Online Agents will kill High St Estate Agency within 10 years
Estate Agents .. you have 3 choices that will decide if your agency will succeed or die in the coming years. I pull no punches and some wont agree with what I say… but you either put your head in the sand and ignore the monster coming over the hill .. or prepare to fight.. prepare to fight for a battle to save your scrawny neck from estate agent oblivion.
How the hell can online agents be so cheap? Low costs!
If an estate (or lettings) agency has higher costs, it needs to charge a higher fee to cover those costs (and hopefully make a profit). However, most people would agree that a higher estate agency fee doesn’t necessarily mean a better estate agency service… but ..
The likes of eMoov and other online agents didn’t set up for fun, but to make money and provide for their founders and their family. Those online agents believe there is a place for an estate agency service that charges either £595 to list or £995 on completion. They don’t have expensive shops around the UK so can charge that “low fee’ and if they can make a decent living off the back of that – good for them, because I believe there will always be sector of population that are driven by price alone – and the online model fits that perfectly.
But if you believe their hype they, the onliners and hybrids, will take over the world of estate agency .. especially if you listen to the likes of eMoov and EasyProp
.. yet ‘Bullocks’ will be the reply to this online agent revolution by the majority of High Street agents reading this –
cries of they are just call ‘centre estate agents’, up and down the High Street agents of the land, others will say ‘they aren’t real agents anyway – we will never be beaten by these online agents .. they only have 4% or 5% of the market’ … but they only had 2.5% market share a couple of years ago .. and only 1% a few years before that. You High Street Agents have 95% of the market .. nothing to worry about?
… but what if they slowly grow at the same rate in the coming years and get 7.5% of the market by 2018 .. then 11% by 2021 … then 15% by 2023 … then 18% by 2025 .. then 22% by 2028 .. then 28% by 2031 … it wont take long before these little pesky ‘onliner agents’ are the big players … slowly eating away at the foundations of your castle … brick by brick because you High Street agents are not in a impregnable fortress– Think of what happened to Woolworths, or Comet, and the worlds largest mobile manufacturer – Nokia … who all thought they were all in an unassailable position – look at them now.
Estate agents in the UK are living on borrowed time, living off past glories. Some of those deserve to go to the wall and eaten by jackals and vultures. Online Agency will take over the world then?
Maybe? but the online estate agency model isn’t the only show in town.
I believe there is place in the next decade and beyond for both a ‘boutique hybrid’ estate and lettings agency model and ‘boutique high street’ estate and lettings agency model (so note I am not a High Street obsessive) where the agents charges a much higher fee (more than the online model and in some respects – more higher than what you High Street agents are scraping for at your 1% ) but … you know there would be a but … but the client gets more in return .. more than what they are getting now.
More in return? More service .. more of everything from you as an agent because lets be honest, most agents take a few pics, whack a board up, chuck it on Rightmove and hope for the best.
No I am taking awesome service .. If a client wants local newspaper advertising – they get acres of space on newspaper adverts… if a client wants 100% accompanied viewing – they get them (and I mean get them – anytime between 7am and 10pm at night – 7 days a week), if the client wants 8 page brochures printing on 750 gsm cardboard – so thick a tank could drive over it – that is what the client will get. If a client wants a local person on the ground in a High Street office – they will get it… but all that costs money.
Now you might say, none of those things mentioned in the previous paragraph are needed to sell a house in estate agency – yes, you are correct – but what the client wants – the client gets – and if they are prepared to pay for that, because that boutique agent has proved to the client why they are worth their extra fee and the client is happy to pay for that .. what’s wrong with that? I am talking about charging fees in the 2% to 2.5% range + disbursements + advertising … the client will pay and be happy to pay.
One thing is certain, in 10 or 20 years, estate agency will be quite different.
Twenty years ago, BRM (Before Rightmove) – houses were sold with newspaper ads and mailing lists. And things will change even more in the next 20 years and it will fundamentally change our industry. If you do nothing .. you ‘vanilla’ High Street agents, who from the outside (and note I say the outside) appear to be the same as all the other other agents in your town will die of a thousand cuts, very slowly over the years, withering on the vine…
.. how do you know you might in that category?
- How many properties did you list in 2015 – then compare that with 2014, 2013, 2010 etc
- What was your percentage average fee in 2015 – then compare that with 2014, 2013, 2010 etc
- What was your percentage pound note fee in 2015 – then compare that with 2014, 2013, 2010 etc
- How many properties did you let in 2015 – then compare that with 2014, 2013, 2010 etc
- How many properties did you manage 2015 – then compare that with 2014, 2013, 2010 etc
Are you growing .. or treading water .. or slowly being dragged out to sea?
All agents appear to be the same to them, you all go on the portals, you have boards, most of you have High St offices, you all have negs that negotiate, Valuers that value, Listers that list, Property Managers that manage property, you all have a website (which to be honest all look the same apart from the logo and the top and brand colours … no wonder the general public think we are all the same .. like vanilla ice cream
… and if nothing happens, the online agents will slowly eat away at your marketshare, bite by bite, piece by piece, brick by brick like little ants – leaving you with something quite different in 10 or 20 years time
… but that doesn’t mean you have to join the majority of High Street agents as their castle foundations slowly ebb away over the coming decade.
Every agent has a choice (they don’t tell you that do they) .. but you do. All agents have a choice. Three choices in fact
- Stay as you are and let the ‘estate agency revolution’ kill you by a thousand tiny cuts or..
- Join the likes of Russell Quirk at eMoov and the Bruce Brothers at Purplebricks in the online/hybrid agency revolution where costs are stripped back and low-cost fees are charged or ..
- Change your agency to be boutique, charging a much higher fee than the online / hybrid model but in return, offering a very particular, highly specialist, an individually bespoke offering and very personal estate (and letting) service. Be that with a High Street office or not (ie Hybrid) is strictly personal opinion.
.. but it will hard work – but you will earn more and enjoy the job more. But you would need to prove that service .. but before you could do that .. you need to prove something .. that you are different and you need to be paid attention to.
To prove that, to make you appear to be different, to make the general public notice you, you need focus your efforts to get them to pay attention, get their interest, get them interested in you and your frim by talking about something that interest them .. the homeowners and landlords of your town.
What interests homeowners and landlords?
Well it isn’t YOU to start with, it isn’t your firm, it isn’t your services, it isn’t you have been opened since 2BC, it isn’t you are part of a large network of offices, it isn’t because you have smashed your targets this month, it isn’t because you won a ESTA last year .. nobody gives a **** about that … apart from you, your boss and your Mum.
You don’t care about local solicitors and accountants talk about – so why should anyone care about you – you know I speak the truth.
… but I do know what local homeowners and landlords are interested in .. obsessed about-
The property market silly .. their local property market.
.. so all agents profess to be experts, local property market experts .. but none of prove it .. do you? By becoming the local property expert, the local property guru but proving it … you will start to prove to the local homeowners that you aren’t just another vanilla agent, like all the other agents. You are different, you are interesting .. that you talk about something they are interested in .. the local property market.. just tell people what you know .. talk about house prices, talk about rents, talk about yields, talk about why one suburb has gone up by 10% this year – whilst another has only gone up by 5% .. and why? People lap this stuff up because people are naturally attracted to things that interest them ..
The choice is yours!
If you like the sound of Option 3 … click here on a article which shows you what other estate and letting agents are doing to make themselves the local property expert https://www.linkedin.com/pulse/future-estate-lettings-agency-christopher-watkin
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