Tech start-up ‘Properly’ aims to change the way houses are bought and sold in Calgary. A technology-based real-estate estate start-up cleverly named ‘Properly’ is hoping to change the way homes are bought and sold in Calgary.
Properly is what is known as an institutional buyer or “iBuyer.” Also known as direct buyers, iBuyers use algorithms to determine the market value. They can make an initial offer to buy the property directly from the homeowner within 48 hours, and the whole process can be completed in a week, with the seller setting the closing date.
The company’s data-driven model is focused on buying only detached or semi-detached homes in the city, built after 1960 and worth $250,000 to $550,000. It is based in Toronto but currently only deals with houses in Calgary.
Ibuyers are gaining popularity on the other side of the border. According to the article, they are seen as disruptive players in American real estate. “iBuyers first emerged in 2015. U.S companies, such as Opendoor, Offerpad and Knock, have raised hundreds of millions of dollars in investment and are operating in over a dozen markets”.
Selling and buying a home is one of the most significant financial transactions in a person’s life, and the stress that goes with it can be tremendous. An Ibuyer makes the selling process much more comfortable.
Clients looking to sell their homes have to pay a service fee properly, like paying an agent a commission. Properly’s average service fee is around 7 per cent, and the cost is based on the condition of the house being purchased and repairs; it needs to be sale-ready.
The company’s motto is ‘Sell your home on your schedule’ and says it helps its clients skip listing, showings, and months of uncertainty, and they can receive an offer for their home within 48 hours at no cost or obligation.
A Sound Business Model?
While the premise sounds very promising, some experts have wondered whether this is the right time for such a start-up to enter the real estate market, given the uncertainties faced by buyers.
Calgary’s real estate market has suffered as the Alberta economy has struggled in near lockstep with oil industry troubles and job losses. According to CBC, the Calgary Real Estate Board reports that detached home sales in the city for January 2019 were down 16 per cent from January 2018, and prices were off by four per cent in the same period.
The CBC article also hinted that some experts were worried about Properly’s entry during an uncertain time.
“Making the wrong decisions on a real estate transaction can haunt you for 10-15 years,” Allan Dwyer, an assistant professor in the Bissett School of Business at Mount Royal University, said.
Dwyer believes that Properly’s ability to move quickly will be attractive to some clients, but some of them may be in a vulnerable state.
“It reminded me a little of how the payday loan business kind of works and is very profitable around the economy’s margins,” he added. “If someone was in a hurry or perhaps desperate, they could want to sell their house quickly, but it’s not always the best frame of mind to sell your home.”
The company remains optimistic and plans to buy about $50 million worth of homes in Calgary, adding up to more than 100 houses in 2019. It also plans to expand to other cities in Canada soon after.