The iProperty Company is on a mission to revolutionise the way homes are bought and sold in the UK – and its plans don’t include estate agents. The SellingUp.com blog interviewed CEO John Candia about the ‘£2.5 million campaign’ to make his private property listings website the next Airbnb.
‘Total opposite’ of Rightmove and Zoopla
Fast-growing start-up The iProperty Company is in the middle of a crowdfunding push to raise £500,000, and that’s just the beginning.
There is, says chief executive John Candia, a ‘very big name’ investor lined up and a deeply committed – and wealthy – co-founder in Brian Blake, the entrepreneurial former MD of Swinton insurance.
Together Candia, 39, a former soldier, and chairman Blake, 71, are determined to smash the hold that estate agents have on the property market.
Their weapon of choice? An Airbnb-style private ‘for sale by owner’ website and app which they hope will soon rival the big portals like Rightmove and Zoopla.
“I know it’s a massive mountain to climb when you look at comparing yourself to Rightmove or Zoopla,” said Candia, who was a sapper in the British Army’s Royal Engineers before becoming a property developer.
“Ultimately though I think that people who go to search on portals like Rightmove and Zoopla are guaranteed to be put in touch with an agent, and I’d like to build a site that does the total opposite.
“I’d like to guarantee anyone that searches on our site that they go straight to the owner, and I think ultimately we are on the right lines.”
Candia says he believes estate agents add no value to the property market, a view which inspired his vision for The iProperty Company (TiPC).
“I don’t think agents give you any reassurance,” he said. “If anything they hinder the operation. Dealing directly with people you get a true picture of what is going on. You’re not relying on someone in the middle.”
Estate agents are banned from listing on theipropertycompany.com, and currently the majority of its 10,000+ properties are new build homes by developers like Barratt, Taylor Wimpey and Persimmon, eager to improve profit margins by cutting out the middleman.
The developers have come on board since Candia secured the support of the National House Building Council, but now TiPC is setting its sights on an even bigger target – signing up millions of private home sellers in the UK and around the world.
£2.5 million marketing war chest
A TiPC spokesperson revealed to Selling Up that the battle plan is to hit the UK market hard and fast with a substantial marketing spend due to begin “aggressively” around early May 2015.
Candia provided more detail: “We are just raising £2.5 million which is going to be entirely spent on marketing. We have a target of 125,000 listings by this time next year.”
He said that they are well on the way to fully financing the project through a mixture of private investors and crowdfunding – a popular way of attracting lots of small investors online.
At the time of writing, TiPC’s £500,000 campaign on crowdfunding website Seedrs.com had attracted 80 investors and had reached £290,200. The TiPC crowdfunding bid was tipped as an ‘investment pick’ in London financial newspaper City A.M and the company was also given a positive analysis in a Financial Times blog.
Candia said: “Half a million of what we are raising is through Seedrs, with two million going on in parallel through high net worth individuals and traditional venture capital so hopefully within a week or two we’ll have a very big name who’s joining us as a major investor.”
He would not be drawn on the identity of the investor but added that TiPC is also working on a deal with major websites that could deliver him large volumes of web traffic.
He said: “We are in talks with two companies in particular, one in the UK who spend £70 million pounds a year advertising and this is a price comparison website. What we’re doing is, we’ll be able to offer their services but in return we’ll have a presence on their home page so we’re about to enter a phase of a lot of exposure.”
Estate agents ‘get in the way of a negotiation’
Candia’s business partner is Brian Blake, former managing director of Swinton Insurance who became a multi-millionaire when he sold his stake to Sun Alliance in 1988 and added to his fortune by setting up a financial services business which was sold for £40 million a decade later.
Now a wealthy veteran entrepreneur with various property interests, Blake, 71, became disillusioned with paying estate agent commissions.
In his online appeal for crowdfunding, Blake wrote: “In my own experience most estate agents get in the way of a negotiation and I am the kind of person that likes to sort things out for myself. I believe that I can sell a property I own more effectively, because I know it well. I also prefer to deal directly with the owner when buying because a middle man often slows things down.”
Although TiPC has an office in East London’s Old Street tech hub area known as ‘Silicon roundabout’, the firm is headquartered in Majorca, where half-Spanish Candia lives.
Blake and Candia met socially when their wives became friends, and the pair developed the idea for TiPC in 2012 after discussing estate agent commissions, which are typically 5% in Spain.
Candia told Selling Up that their philosophy is to bring buyers and sellers together and from there “both parties are more than capable” of completing the transaction without an estate agent.
“The owner will decide, ‘listen take it off the market, I don’t want anyone to come around and view it while we pursue this particular offer, or not’. The moment the owner says take it down from our site it’s immediate,” he said.
“It’s much more efficient, there’s no delay, no sort of ulterior interest at any stage, it’s just between the buyer and the seller. This is the whole thing really, it’s just stepping right out of it and let the two people that are actually going to be buying and selling to get on with it really. Agents are a funnel, it’s passing on information.”
On the role that traditional estate agents play in valuing properties and helping home sellers decide on an asking price, Candia says his recommended automated system would work just as well.
“People who own homes, they know what it’s worth. If there’s any doubt they can get a valuation through us for under £20 from Hometrack, which is the largest automated valuation provider in the UK. Over 90% of UK lenders use them.
“I think owners are the ones at the end of the day who are going to say ‘I accept the offer’ or ‘I don’t accept the offer’. It doesn’t matter if it’s come from the person direct or the agent. I don’t think there’s any need to get involved in the negotiation. Both parties are more than capable.”
‘Encouraged’ by disruptive success of Airbnb
By cutting out the estate agent middleman, TiPC intends to have the sort of disruptive impact on the property market that private accommodation rentals site Airbnb has had on the travel industry.
Candia said: “When Airbnb entered their market there was already a very established company doing well but Airbnb managed to come in and do it with a very beautiful site which was efficient and well presented. It encouraged me to do that sort of thing.
“There are a lot of comparables between us and Airbnb. There are similarities in the fact that we are going to encourage our owners to really talk more about their local community, and more personal things about their home.
“I think that everyone has been so used to the traditional estate agency way of describing your home that even when individuals list their property on our site they almost write exactly as if they were an estate agent, so we’re going to start bringing in things saying ‘listen let’s talk a bit more about stuff that only they will know which buyers will find incredibly useful’.
“This is the bit that I think overall is the most attractive. It will attract buyers because buyers don’t want to speak to an agent, they really do want to speak to the owner of the house.”
Candia believes the success of Airbnb proves that a private listings concept that removes estate agents from the process will work.
“Who would have thought that people would be willing to rent their rooms out?,” he asked. “I have people questioning me ‘do you think people would be willing to show their own home?’ The answer is ‘yes, I definitely do’.”
Outspending ‘for sale by owner’ competition
Candia dismisses competition from more established ‘for sale by owner’ websites like thelittlehousecompany.com and Houseweb.com, citing the advantage of being 100% free to use plus an ability to outspend them on advertising.
“I think traditionally in the past companies have come up with a sort of fixed-fee model whether it’s £30 a month or £200 or whatever it is, and they didn’t spend much money marketing it, so really it was £30 or £200 not that well spent,” he said.
“It may be effective, you may sell your house in which case it’s a great saving but we are coming out with a multi-million pound marketing budget so potentially you stand a huge amount to gain by listing your property with us.”
TiPC’s free offering will be largely supported by revenues from referring customers to related services like mortgages, solicitors and removals, explained Candia.
Sarah Beeny ‘didn’t succeed’ at private listings
Just like other ‘for sale by owner’ sites TiPC will not be able to list users’ properties with Rightmove, Zoopla or newcomer portal OntheMarket.com, but Candia claims the need to differentiate from how estate agents operate is so vital that he would not want to anyway.
“I wouldn’t for the simple reason that I think what we are going to have eventually is something very unique for the buyer which is basically a guarantee that they will be put into contact with the owner directly,” he said.
But is he ignoring the lessons of the past?
Before TiPC, the most notable attempt to create a private listings site was television property expert Sarah Beeny’s Tepilo, which after a few years re-launched as an online estate agent – and is now a brand leader.
Beeny is on record as saying she had to change the business model because her customers wanted exposure on the biggest portals – which only take properties from estate agents.
But when discussing why he can succeed with a private listing model where Beeny failed, he blames Tepilo’s early problems on over-involvement in the buyer-seller relationship.
“There was too much interference,” said Candia. “They mediated and stuff like that and this is the problem, you have to decide either you’re going to be an agent – online or traditional – in which case you’re going to get involved in everything, or you’re going to totally step back and let both parties get on with it and that’s what we’re doing. She (Sarah Beeny) tried to do something in the middle and I don’t think there’s any room for that.
“There could be many factors but I’d say the majority is them trying to interfere and not let people actually just communicate directly. That’s probably ultimately why it didn’t succeed.”
He added that technology costs have come down since Tepilo launched in 2009, making a free or very cheap model more viable.
“With the amount of things going on, like server costs coming down, it’s enabled us to do this free listing policy. Back then your server costs would have been expensive, maybe the photographs are limited, and it has to be easy to use, you have to be able to let people list their property fairly efficiently and easily.
“All of those things need a big investment in technology, which we’ve carried out.”
Online estate agents ‘a good alternative’
Candia was less dismissive of online estate agents – a growing budget alternative to the high street that can list properties on Rightmove and Zoopla for as little as £250. He even admitted he would probably use one until his own website gains the traction required for mass exposure to buyers.
“I think it’s a good alternative. If I was looking to do anything, obviously I would go on to The iProperty Company because I have absolutely nothing to lose and a lot to gain, and then I probably would instruct an online agent. If I had any reservations that’s what I’d do,” he said.
“Until we start spending millions of pounds advertising you’re not going to guarantee a very quick sale so I would say a sensible piece of advice would be by all means use an online agent and be exposed to the larger portals.”
He added: “I won’t be saying the same thing in six months’ time when we have masses of marketing going out there and we’re generating millions of hits a month. I would say don’t bother spending £500 or £800 or whatever it is they are going to charge you. But right this second I’d say if you have any doubt and you’re in a rush to sell, use one by all means and use us as well.”
What’s in a name? Possible re-brand coming
Candia’s full name is John Candia Massey but he has dropped the Massey when representing TiPC to “simplify” matters. It is an approach that he may be extending to his business too.
One obvious difference between The iProperty Company and the site that helped inspire it – Airbnb – is the style of name. The former is wordy and quite formal while the latter is the sort of snappy, web-friendly moniker than online users have come to expect.
Candia admitted he is aware that the lengthy name has a potential downside, and revealed they may shorten it.
“Airbnb started off as Air Bed and Breakfast, so it depends what route you want to go down,” he said.
“The thing about names is it’s quite easy to come up with good names, it’s finding the domain name that’s available to match it which is the problem.
“We took advice from a very large marketing company, and we had about 30 domain names and they said ‘listen just go with the name that actually says what you do’ because at least it does what it says on the tin, as opposed to a made up name that you have to really spend a fortune trying to educate people what it’s all about’.
“Plus there is the fact that now with all the search engines everything’s memorised. You only have to type it in once and it’s memorised for the next time around, and if your SEO (search engine optimisation) and SEM (search engine marketing) is done properly you should literally appear at the top if the page anyway so that’s the basic idea.”
He added: “We have actually got TIPC.com, which would stand for The iProperty Company, but until the fact that your name is out there and registered and people get to grips with the fact you are a property company we won’t be going down that route. But ultimately we have got TIPC, it’s much shorter, it’s much quicker, and much easier to remember.”
Whether or not The iProperty Company has the same name this time next year, the real question is whether it will still smell as sweet to its business partners, crowdfunders and venture capitalists.