Here's why proptech will not replace agents

A recent Property Professional article pointed out that in the US a growing number of estate agencies are using ibuyer technology to accelerate the process of buying or selling property for clients who are in a hurry to make the sale - and asked our CEO Berry Everitt to comment on whether this could become a threat to local agencies already under duress from the economic slowdown and digital disruption. Here's what he had to say:

"We need to distinguish between ibuyer-type programmes and digital/ online agencies, with ibuyer and similar programmes like Opendoor, Zillow Offers and now Keller Offers in the US being specifically aimed at buyers who need to sell in a hurry, usually due to an urgent need to relocate or some sort of personal/ financial distress.

"Through such programmes, the agency itself will offer to become the cash buyer of the property right away, in return for a fairly large discount on the price. In due course it will then resell the property itself at a higher price, making a profit on the difference between the two prices, rather than the normal agent's commission on the sale of someone else's property. What is more, potential sellers who do not "fit" an ibuyer programme will in most cases be directed to a human agent to assist them with a normal sale. The primary reason for ibuyer programmes is thus to extend the offering of traditional agencies by using technology.

"On the other hand, the aim of digital or online agencies (such as eazi.com, leadhome, propertyfox and homebid) is usually to try to use technology to replace traditional agency services, so that they can charge a low commission or flat fee and still be profitable. In recent years we have observed the rise of many "online" agencies elsewhere in the world too, including Redfin in the US, and Purple Bricks in the UK. Frankly though, most of these are just dressed-up versions of the low-commission or flat-fee agencies that have been around for decades and inevitably offer lower levels of service in return for their lower fees - and like those agencies, the digital companies tend not to do very well in declining or even static markets. In fact, we have observed that most of them around the world are "adding back" traditional agents to their offering in order to survive.

"The fact of the matter is that buying a home or investment property is a not the same as making an online purchase of a book, new shoes or a kitchen gadget, paying by credit card and then waiting for delivery the next day. Property sales and purchases are complicated, emotional and essentially 'human' transactions, and the majority of buyers and sellers want a trusted human advisor that will not only guide them safely through the process, but also acknowledge their feelings. This is evident from the numbers: currently all the digital agencies together account for at most 3% of sales (number of units) in our market.

"What is more, low frequency, low volume industries everywhere are much less susceptible to permanent disruption than any other type of business, so we believe that the future of real estate does not lie in the decline of traditional agencies per se, but is in the hands of those traditional agencies that are able to move swiftly to embrace digitization (the use of new technologies) to continuously improve and expand the experience, service and offering that their agents can provide to their clients."