How the “perfect storm” of COVID-19 saw this proptech startup’s sales jump 2000% in two months
COVID-19 is shaking up the property development sector, and startup Balfour Homes is reaping the benefits.
Between an outdated market, a sector turned on its head, and the government’s HomeBuilder stimulus, proptech startup Balfour Homes has found itself riding an exponential growth wave during COVID-19, which has seen its sales leap from $1.5 million to almost $40 million within a matter of months.
‘Soft launched’ in December, Balfour Homes is designed to streamline the process of buying a plot of land and building a home on it.
“I kept seeing the same problem continually recurring,” co-founder James Mullany tells SmartCompany.
Customers were bouncing between different builders, and developers, and getting mixed messages on where to start, and the kind of funds they would need.
It was “an overwhelming process”, Mullany says.
Balfour Homes uses tech to quickly determine a buyer’s borrowing capacity, and then matches them with building packages available to them, as well as any grants they may be eligible for.
All in, Mullany says, the tech reduces a process that usually takes two to three weeks to about 24 hours.
The tech has modernised the new-build process, the co-founder says. He likens it to the way buying a mobile phone has changed — no longer do you have to make multiple trips to the store, test out every feature of every phone under the coaching of a sales rep, before making a long-considered decision.
Rather, you do your research yourself, order online and collect the same day.
The same could be true for buying a land-and-build package. At least, that was the theory.
As it turns out, when people are spending an average of $500,000, they still want an element of human interaction.
In June, Balfour Homes incorporated this demand into its offering. The idea was the tech would still process everyone online, and quickly, but it would also have someone on the ground ready to walk a customer through a display home design, similar to the one they’re purchasing.
As it happened, COVID-19 lockdowns meant face-to-face meetings were tricky anyway, but the seed was sown, and business suddenly picked up exponentially.
In June, the startup processed $1.5 million in purchases. In July, that figure shot up to $19 million. And according to Mullany, sales for August are shaping up to be double that.
“We had over 1,100 enquiries last week,” he says.
“We’re trying our hardest to keep up with the demand … it’s full-on at the moment.”
A perfect storm
Traction is coming “from all angles”, Mullany says.
“People are responsive to our marketing, people are responsive to our Facebook pages, and obviously referrals as well.”
The startup is opening up the property market to those who previously haven’t been able to access all the options, he explains. Those who have been knocked back for loans previously, or who haven’t been aware of the grants available to them, are now telling their friends.
“It’s a frustrating market at the moment.”
The co-founders have also launched a property podcast. While it’s about trends in the sector, rather than about Balfour Homes itself, expert guests do tend to highlight some of the issues the startup has set out to address.
Of course, we’re also in the midst of a global pandemic that has changed the industry. Perhaps oddly, there’s been a surge in demand for home and land packages, Mullany says.
First of all, COVID-19 has forced people to put a pause on life as they know it.
“Everyone was stopped in their tracks,” Mullany says.
“They were able to reflect on what’s important to them.”
At the same time, there’s a whole cohort of people who are still working, but unable to spend.
“They weren’t going to the pub on a Sunday afternoon so they weren’t spending as much. So they got to save a little bit more,” the co-founder explains.
“People had a little bit more disposable income.”
Then, in June the government announced its $680 million so-called ‘HomeBuilder’ stimulus package, offering grant funding for new builds and renovations.
“If there was ever going to be a time to buy, the time is now,” Mullany says.
“Even though they’re seeing the doom and gloom … people are still tapped into the property market,” he adds.
And finally, being a nimble new startup has been a bonus too. The world is changing — consumers are used to using tech to get things done quickly and smoothly.
Everything is done via Zoom and phone calls these days.
“Big building companies that have been around since the 80s and 90s, they’re too big a machine to pivot,” Mullany says.
“It has been an absolute perfect storm for us. We’re able to develop and grow our business off the back of COVID, and I hate saying that because it’s been a horrible pandemic for the whole world.
“But we’ve been able to create a process and streamline a process. People are starting to realise this is the way it should be.”
Audacious goals
Ultimately, Balfour Homes is working towards a “crazy, audacious, massive goal,” Mullany says.
“To help more Australians than any other building company.”
Currently, the biggest building company in Australia helps between 86 and 100 customers each week, he says.
“We do believe that we are going to achieve that.”
In the short term, the founder plans to expand to offer the startup’s services all over Australia, and to bring more building companies and developers on board.
At least for the time being, the co-founders won’t be seeking to raise external funding.
“I don’t feel like we need it,” Mullany says.
Already, the business is growing off its own steam. And he believes bringing transparency to this sector will be enough to keep that momentum going.
“I think a lot of people can get caught up in bringing on capital and can forget their process,” Mullany notes.
“We’re not interested in getting capital for capital’s sake,” he adds.
“We’re a lot more focused on keeping our customers happy and streamlining that process, rather than building a business that has lots of money in the bank.”
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