The What, Why and When of Agents’ Mutual
1. Estate agents, who typically dominate high streets across the UK, pay Rightmove a membership fee to advertise property listings. Property owners and landlords are explicitly not allowed to list on Rightmove directly.
2. Rightmove send buyers and tenants back to agents via email and phone. These people are called ‘leads’.
3. This low-effort way of getting buyer and tenant leads is now the norm. No agent can do business without Rightmove membership.
4. Rightmove is cheap (less than half the cost of a member of staff per branch) but have cleverly found a way to increase their fees every year.
5. Agents are afraid Rightmove will carry on increasing prices, and thereby potentially squeezing agency profit margins.
6. Anybody can set up as an agent in UK. Rightmove membership allows anybody to advertise next to established agents on an equal footing.
7. Many new agents are undercutting high street agents with flat fees for listing on Rightmove. By many existing high street agents, this is seen as Rightmove allowing private sellers and landlords to list directly, thereby bypassing agents.
8. These new agents (and many high street agents) wouldn’t exist without Rightmove.
9. Rightmove wouldn’t exist without agent membership fees and property listings.
10. Zoopla, a clone of Rightmove founded in 2007, has through some shrewd M&A activity and smart advertising quickly gained the custom of most UK agents. But they have also resorted to raising fees, worrying agents further.
So let’s take a breather to reflect: agents feel portals take them for granted, raise fees every year, allow low cost agents to exist and generally don’t like the cut of their jib.
What do agents do?
a. Improve service levels
b. Innovate
c. Merge to increase economies of scale
d. Set up their own portal
Predictably, they chose the latter. Here’s the deal with Agents’ Mutual:
11. An agent owned property portal venture, started by some large and reputable London-based agents.
12. They recruited the former CEO of property portal Primelocation.com, Ian Springett, to run the venture.
13. Devised a strategy to play Rightmove and Zoopla off each other, by getting Agents’ Mutual agents to drop one or t’other of the two main portals.
14. To raise seed capital, Agents’ Mutual have offered a loan note which initially over 1,500 agency branches signed up to, giving the venture approximately £6m in seed capital. These agents are called Gold members and receive a discount on launch.
15. The seed capital has been used to employ a team of developers, led by Morgan Ross, to build a portal similar to Rightmove.
16. A sales team made up mostly of former Rightmove and Zoopla staff have been hired to increase the sign up rate.
17. By August, at least 3,000 agency branches out of 20,000 in the UK have signed up to Agents’ Mutual with a commitment of 5 years.
18. OnTheMarket.com and OnTheMarket.co.uk were offered up as the brand Agents’ Mutual will adopt on launch.
19. The venture intends to launch the property portal on the internet in January 2015.
20. Rightmove and Zoopla have acknowledged the threat to their business as credible, but something they can both weather.
On that last point, the Pundit doesn’t agree. Rightmove and Zoopla will be dramatically effected by OnTheMarket.com. More details in the next post tomorrow.
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