Nested, the online agent that provides a cash advance to allow vendors to buy their next home if they haven’t managed to sell their current one, has raised a further £120m in funding.
The latest round is a mix of equity and debt, and has been raised from venture capital firms Northzone, which backs music streaming service Spotify, and Balderton Capital, which backs Betfair.
Nested guarantees to sell a home for a certain amount.
If it fails to do so within 30 days, then it offers sellers an advance of around 95% of the value of their property, making vendors chain-free. If it cannot offer an advance, then sellers are free to disinstruct Nested and receive £1,000 cash by way of an apology, or continue to list at 1% commission.
It claims to have helped 400 home owners in London to move.
Launched in late 2016, Nested has now raised a total of £165m including the latest round.
In return for offering sellers a way of moving chain-free, it charges commission of between 2% and 4% plus VAT. It takes the hit if the property fails to sell above the sum it has advanced – meaning that it is heavily reliant on getting its initial valuations right.
However, co-founder Matt Robinson says that the firm is selling properties for 1.5% higher than predicted, and that where an advance is required, the average sum lent is 94.6% of valuation “and we typically sell for 6.9% above that”.
Robinson claimed to publication Tech Crunch that traditional agents do not track the accuracy of their initial valuations, while “online players to do their best to obscure the fact that they sell only roughly four out of ten of properties they take on – ie, most customers pay them £1,000 up-front to not sell their house and are left out of pocket”.
While most of its property listings are inside London, some are in adjacent counties.
Robinson said: “We’re excited to receive the backing from some of Europe’s top VCs who share our vision for fixing the age-old problem of buying and selling homes.
“We are building an incredible team to offer an unassailable service with the most progressive technology in the property industry.
“This investment will allow us to continue solving the problems that prevent people from moving home with ease.”
https://nested.com/performance
* Separately, Moneypenny – the telephone and live chat service used by a number of estate agents – has had a “significant” private equity investment from ECI Partners, valuing the firm at over £100m. Moneypenny will invest the funds in technology and expansion in the US.
Comments (11)
So, here we have a supposedly funded company to the tune of £165 MILLION POUNDS and yet….. its one and a half months overdue in filing 2017 accounts at companies house.
This has got disaster written all over it or, as you say, they will be so cautious that it will never scale. Glad its not my money
Well the advertising writes itself, doesn’t it?
“Our fees are between 1% to 1.5% versus the typical call centre agent sector of 2% – 4%.”
But we wouldn’t do that, because we’re not dishonest in our advertising.
It works likes this….”So Mr and Mrs Vendors, your home is worth £200,000 but i want to list it at £180,000, and then after the first 30 days we will offer you £170,000″….then several months later it sells for £195,000….BINGO!
Question, are they paying the 2nd home stamp duty surcharge?
In fairness I know someone who works there and that isn’t how Nested works. It works on genuine valuations which is why it so selective on the instructions it lists.
Well this certainly isn’t a new concept then if this is how it works – Springbok Properties have been doing this for ages.
Morning ArthurHouse02,
You might have been misinformed with how Nested works, so hopefully I can help clear some points up for you.
Our aim is to give a seller an accurate valuation based on a combination of data and expertise from our experienced team. To give context, our approach has given us 100% accuracy in 2018 so far.
By giving a fair valuation, the seller can expect the house to get more interest and gives us enough performance data to offer an advance and become chain-free. It also reduces the time to offer, achieving a sale more quickly than an inflated valuation.
If the house sells for over the asking price, the seller takes all the profit, minus the agreed agency fee (from 1.2% inc vat).
Finally, we cover the second home surcharge, so the seller pays the standard stamp duty they would expect to pay. We are then able to claim it back once the house sells.
Hope that helps!
Ben @ Nested
I have no idea how this company will ever turn a profit. They are so selective with the instructions they list that they could never scale the business. I’ve heard that they take 1 in 4 and that takes 3 or 4 days of research per valuation. It’s a great idea but to invest £165m in such a niche offering seems madness to me.
I imagine it’s not a case of being overly selective with their valuations and more a case of 3 out of 4 vendors not actually being prepared to accept the genuine valuation figure they provide, especially when all the other agents are systematically over valuing to try and win the business.
Morning hertsagent13,
Our aspiration is not to be a niche player, but rather to fix the big problems that plague home selling, from inaccurate valuations to broken chains – with the aim of making it easier for everyone to sell and buy homes. You’ve correctly identified a challenge for us as to how many instructions we can take on.
Our valuations are data-driven, which provide more accuracy, but the blocker here is us being unable to accurately value the home because not enough data is available. As we continue to grow, more data will become available enabling us to help more people.
However, it is true that data alone doesn’t provide enough accuracy, which is why we have experts on-hand to complete the valuation. This process takes about 5 hours, in addition to a home visit, as is standard with a high-street agent. Using this approach we currently have 100% accuracy with our valuations in 2018.
We are always looking for ways to enhance the business model to increase the amount of sellers we can help, and new products are in the pipeline in the coming months.
Hope this helps to address your points.
Ben @ Nested
Still can’t see how this niche can be upscaled sufficiently to make a profit. Most property does sell. Besides perhaps the other 3 out of 4 simply fried their brains trying to understand it.