Purplebricks and Tepilo are doing it. Even traditional high street agencies, Connells Group and Savills, are doing it. But what is it and why should you be doing the same right now?
Investing in property technology has been a growing trend in the last few years and shows no signs of abating.
In the online agency space, Purplebricks stormed into the UK property market in April 2014, much to the surprise of many a high street agent, who questioned the long-term viability of a hybrid agency model with a flat fee pricing structure.
Nevertheless, 20 months later in December 2015, the fledging business, founded by brothers and former Midlands-based estate agency owners Michael and Kenny Bruce, started trading on the Alternative Investment Market with a market capitalisation of £240.3 million and a share price of 104.5p. The flotation raised £25 million of funding, which the business is already using to expand overseas in Australia.
The Bruce brothers follow in the footsteps of online agency pioneers Adam Day, who launched Hatched in 2006 and then sold the business to Connells Group in November 2015; Russell Quirk, who launched eMoov in 2010 and has spent the last two years fundraising after being backed by Dragons’ Den star, James Caan; and Sarah Beeny, who launched Tepilo as an online agency in 2013.
Now is the time to invest
Most recently, online estate agency, YOPA, raised a staggering £16 million of investment from investors, including Savills, in June 2016, proving why now is the perfect time for letting and estate agents to invest in technology, whatever their business model, if they value their business and want to stay ahead in the game.
As Nigel Poole, managing director of leading property management and estate agency software services provider, Eurolink, says: “Amid continued global economic volatility and political uncertainty, investing in property technology is more important than ever for any savvy business leader who not only wants to survive, but flourish in the future.
“Investing in technology is the only way in which traditional high street letting and estate agents can position and protect themselves against the increasing presence and success of online agencies, which are no longer an empty threat, but a real danger to their long-established rivals.”
Preparing to take on rivals
London-based Dendrow International knows only too well the importance of staying ahead of the game, which is why the estate and letting agency’s management team has spent the last year investing in technology to support an overhaul of its business structure.
Matthew Wilkinson, business development manager for the Paddington-headquartered agency, explains: “The need for high street agents is dwindling as the likes of Purplebricks and Tepilo come in [to the market] offering people an upfront flat fee. What we’re doing is adapting our system [in response].”
Working on a consultancy basis
Eurolink is working with Dendrow on a consultancy basis to help create a US realtor-type business model whereby the agency hires negotiators, referred to by Wilkinson as ‘consultants’, on a self-employed, commissioned-led basis to establish their own geographical territories from which to operate.
The agency, which currently has 15 staff, of which eight are consultants, has one consultant set up and ready to go in their own territory in London, with plans for another two to three consultants to be in place in different locations, also within London, within the next 12 months.
Talks are also underway to have a consultant based in Singapore.
“When I wanted to set this [business structure] up, I spoke to Carl [Nelson, a regional director at Eurolink] and we came up with a way of adapting [Eurolink’s fully integrated property software services] Veco™ to allow these remote workers to build up their own database, which is separate from the office database, so they wouldn’t be able to access information within Paddington, where our [headquarters are] based. It just allows for a way of working that’s really flexible,” Wilkinson says.
Technology must serve a purpose
“It’s about how the technology can help serve a purpose. At the end of the day, it’s about how we as a company can best serve the customer, and obviously by changing the business model to an American realtor-based system, it means that we can always put the customer first,” he adds.
Wilkinson first started working with the Eurolink team in 2010, when he and his team took over Dendrow. At the time, the business was a property management company that managed the property portfolios of multiple investors, some of whom remain invested in the business.
Wilkinson says: “Veco™’s been phenomenal for standardisation across the company. Everything is done on the system, from taking a property on right through to terms and conditions and completion of a sale or subsequent let.
“And the full management package is incredible because now [third party applications by providers such as repairs reporting service ] Fixflo is integrated with Veco™.”
But he particularly values Eurolink’s cloud-based service option, which means that the agency no longer requires servers within its offices.
Mears Group is also investing in property technology to get ahead of the game after expanding its housing management division into student accommodation in September.
Mark Blyth, IT business manager for the division, explains: “[The expansion] almost slowed down our one-system type approach [because] as well as migrating companies we’ve acquired, we’ve also bought a new business stream at the same time.
“It’s been very labour intensive, as some of our legacy systems use a lot of free text fields. Plus [they’re] all custom built systems, so finding the support to work with them has been a challenge.”
But the task at hand soon became easier when Mears drafted in Eurolink to help.
“Eurolink has been instrumental in helping us migrate the information out of [these] legacy systems,” says Blyth.
“Next year is about bringing us up to speed with the market in terms of mobile working and online portals [for employees], which is what we wanted to achieve in the first place,” he adds.
Blyth expects to invest more of his budget in property technology in 2017, which he believes is crucial to be able to grow the business.
He says: “Technology is essential in getting ahead these days. Just a few years ago, technology was something you had and had to support, whereas there’s very little you can do in your business that doesn’t impact on IT now.”
Given that Mears’ housing management division saw revenues increase by 86% to £41.0 million for the six months to 30 June 2016, almost double the £22 million reported for the first half of 2015, and that its housing division as a whole accounts for 84% of group revenues, it is no wonder that Blyth is so focused on investing in technology in 2017 and beyond.
Agency peers with a similar commitment and desire to succeed would be wise to follow suit.