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).

Alex Evans

You May Also Enjoy

Breaking News

Prime London second property purchases fall by over 50%

The latest research from Jefferies London shows that second home purchases have fallen by 42% across the capital over the last 12 months, with this decline even more pronounced across the prime market at 51%. Jefferies London analysed sold price records from the Land Registry, looking at transactions to have completed over the last year…
Read More
Letting Agent Talk

Letting Agency Owners: Are You the Bottleneck in Your Business?

As a letting agency owner, it’s easy to fall into the trap of wearing too many hats. But it’s not just exhaustion and burnout you need to worry about – it’s the impact it’s having on your bottom-line. Guest Blog By Sally Lawson – Agent Rainmaker “From managing client relationships and handling operations, to overseeing…
Read More
Breaking News

Latest developments in Renters’ Rights Bill: What landlords need to know

On the brink of becoming law, the Government last week rejected the majority of amendments put forward by the House of Lords, which would have mitigated the severity of some of the amendments. Property professionals, landlords and tenants are poised to navigate this once-in-a-generation overhaul of housing legislation.   Lucy Jones, Chief Operating Officer at…
Read More
Breaking News

What Will Commonhold Mean for Property Managers?

By Robert Poole, Director – Block Management, Glide Property Management, part of LRG The government’s ambition to end leasehold for most residential properties has put commonhold back into the spotlight. First introduced in 2002, commonhold offered a resident-led alternative to traditional leasehold ownership. However, legal and commercial complexity stalled adoption. Two decades later, policymakers are…
Read More
Breaking News

Think You Know Mortgages? These 5 Myths Could Be Costing You Money

When it comes to mortgages, most of us have had advice from family and friends. The trouble is, a lot of these so-called facts are myths, with many individuals missing out on better deals or opportunities, due to not doing their own due diligence. Emma Graham, Business Development Director at Hodge Bank, explained: “Mortgages are…
Read More
Breaking News

Just 17% of homes selling for more than £500k

The latest analysis by eXp UK has revealed that while just 17.4% of homes sold across England and Wales so far this year achieved a price of £500,000 or more, agents in London, the South East, and the East of England will face the greatest need to adapt should the Government press ahead with plans…
Read More