#ExpertsTalk: Has Pam Golding slapped its franchisees in the face?
Pam Golding Properties (PGP) has stabbed the traditional high-commission estate agencies in the heart, and probably damaged the PGP franchisees business through their purchase of eazi.com, the fixed-fee online real estate platform.
This is according to low-commission pioneer Neville Berkowitz, who started HomeBid in 2014.
“We have been waiting patiently for the inevitable entry of a high-commission estate agency into the low-commission space,” said Berkowitz, a property veteran of more than 45 years.
HomeBid’s CEO, Cavan Sheahan says PGP has simply validated “our four-year-long standpoint that there is no need to pay 5% to 7.5% (plus VAT) in estate agent commission”.
“We, after all, only charge a commission of 1.95% (plus VAT), or a minimum of R19,500 (plus VAT),” said Sheahan.
Berkowitz said that while he lauds PGP for taking such a bold move in the purchase of eazi.com, he feels strategic mistakes have been made.
“The first mistake that PGP has made will be financially detrimental to some 5,000 high-commission estate agencies employing more than 30,000 estate agents as they are, in effect, saying you only need to pay R29,500 (plus VAT) to sell your home through eazi.com,” he said.
“The second mistake is that buying a technology platform to buy and sell homes shows naivety of the sub-R2m marketplace in that many sellers are either inexperienced and/or elderly people, not usually tech-savvy, and many buyers are inexperienced and need a qualified, experienced estate agent holding their hand throughout the process.
“The third mistake is expecting the buyer and the seller to use a technology platform to replace the estate agent’s work and still charge R29,500 (plus VAT). This is insulting to estate agents as well as sellers and buyers.
“The fourth mistake is possibly not acting in good faith to its PGP franchisees who now have a competitor owned by the franchisor undercutting them in the marketplace by offering to sell homes at R29,500 (plus VAT).”
“HomeBid’s minimum commission of R19,500 (plus VAT) is 33% cheaper than eazi.com’s fixed fee of R29,500 (plus VAT), and we still employ qualified and experienced estate agents to assist buyers and sellers every step of the way,” said Sheahan, noting that the company learned lessons when a tech-only approach was adopted in its genesis. “We tried the technology platform first and then moved to the estate agency model. And this made all the difference: Our agents each sell between 12 to 15 homes a month. Last month our top agent sold 16 homes.
“We welcome the move by PGP which now breaks the shackles of the high-commission estate agencies upon homeowners who have been led to believe that they needed to pay 5% to 7.5% (plus VAT) to get their homes sold. PGP is now saying you only need to pay R29,500 (plus VAT), while HomeBid is saying you actually only need to pay a minimum of R19,500 (plus VAT) or 1.95% (plus VAT).
“PGP has probably done HomeBid at R19,500 (plus VAT) minimum commission, Leadhome at R39,500 (plus VAT) fixed commission, Property Fox at R35,000 (plus VAT) minimum commission and other new players into the low-commission and fixed-fee space the greatest favour in saying use eazi.com at R29,500 (plus VAT) fixed commission. By implication, there is no need to pay high commission to estate agents ever again!
“At HomeBid, our single biggest concern is about the ordinary home buyer and seller getting the transactional estate agency cost of their biggest asset down as low as practically possible. And at R19,500 (plus VAT) or 1.95% (plus VAT), HomeBid leads the way in the low-commission space with the most sales and referrals from happy clients.”