Bringing buyers and sellers into direct contact while cutting out the agent is the basis for Web sites seeking to remake the traditional property purchase process.
Making property a self-service sector
Don't you just love the idea of cutting out the middleman? After all, Dell did it with computing and Amazon did it for books, so why not try it in real estate? The property market in the UAE, particularly in Dubai, was rife with self-appointed property brokers who had been snake-oil salesmen in a previous life or had just learnt how to spell "yield" the very morning they were pitching a customer about rental returns on a prospective apartment. Unfortunately, there were far too many brokers and far too little common sense in the market.
The phenomenal growth in villa and apartment demand had left an inordinate number of customers frustrated at not being able to buy a property while the market was hot. The majority of brokers would not return calls, would not show up to viewings and would have the attention span of a gnat as they fiddled with their mobile phone and fidgeted with the keys to their super luxury convertible. Thankfully, the Real Estate Regulatory Authority (RERA) in Dubai recognised the abuse that customers were getting from dodgy brokers. It implemented a law which forced all brokers to register with it and undergo an initial RERA-instructed course. This was a step in the right direction.
But then it happened, the now all-too-infamous own goal which wiped out demand in the property sector. Prices and supply were too high to sustain a market in which looking for an end user was akin to searching for Inca gold in the Himalayas. Self-appointed brokers disappeared and only those who were true professionals and customer focused remained. They are the ones still advertising today and those who enjoy a healthy prospect list. So the good guys won and the bad guys got chased out of town; a rather simplistic but happily-ever-after moment nonetheless.
The problem for the property brokerage community was that something else happened along the way, something that entirely changed the customer-broker relationship. Due to the incompetence of the now defunct self-appointed brokers, customers had lost trust in the brokerage services they were being offered. As anyone in the sales game knows, once you lose the customer's trust, you lose their custom. Which is why if the chance came to cut out the middleman, or to use the correct business jargon, "disintermediate the broker from the transaction", it would represent an interesting proposition. It would create the opportunity for sellers and buyers to deal directly with one another.
A precedent for this delightful situation already exists in the US with the successful online site forsalebyowner.com and in Britain with the less slick but equally compelling cutthemiddleman.co.uk. Both sites aim to bring together buyers and sellers while omitting the broker from the scene. The beeyoot.com, service, which runs on the same principle, seeks to offer residents of the UAE a similar choice, says Hashim Ahmed, its managing director.
"Beeyoot facilitates communication between all real estate market participants: sellers, buyers, landlords, tenants, brokers, bankers, attorneys and media by using social media tools," he says. "Beeyoot carefully safeguards and moderates member actions and supports prudent procedures in communication and transactions by providing help, advice or broker contacts on request. "Open communication and transparent operation of the service is the key to a trustworthy market practice amongst our members."
Mr Ahmed agrees that though property is not akin to selling books, disintermediation has its place in real estate. "The for-sale-by-owner service creates a new easy way for selling and searching real estate," he says. "It saves time. Direct connections will also increase trust and transparency in the market. And if you want to involve a broker, you can do it during the process. This is a new kind of flexibility which can facilitate trade."
While the online services may offer more personal involvement in the purchase process, Kit James, the managing director of the brokerage firm Rickerby Martin, believes their popularity is more a question of timing. "I think it's too early in the development of the region for this process to happen just yet," he says. "The UAE has achieved an amazing amount in a very short time but, as with all developing regions, it is important for both buyers and sellers to have a good understanding of the market and also the product within the market.
"This is something a good agent can help with; they will bring far more to the table than just putting buyer and seller together." While Mr James concedes there were some extremely poor brokers in the market, he points out that one of the main difficulties is that the wrong person pays the agent, which causes a conflict of interest. "In other places the seller will appoint an agent to market and sell his property," he says. "He will also pay the agent. The agent is therefore exclusively acting for the seller rather than the process here whereby the agent is in effect acting as a broker for both parties but being paid by the buyer.
"The other issue is that both buyers and sellers here tend to go to a lot of agents, thus making it very difficult even for the professional ones to do their job properly. This tends to cause confusion and fuel bad practices. What is needed is more clarity, for sellers and buyers to appoint single or at most two agents. This in turn will mean that client care and satisfaction will be improved." Buyers today have a lot more choice when it comes to product and also when it comes to their access channel to that product. Deal direct with the seller or appoint a suave broker. For once there are plenty of qualified brokers waiting around for your business. Something about the customer being king will come to mind, which definitely makes for a happily-ever-after ending.
Rehan Khan is a consultant and writer based in Dubai.