Fancy A Cuppa?
Issue 3 - October 23rd, 2020
I have been spending a lot of time learning the ins and outs of real estate markets around the world to see if there are any insights that could be replicated in the USA. In America, the standard 5-6% total commission fee currently paid by seller's to agents to sell their home is under attack from a lot of angles. It has held strong over the years, but I think we are going to start seeing that fee slowly creep down over the next 5 years. It is already happening in very competitive markets around the country. As I have said many times in other posts I have written: Real estate agents will never be completely replaced by technology, BUT their role is evolving and changing and the agents who refuse to embrace change will be completely left behind as the industry moves forward at a rapid pace.
Here is a snapshot on how house hunting works in London:
1. Sellers hire Estate Agents to market their property online
2. Buyers typically search for homes on their own via sites such as RightMove or Zoopla
3. Buyers schedule showings directly and the home seller meets them there for a tour
4. If buyers want to make an offer then the Estate Agent handles a majority of the paperwork and closing coordination duties and collects their fee from the seller
If a buyer chooses to hire an agent to represent them, then here is how that scenario plays out:
Buy-side agents in London typically charge a fee paid up front before house hunting even begins then an additional percentage-based fee is paid once the deal is closed successfully. The fees vary based on price point usually and the buy-side agents are more frequently used for higher price point purchases. A lot of technology firms have popped up to service buyers to assist with pricing comps and other tools to aid them in their search process.
Would you hire an agent for your home buying search in America if you had to pay them directly or would you go at it on your own?
Newsworthy Links To Share
Order a custom HOME online? Welcome Home launches a new online home buying platform where you can customize your home similar to buying a new car online. They will build the home on your selected land site and deliver it within 6 months. They also just raised some money to expand into new markets.
2020 has been nothing short of strange, and one thing that is insane is that the housing inventory in America is the lowest it has been since 1963. Business Insider dives deep into this issue and ponders whether we will run out of homes for people to purchase in the next few months...
WoHo, a Cambridge, Massachusetts based construction startup, is shaking things up in the "construction tech" world. They are developing raw building materials that resemble Lego pieces that will save costs and time, and they are also building software to streamline the entire process of building structures from the ground up. Learn more about them HERE.
BrikPay, a home improvement management app, launched last week after 23-year-old former contractor Pasquale Scaife noticed “a huge need” for a platform that utilizes big-data to make home improvement more efficient. The company aims to use its AI to reduce the carbon-footprint within the residential construction market (one of the biggest sources of pollution). BrikPay says it is going head to head with industry giants such as Houzz, Thumbtack, and HomeAdvisor.
This is a great podcast breaking down OpenDoor and their future as they continue to expand now that they are entering the public market via SPAC with Chamath Palihapitiya and Social Capital. Thomvest Ventures’ Nima Wedlake joins the Housing News podcast to discuss the housing market’s real estate ecosystem as well as Opendoor’s S-4 filing.