Why is the property industry not consolidating faster?
The Real Estate Pundit writes primarily about Property Technology: https://twitter.com/realpundit
Seriously, in a massively fragmented industry, few companies make big money and none come close to dominating in any sphere.
What is it about estate agency that perpetuates an incredibly long tail of same-same service providers. There’s very little difference between one agent and another, consumers have a general hate for agents as they see the job as not adding value, yet it seems accessing property owners requires a long tail of small agencies to exist.
In the US, Realogy group uses this fact and the licensing/broker/MLS regime to provide a platform for many agents to operate; often part time.
If Realogy wanted a larger slice of the pie, could it go from franchisee to massive, consolidated agency/ brokerage?
In the UK, the largest groups of Countrywide, LSL and Connells don’t even represent 20% of the market combined.
It seems the last decade has seen some bundling of services (sales and rentals/ lettings together, in-house mortgage brokers and legal services).
However the recent trend is in reverse and more unbundling of services (pay a cheap fee (to an online-only agent) for marketing, and ad-hoc services).
It is likely the unbundling trend in rental property will continue as the age of property owners declines (inheritance) and those people born into the easy money (in comparison to a real job) that comes from being a landlord are younger.
Selling a home, with a higher burden of rules and regulation, alongside the larger transaction size, seems to attract an attitude of cowardice from property owners (just get it done quickly please, while I look away). Such a mental state permeates most that sell; they care little for the process and focus on the money coming through at the end (regardless of whether they got the best price, or not).
The biggest change coming to this industry is data-led, but not for the reasons you think it is. Data will allow property owners to do more than value their home, it’ll empower them to first rent out, then sell, in an online ‘Amazon-style’ marketplace.
But it won’t happen any time soon. Until then, listings services will gather the biggest profits (for providing access to market – selling shovels and jeans in a gold rush).
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