Do Online Agents Have The Competitive Advantage To Take Significant Market Share From High Street Agents?
Blog by Richard Murray, CEO of Veco™
According to recent data collected between January 2022 to April 2022 from Zoopla, Rightmove and Home.co.uk, hybrid and online estate agents have enjoyed a surge in instructions, pushing their market share to 18% in April 2022, up from 12% over the last 12 months.
Despite the increase in property instructions, high street agents continue to see off their online rivals when it comes to market share for properties sold. The percentage of homes sold by online and hybrid agents remains low, at below 7% of overall market share.
The online agent market is dominated by Purplebricks, Yopa and Strike, representing 70% of the market. Despite an increasing number of instructions, the online market share is well below what was forecast – around 50% within five years.
Since its launch in 2012 by brothers Michael and Kenny Bruce, Purplebricks has shaken the property industry. Despite its share of the UK property market growing to 4.5%, it is someway from a 15% market share in 2002, predicted by investment bank JP Morgan.
Clearly, high street estate agents have proven to be the preferred method of selling a home in the UK. Their local expertise is a crucial differentiator – they know their area inside out. Many estate agents have a wealth of knowledge in the area they specialise in, meaning that they have great experience of the local property market. Even online agents with regional representatives may find it difficult to compete with a high street agent, who have in-depth local knowledge.
High street agents also know exactly what to look out for, what to ask and the signs to pick up on during a viewing. According to the Guild of Property Professionals, when vendors opt for a high street agent, they opt for experience.
The most obvious advantage of choosing a high street agent, is the personal service vendors receive for their property and situation. High street agents have teams that work closely with vendors, as opposed to someone online, which provides a lot of reassurance for many when undergoing such a large and personal task, as selling a property. Viewings are also conducted by the agent, or accompanied by the vendor, whatever is their preference.
While online agents offer lower fees, providing vendors with significant savings, they often use online data to value a property, rather than sending around a ‘local expert’ to provide a valuation.
While the low fees can be very attractive to a vendor, online agents have a poor track record actually selling properties. Research from The Advisory, an independent consumer advice group for house sellers, reveals that online agents are very reliant on the portals to find buyers. High street agents achieve more viewings, more offers and in almost three-quarters of cases, a 5% better price than online-only firms.
In such a competitive market, with so many brands and companies operating in the same area and competing for the same business, it is crucial that high street agents deliver technology and services which make them stand out from the competition. For example, providing access to information, documentation and statistics, via a client portal for example. This gives the perception of a 24/7 operation, which those vendors who considered an online agency might expect.
Also, offering technology which is not standard, or offered by many other agents, like voice search, may help differentiate your agency from others. Automating some of your communication can also present the perception of a ‘never closed’ agency. Regular update notifications about marketing activity will ensure that clients understand the amount of work which goes into a full-service agency sale process and help justify the associated fees.
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