As featured in ‘WhatHouse?’ Magazine: Monday 21st December 2020 by Lizzie Leigh
Spring’s CEO, Cormac Henderson, tells us how its home buying service promises speed, certainty and confidence to sellers. We hear how speed and certainty are the main drivers for sellers using Spring’s home buying service.
1. Cormac, as CEO of Spring, can you give us a brief overview of the company?
Spring is a new national home buying service that gives home sellers speed, certainty and confidence in the sale of their property, allowing them to make their onward move. While the Spring brand and slightly updated business model is new, we were previously trading as National Property Trade since 2004.
We also actively support property developers with sales and part exchange programmes. In these cases, we are effectively buying the seller’s property on behalf of the developer directly.
2. What are the main benefits for sellers using a service such as Spring?
Spring frees consumers from the uncertainty and stress of selling their home and complex chains by buying their property for a fair price on a date of their choice, completing in as little as seven working days. There is a clear need for this – we conducted independent research looking at 1,000 people who had sold on the open market over the past two years; on average it took over eight months, while 47% of respondents had experienced an offer falling through and 85% had to make costly home improvements before selling. Spring can free consumers from these headaches.
3. Are there particular property types that Spring tends to purchase more often than others?
We purchase all types of property, from small flats to large houses or highly ‘unique’ homes, however our sweet spot tends to be mid-sized houses outside of London priced from £100,000- £600,000.
4. What might a typical client look like in terms of their personal circumstances?
Our customers are extremely diverse but share a common thread in being motivated by time and the desire to move on due to a change in circumstances – whether a new job, a growing family or a need to move children for school. An increasing portion of our business is retirees who are looking to downsize and move to a specialist retirement village – they have often already identified their dream property and don’t want to wait on the open market to sell their existing home.
On the corporate side, our clients include a range of housebuilders and retirement operators. Here, we take a bespoke approach to partnerships – whether acting as a full part-exchange provider with end to end support or as a consultant that can advise on funding, customer experience and marketing.
5. How can sellers be reassured that Spring will pay a fair market value for their property?
We base our offer on three independent valuations – two from estate agents and one from an RICS-qualified surveyor. We use an eight week valuation, which takes into account market conditions for the previous eight weeks, allowing for more accurate pricing. We’re so confident in our valuation that if we subsequently sell the home within six months for a higher price than the valuation, we pay the seller the difference minus the home buying fee. That is the ‘Spring price promise.’
6. Do people have to renovate or decorate their properties ahead of a sale?
Homes sold to us do not need to be renovated or prepared for sale. We have acquired a very extensive range of properties in various conditions.
7. How does the company carry out viewings on the homes they’re buying?
We typically use two virtual estate agent viewings, as well as one physical viewing by an RICS surveyor. Our research found that ongoing viewings were among one of the pain points of using the open market so we have worked to find a solution that minimises this.
8. Spring typically pays full market value for a property and charges sellers circa 10-15% in fees; this is significantly higher than traditional or online estate agency fees, how do you justify the higher rate?
We are carrying all of the risk, holding and resale costs as the purchaser and take on full responsibility for the onward sale of the home. Ultimately, it is the speed and certainty that carries a premium, similar to how paying for next day delivery on consumer goods costs more money. We acknowledge that this model isn’t for everyone – but we want to give the consumer the choice and for many people, the certainty is worth the concession in fees.
Our research also revealed that 28% of people who sold in the past two years on the open market would have been willing to pay up to 10% in fees for the guarantee of a quick sale within a month, with 10% willing to pay over 10%.
9. Spring has circa £300m in annual home buying capacity, how is this capital raised?
Our funding has been secured through a fundraising process and comprises a blend of committed equity and debt, meaning Spring can draw on this funding as required to expand the business operation or support new partner property acquisitions. It provides Spring with an unrivalled ability to deliver transactions quickly, enabling partners and customers to reap the benefits. The funding is believed to be the highest in the UK for this type of business.
10. And finally, how has Spring been performing so far and what are your aspirations for 2021?
We have enjoyed a strong initial response to our new brand launch. The consumer response has been particularly encouraging during our initial test phase. We look forward to showcasing the brand in 2021 through a multimedia advertising campaign.
With the recent vaccine news coming to the fore, I’m looking forward to an optimistic 2021 as normality starts to return and the economy starts to pick up. We expect to see a further societal shift that puts choice in the hands of the consumer; from how they book transport to ordering food, conducting their shopping, or indeed selling their homes!
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