How the internet broke estate agents
Traditional estate agents need to embrace new business models or risk becoming obsolete as digital disrupters move in on their turf
FNB’s recent launch of an app that allows its customers to trade their homes privately among themselves at no cost couldn’t have come at a worse time for real estate agents. The livelihood of SA’s estimated 40,000 estate agents has come increasingly under threat in the past few years, with the entry of a number of digital disrupters challenging the way in which South Africans have traditionally bought and sold property. New online listing platforms such as Leadhome, PropertyFox and HomeBid offer a cheaper alternative to the average commission of about 7% of the sales price (plus VAT) that sellers typically have to pay estate agents to market and sell their homes. Most new entrants charge commission of only 1.5% (plus VAT) or a flat fee of between R35,000 and R40,000 — payable once a sale is concluded. Leadhome, for instance, claims that its fee structure means a seller of a R1.5m home will save nearly R75,000 in agent’s fees. The biggest difference between the business models of tra...