Consumers are now less trusting
By John Graham CEO HouseCheck
Research over the past 10 years on consumer behaviour shows clearly that all over the world the common denominator is a search by the consumer for something to trust.
Easy access to independent information via the internet, the banking scandals, political scandals and increasing incidents of what is perceived to be blatant corporate greed, have all left the average consumer extremely wary about what the corporate world is saying.
In South Africa there has been no real change for a century in the way houses are sold. Now the wheel is beginning to turn with banks and powerful estate agencies increasingly being seen as unsupportive of the home buyer’s consumer rights.
Consider: The South African real estate industry is still stuck in a time warp of high percentage-based agent commissions, high percentage-based property legal fees and a system which is heavily weighted against the consumer in favour of the seller.
It is true too say that the cost of doing business (buying a house) is now considerably higher in South Africa than in most parts of the developed world and the level of disclosure and transparency to the consumer is much, much lower.
In the age of the internet, the South African real estate industry is a glaring example of an industry which has not released additional consumer value by moving towards a business model of lower costs and increased disclosure and transparency.
The current business model of the real estate industry in this country surely cannot endure and is ripe for a shake-up. Industry players who successfully move towards a lower and fairer cost structure and better care of the consumer will be the ones that survive going forward.
Estate agencies which cling to a 5 to 7 percent commission structure, the unfair seller advantage provided by the voetstoots clause and seller-appointed transferring attorneys (who also charge a very high percentage based fee) are in for a rude awakening. The South African house market, worth well in excess of R25-billion a month, will not long be able to resist consumer demands for better information and lower costs.
In the home inspection industry we already see increasing signs of this happening. Home buyers/consumers are increasingly demanding better information on the houses they are considering buying. First time buyers and astute young professionals are leading the charge.
• Consumers now want better and more trustworthy information on the real condition of the house they are interested in buying. They want to have a full picture of the defects and potential defects and what these will cost to fix. Consumers/home buyers are increasingly realizing that sellers and their estate agents are neither qualified nor able to provide reliable and comprehensive information on the actual condition of the house – especially as regards areas such as the roof, foundations and services such as plumbing, electrical and gas. Companies like HouseCheck now make it very easy and cost effective for home buyers to obtain reliable information on which to base their buying decisions.
• Consumers also want better and more reliable data on market prices. Various companies linked to the Deeds Offices, such as Lightstone and Windeed/Property24, now make it very easy for astute home buyers to decrease their reliance on what the agent/seller is saying and to cheaply obtain independent price information. This data includes actual recent house sales in the neighbourhood, price trends and also a computerized model of what would be a reasonable price for the house the consumer is interested in buying.