in this industry.
- Huge advertising budgets
If the new entrants into the market have good financing, then they have the potential of reducing margins for estate agents. The existing buyers like House Buy Fast will begin to feel the impact of this move in a market that is already competitive. As most of the inquiries are generated through online platforms, companies will have to spend more on ads to get the phone to ring.
- Sellers are cautious
Homeowners approach the entrance of new buyers into the market with caution. This is because most of them have experienced or know someone who has been scammed by rogue buyers. The reality is that it takes a long time to build a reputation so that sellers can trust buyers again and rely on them to buy off their property.
Although it looks promising, navigating the UK property market is not an easy task particularly for foreign-owned businesses despite their success in other property markets like the US. However, once these businesses enter the market, you can expect to see a significant change in the manner in which the market responds, even though not for the worst.