Chain reaction
by Anh Nguyen
Sarah Beeny is fronting a new online tool designed to help first-time buyers onto the property ladder by helping them plug their mortgage funding shortfall. Anh Nguyen investigates.
In between giving birth to her third child and being hospitalised for appendicitis, TV presenter and property guru Sarah Beeny has also found time to launch a new estate agency tool.
With property prices predicted to plummet 30% by next year and mortgage lenders continuing to make it difficult for first-time buyers to get a foot on the housing ladder, Beeny, who has 15 years’ industry experience, considers now to be the perfect time to launch completingchains.com.
The website, which Beeny is developing in partnership with estate agent Matthew Southey, IT entrepreneur Chris Goodall and Phillips Solicitors, builds buyer chains to which first-time buyers are matched, providing their buying requirements correspond to a property’s features.
Agents must register each property for sale on the site, logging 10 of its best features, and six requirements for each prospective buyer.
Agents can only register first-time buyers on the site if they can show that they have sought financial advice, proving that they can secure a mortgage.
Once clients’ details are uploaded, the site displays first-time buyers’ available funding, which enables agents to negotiate with sellers further along a chain about reducing their asking price by as much as the shortfall.
The idea is to smooth buyers’ shortfalls across the chain while minimising the amount of equity by which sellers need to reduce their asking prices.
Beeny says: “Not only does it enable firsttime buyers to be able to buy a home they can afford without borrowing loads of money, it enables everyone to avoid massive drops in the value of their homes.
“Moreover, it means that buyers don’t have to trudge around estate agents and register themselves with all of them; they can just sit at home and the agents will come to them.”
Southey adds: “It is difficult to understand why someone wouldn’t want to make the small adjustments [in price] necessary to make it work because under current sales processes, the losses are huge.”
Asking prices are accessible to all agents involved in the chain via the website at any time.
“The ability for agents to view all the potential links in the chain prior to sale agreed means they can demonstrate to a vendor that a complete chain can be achieved and enables them to use their skills in negotiation to get the best deal for everyone involved,” says Beeny.
The concept is similar to a service being offered by Findsyou.com, which works by allowing buyers to register online ‘wanted’ advertisements on the site, detailing their exact property requirements to which agents can match corresponding stock.
But the similarity between the two sites ends there.
Findsyou.com is limited to a transaction between two parties while completingchains.com relies on co-operation between buyersand sellers and their agents, as well as between agents themselves.
Negotiation
Chains can in theory be infinite, but they will be limited to around eight.
“In our test data the chains were very long, so we have narrowed them down,” says Southey.
“It is better to present five good opportunities to an estate agent than 100 rubbish ones. We will ensure the opportunities we pass to estate agents are good and that when they have got the chain information in front of them, they are only a little bit of negotiation away from making a deal.”
To further minimise sales falling through, the system identifies more than one potential buyer for each chain.
“You’ll always find people who maybe don’t want to help in a particular chain, but the beauty is that any one house could have two or three people registering their interest, so there are two or three opportunities for any one house sale,” says Southey.
Partnership
The completingchains.com team is in negotiations with Savills and Foxtons about their use of the site, as well as Hamptons International.
In terms of service standards, agents must be members of the National Association of Estate Agents or Ombudsman for Estate Agents’ scheme while agents must prove that clients can secure funding.
And, of course, there’s the transparency.
“It has so much visibility that if you are going to be a dodgy estate agent, there is no point in you joining the site,” warns Beeny.
Longer-term benefits of the system, claims Beeny, include help in stabilising market pricing.
A monthly administration fee of £50 is charged to agents for use of the site, with £150 commission being paid to completingchains. com for each successful sale.
“For the admin fee, we pass the leads to estate agents, they advertise on the site and they share a lot of the press we have.
“Our consumer-facing site will also redirect consumers to agents advertising with us,” says Southey, who has been working on the concept of completingchains.com for the past two years.
The only possible barrier to the success of completingchains.com is older agents’ resistance to the cultural change of online marketing.
“It is a new way of looking at the market, but agents who are dinosaurs and can’t cope with change and who are more concerned about their business than actually giving a good service will not be able to take this on board and won’t want to do it,’” says Beeny.
But Peter Bolton King, chief executive of the National Association of Estate Agents, says: “I think that’s a slightly unfair comment. I would say that some of our more senior members are extremely technically aware and actually very switched on to additional marketing and sales opportunities.”
But he adds: “Regardless of your age, if you are not able to keep up to speed with changes in technology and the way that it can be used from a sales and marketing point of view, then you probably wouldn’t still be in business now and you certainly won’t be in the future.”
Plans to roll out completingchains.com nationally are expected to follow the launch in London and the south of England on September 1. International expansion is also being considered for the future.
“Because of the visibility both before and, most importantly, after agreeing the sale, the template is set out for a good sales chasing
process.
“The fact that there are different ways of working throughout Europe doesn’t restrict this,” insists Southey.