The Guild of Property Professionals is to bring the US iBuyer model of purchasing homes to the UK property market for the first time.
Its initiative was announced yesterday at its packed annual conference in London.
During the presentation by its Group Operations Manager Phillipa Legg she asked the 400 or so delegates what an iBuyer model was, but just one stuck their hand up, highlighting the uphill task the Guild has to persuade UK agents to embrace this very American idea.
Over the pond approximately 5% of homes are sold via iBuyer platforms such as Zillow but in some states up to 40% of vendors consider using them.
Like its US counterparts, the Guild’s new OfferHive platform will enable agents to find buyers for properties whose vendors cannot wait for a buyer via the traditional sales process.
It will also pay agents a fee both when the property is bought via an iBuyer and also when it is later sold on.
The Guild has been building the platform for some time with two pilot estate agents, one of which is seven-branch firm Thomas Morris.
Agents are now to be on-boarded in tranches of 20 agents starting on 1st May.
“While the concept was conceived in the US, and we know from experience that not all facets of the US property market travel well to the UK, with so many homebuyers finding themselves in a property chain iBuyers could easily integrate and transform the way homes are bought and sold,” says Legg (left).
She says the OfferHive platform is designed to compete directly with the vast array of ‘quick sale’ companies that have sprung up in the UK and instead offer vendors and buyers a tech-backed system that uses an Automated Valuation Model to create offers on homes for vendors, and then match them with qualified investment buyers.
The Guild is keen to reassure member agents that they will do the hand-holding between the parties and be involved in “every part of the transaction,” says Legg.
“Agents will be able to direct vendors to the OfferHive platform or we can provide a white-labelled button on their own site to attract leads.”
The iBuyer model is not without its critics. For example, proptech expert and Unissu co-founder Eddie Holmes says iBuyer platforms can end up with huge liabilities on their balance sheets and that, therefore, tiny changes in markets can cause them financial difficulties.
He also warns that [for the platforms] the margins can be slim and that, if other iBuyer platforms were to open in the UK and begin competing on the prices offered to vendors, these margins would be squeezed.
Real Estate Analyst Andrew Stanton (left), adds: “Having analysed iBuyer in the US, it is not yet a proven mature model and selling a big asset at 90–93% of market value [the Guild claims 96%], for a quick sale, is a big ask.
“It may appeal to a few of the tech savvy younger generation in need of a quick liquidation of their assets. But my 32-years of selling property says iBuyer is a marginal model with limited market potential of maybe of 5%.”
Industry consultant Mike Day of Integra Property Services (left) says: “In USA the likes of Zillow, Redfin and Open door have spent billions of dollars but yet to show a profit, and are taking a very long term view on growing market share.
“I am healthily sceptical – all for new ideas and services or products but whilst I can see some sellers being interested, I am not sure how deep the operators pockets are and whether the ‘conservative’ UK market will enable it to be financially viable.