Are online-only agents just FSBO in disguise?
The Real Estate Pundit writes primarily about Property Technology: https://twitter.com/realpundit
And there it is: the deafening chorus of traditional estate agents screaming “Yes!”.
For years high street agents have been crying foul that Rightmove allows For-Sale-By-Owner sites to sneak listings next to theirs.
But with the barrier to entry for a new estate agent so low, alongside relatively low commissions in the UK (1-1.5% vs 5-6% in the rest of the world), is there no small amount of hypocrisy in the claim online-agents are undermining the industry?
It seems that only Foxtons doesn’t negotiate their fee, while most other agents will happily come down to 1% in the current race to the bottom on agency fees.
And this decreased income has brought about its own evil: double charging.
But first, we have to understand the term ‘agent’. An agent is proxy for the owner (or buyer, if the agent represents the other side). They are giving expertise and time to do some work on behalf of the owner. Naturally agents charge a fee for their proxy representation. That fee includes marketing costs, vetting of buyers (or tenants) and generally chasing loose ends.
The core premise of an online agent is that Rightmove exists and does the vast majority of the hard work. Traditional agents argue that Rightmove wouldn’t exist without all their collective listings data, but that point is now moot (even in light of the rise of Agents’ Mutual).
So, if an online-only agent charges for access to Rightmove, and has a menu of items you can pay for, like ‘For Sale’ boards and conducting viewings, are they really an agent?
Rightmove judge an agent to be a company that abides by regulatory standards (which are a bit of a joke) and that all communication should not go directly to the owner.
And there you have it: answer the call before transferring buyer/tenant leads to the owner, and pay a small fee to The Property Ombudsman.
So you can see the point made by High Street Agents: online agents aren’t agents at all.
However, do traditional agents see their own hypocrisy when they charge both landlord and tenant for referencing? Or worse, add an uplift fee on maintenance works to landlords who pay a monthly management agency fee.
It is these practices that continue to tarnish the industry. And it is that tarnish that leads to ‘disruptors’ coming in to try and steal customers and market share.
Agents’ Mutual has gained so much support as a counter-measure; we’ll be hearing that 4,000 branches have signed up to OnTheMarket.com any day now, as a battle cry.
There has been a recent surge of new online-only agencies to join the stalwarts of eMoov, Hatched and HouseSimple. Known brands like EasyGroup and Sarah Beeny have been getting in on the act with the predictable and oddly named EasyProperty and Tepilo.
Will any online-only agent convert property owners to their new low-cost religion? In a nation famous for an aversion to bartering, it is highly unlikely.
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