Turnkey Commercial Properties - Great news estate agents (1)

Well almost! South Africa’s Competition Commission (CC) has published a comprehensive report outlining provisional findings and recommendations of its Online Intermediation Platforms Market Inquiry. It’s open for discussion with the final report to be published in November 2022.

In short, I feel they’ve done an excellent job to investigate and address all the concerns that was raised by me and others. While the CC investigated different industries, I’ve summarised the key findings and recommendations related to real estate for you:

1. Inbound fees

Inbound fees that are charged by Property24 and Private Property to estate agencies to accept feeds from external listing feed platforms to be removed; A current fee of R500/month per office is charged.

This has been a thorn in our and other service providers’ sides switching clients or onboarding new agencies as some are reluctant to pay the extra fees. I welcome the recommendation and believe it will give agents more freedom to choose a listing platform of choice without being penalized.

2. Access to listings

Leading listing syndication providers must operate with 3rd party platforms to supply listings on request by business users for no fee.

As a property portal, you’ve lost 50% of the battle if you don’t have access to all the listings. This explains platforms holding on to their listing data at all cost. I welcome the recommendation from the CC to remove these ringfenced data islands and promote a level playing field. Portal owners, rejoice!

3. Portal contracts

Portal contracts with estate agents should permit termination of one month’s notice.

This is a no-brainer. We’ve had this motto from the start as I believe you need to create enough value in your products to not hold your client’s ransom if they choose to leave. I’d like to see this extended to any real estate platform as we’ve experienced countless issues with estate agents wanting to move but are bound by complicated long-term contracts.

4. No exclusivity between industry organisations and online platforms

The Competition Commission recommends the divestiture of the large real estate companies in the Estate Agents Property Portal Company from Private Property.

REBOSA (or any other organisations) should also refrain from coordinating commercial conduct by its members, such as the investment or partnering with specific intermediation platforms including portals which is likely to constitute prohibited conduct under section 4 of the Act.

Ouch. This is something I’ve objected in 2017 through the same Competition Commission with the takeover bid of Private Property by Caxton Media, Bond Originators and large real estate companies. In short I felt that it was not inclusive enough, would empower another listed company with a majority share, and kill innovation in the space. I’ve failed at the time.

Full circle and the damage has been done. In the process, we’ve lost time to empower promising portals and eager entrepreneurs with the chance to challenge the status quo. Luckily the CC has now identified this as a major stumbling block and we have time to untangle this conglomerate (pending final recommendations) and move forward.

I think REBOSA & EAPPC misjudged the downstream impact of this move with its exclusive partnership and shareholding with Private Property. However good intensions there may have been, they could have lowered the risk of relying on only one company to ‘save the industry’ and create a more competitive and inclusive portal landscape. This has also been highlighted by the Commission:

This arrangement currently undermines platform competition through depriving new platforms of support from the largest agencies outside the two incumbent platforms, and stifles innovation by doggedly picking one champion to challenge Property24.

In many occasions, money was thrown in our faces as key success factor for a portal to succeed, and REBOSA downplayed the chance of anyone else making an impact (through various press releases noted by the CC). In contrast, I believe key success factors in the portal space revolves around having a well designed platform, access to all the listing data, and the right team that can drive innovation at a relentless pace. Money will always be the cherry on top if you want to make things work, but hey, that’s my view.

The position for the #2 portal in South Africa is wide open, and if the Competition Commission succeeds in breaking down the walls, it will ultimately be a win for agents and consumers.

Author : Adriaan Grové

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