2019: Battle of the fixed fee estate agencies
- Eazi has raised their fixed commission to match that of Leadhome. R30-R40k seems to be the norm for fixed fee agencies in South Africa.
- When Pam Golding bought the startup in Aug last year, Eazi had 201 homes for sale and Leadhome 1700.
- 4 months down the line, Leadhome has now opened the gap and has +- 2347 mandates for sale with Eazi coming in at 168. Eazi is experiencing slightly negative growth while Leadhome has grown exponentially. At the rate and considering their expansion in Bloemfontein and PE, Leadhome should easily pass 4000 mandates before 2020. No doubt that they (and many other fixed or low fee agencies) will put further pressure on traditional agents to justify their commission.
- In August 60% of Eazi’s properties and 42% of Leadhome’s listings were over R2m. Today Eazi has 62% and Leadhome 48% of listings over R2m. So still not targeting Dr Golding’s “R500k-R2M high volume” price segment. Will Pam Golding throw serious money into Eazi to challenge Leadhome?
- Fixed fee agencies work on volume to cover operational expenses, and to get those listing mandates you need plenty of money and/or clever marketing to create awareness with sellers. This makes it very difficult for any new fixed fee agency to launch and gain traction. It is a long term game.
- In the UK, PurpleBricks has proven the online hybrid model works, and with a recent £125 million investment from media giant Axel Springer they are prepared to invest millions and make big losses every year to build market share. Are you willing to take that same risk with a sound business model and financial backing?
- Based on the current enquiries we receive at Entegral, we are most likely to see more fixed and low fee agencies launch in 2019. Question is, how many of them will have the financial backing to make it into 2020 and will they pose a threat to the traditional real estate model in South Africa?