Trading places
A real estate start-up called Igglo has received a lot of media attention in Finland recently. Their catch: to create a stock market for homes. The guys have pictured practically every building in the capital region and now ask people to submit expressions of interest for any building they like. The Igglo guys then probably call through the residents. They claim to save costs since they take “only” 2.85% fee for print-media sales or 1.85% for web-sales. Finally, Igglo tries to create an open database of actual home prices building by building.
I browsed their site and ads through with some interest since just last week we sold our flat in Helsinki and bought a new home from Espoo. Igglo certainly was not involved… on that basis, my 5 cents go as follows. Igglo might sink deep because:
(1) Housing market is not like stock market. If some asshole calls or mails me because someone has “crossed” our home in some fucking website I call that spamming. It simply sucks. I hate spam. My experience tells that the housing market is a services market all over the place. You simply cannot commodify it. And you don’t market services through spamming.
(2) They are not that cheap. Sure, the major agents in Finland quote 4.88% fee as a starting point but practically they will quote you immediately something like 3.5% if you just ask “how much is this really gonna be”. Ask more and you soon understand that the sales guy gets his/her monthly salary from the fee (typically 40-60%). So the question is, how much salary does he/she need. I think 2-3K is definitely a decent salary for such a job so you end-up in something like 5K if another 2-3K goes to the firm. Our fee was 5K. Because the sale price was 240K, that means basically a 2% fee for one of the major agents. Igglo’s 2.85% is therefore at least 30% too much. – Igglo’s web-price is ridiculous. If I put my home in a competing website like Oikotie that will cost me less than 50 EUR per week, or 0.000x% of the sale price.
(3) Their pricing database is not credible since they have access to their own sales only. Finnish government will probably launch an official database later this year.
The best part of Igglo is its nice website. Map search and the building database do work. Thus, when Igglo dies, I hope the map is not held ransom but let free. We’d get almost Google maps for others to build on.
