Having attended two major property conferences recently I have been saddened somewhat by my industry’s approach to the perceived market share of Purplebricks, Yopa, Hatched, et al.
In particular, I am alarmed by the lack of coherent industry-wide action by full-service agents to mitigate the threat over the next 15-20 years from online competitors.
Currently the online sector of estate agency makes up 3-5% of the total market, depending on who you listen to.
There has always been an element of the public who for whatever reason want to sell their own home, so actually for me, the present day competition is nowhere near as severe as many are making out.
My fear is that as an industry we are complaining and protesting too much just because the model is different and using it as an excuse to why our firms are not achieving a fee reflective of our service.
By being obsessed with today, we are losing sight over what could be an overall very different market in 15-20 years.
To give an example, one attendee at a recent conference from the west country was very animated in explaining that one Purplebricks representative is selling property over a 50-mile radius and this seem to be having a major effect on him.
I question why he is alarmed by this competition. Frankly if this one online-only rep can make a reputation and generate sizeable revenue by servicing clients over a 50-mile radius, then good luck to them.
This short article is not to eulogise or criticise a business model. Good luck to anyone offering an honest service for honest pay, but the reality is we as full-service agents should be doing more to defend our industry and highlight the benefits of using a good full-service agency against an online-only competitor.
The need to point out the listing fee v success fee
Why is there not industry-wide communication to the general public that online-only agencies charge a listing fee – not a fee based on overall success?
This breaks the traditional link between standing by your valuation, gaining traction over the marketing period and taking the transaction through to successful completion with all the chain-related, legal and financial obstacles that generates.
Over-valuing is one of the main complaints against estate agents, yet if you are an online-only agent (offering the standard approach of a listing fee) it does not actually matter what the property gets listed for, given there is no link between initial valuation to successful overall transaction to receiving your commission for a job well done.
We had a case at the start of the year where a lower chain was selling through an online-only agency. Needless to say there was no pace or guile to the legal conveyancing process at their end, and they lost their buyer as the market tightened post investor stamp duty increase.
The house they had their heart set on through my agency (and it was a unique, one of a kind offering) went to someone who actually had their chain in order through a full-service agent.
If the agent had been paid on success and not just listing, it would have been fair to suggest that the initial couple would have bought their dream home, but alas they were trying to save a few thousand pounds and did not have an agent who could grab their transaction by the scruff of the neck and run with it.
The onus on fee for listing and not fee for success was pointed out by Jefferies, the investment firm, in advice to clients thinking of investing in Purplebricks during the summer, but why are we relying on an investment firm to gain publicity for this view and not defending our industry from the front?
The net difference
I, like most of my clients, would dread selling my own property. In fact, most clients don’t even want to be in for the viewing let alone try and sell the property themselves.
The crux of this is that you contract a selling agent as the emotion is removed from the transaction and the property should be more effectively sold on viewings.
When you couple that ideology with a focused, full-service local estate agent who has his or her finger on the pulse of the market, you are then in a prime position, ready to achieve the optimum selling price for your property.
As an industry we should be highlighting more the price achieved differences by local full-service agents in comparison to online-only agents.
The difference in many cases can be huge, as evidenced above, and while someone may be tempted by a listing fee at £500-£1,000 (with no guarantee of sale), if there is a body of evidence that actually indicates that using a local full-service agency can achieve thousands more, or as the above example shows hundreds of thousands more, well, let’s push the message out there.
We could turn on its head the claim that online-only agents save thousands when my own evidence of seeing their business model evolve in the last few years (I even tried to buy a house through one four years ago as it represented such good value) is that they actually don’t achieve the level of pricing that a good full-service agency does.
What does the industry actually do?
Instead of coming together in the form of an industry body (think press or radio advertising bodies) which can collate the type of information above in a scientific, large-scale manner and look to protect the industry through concise and mass communication of this information.
We seem to be folding like a pack of cards and using the advent of online agencies to mask difficulties in our own markets while seeing large-scale corporate institutions buying internet-only offerings for questionable, inflated valuations and others moving towards a ‘hybrid’ type of agency.
All of this plays into the hands of those hoping to eradicate traditional full-service agency and replace it with a listing fee service while having viewings conducted by those on zero-hours contracts (or let’s call it the ‘gig’ economy to sex it up a bit).
At the moment the industry needs a leader or leaders who actually stand up for it, and there may be a tremendous opportunity for an experienced figurehead to bring together full-service agencies with a subscription service that means we can work together (yes, together!) to protect our industry over the next 15-20 years.
I am not advocating we need a response to cope with today’s threat – if you cannot compete against 3-5% of the market then you need to take a good look in the mirror or in the eyes of your team.
For the longer term, though, we need a response that combats further eradication of our market.
The world and its consumer is changing and unless you validate your presence within it you might turn into the next Blockbuster, Bhs (minus the yacht maybe), Jessops, Blackberry, Comet, HMV…
We need to protect our patch.
* Donald Collins is sales director of agent Go View London, based in Ealing
Comments (23)
Agents do need to unite but we also need to accept new ways of working. When the corporates came in in the late 80’s there were calls to block them as there are now calls to block call-centre agents. My view is that as long as an agent is complying with the law and their obligations to their clients and the law, then they should be as equally valid as any other agents acting in the same manner, whether with or without a fixed office.
The NAEA and RICS etc, have remained disappointingly silent on these matters and have been reactive, rather than proactive. In doing so, they have failed to prevent the problems we are nw seeing in estate agency or, at the very least, using their considerable influence and good name to alert the public to the law breaking and bad practices we see on a daily basis (from high street and call-centre agents alike).
I would again urge all agents who are not already members to rejoin the NAEA/ ARLA or RICS and to make your voice heard. I have done so and look forward to seeing many more law-abiding agents at council and conference events.
To the ‘Agents’ above, who do not seem to acknowledge or accept that the eventual sale price of a property can be affected by the skill (or lack of…) of the selling Agent.
Forgive my pointing out the obvious – but you are under obligation to work in the best interests of your Vendor client. That, to the vast majority of Vendors, is to achieve the highest price for them – either in the shortest period of time possible or a timescale to suit their requirements.
There are those Agents who excel at this.
Equally, there are those who consider it easier to ‘sell’ the Vendor a low offer than to risk losing a potential purchaser for the sake of a few thousand – or even a few hundred – pounds.
Those Agents in the latter group can (and sometimes do) learn from those of the former camp. But in order to do so they have to accept a major sea-change is required in respect of their attitude and understanding of the principles of negotiating a sale – and this is often a bridge too far for them.
In fact – unless they are receptive to the basic principle… and actually want to be able to look their Vendor in the eyes with complete certainty they did the best job they possibly could for them, it is unwise even to attempt the transition from what has been apparently learned at ‘The McDonalds School of Salesmanship’ to professional Estate Agency negotiation standards.
A good Agent will pay their own Fee through their results – often several times over.
A bad Agent will, at best, cost the Vendor some, all, or more than they thought they would ‘save’.
Donald a good piece that reflects the sentiment of many quality agents up and down the UK. However, I think we actually need to take a slightly different tack all together (brace yourself)- we need to all work together: high st, hybrid and online. What is key is ensuring the differentiators are clear. A market that offers consumers genuine choice is key. As you highlight, many people would never want to sell their own house and are happy to pay additional costs to have this whole process managed- however online agents do service the sector that does want this.
What is key, in doing this, is also to ensure that the ‘facts’ claimed by all parties are accurate and substantiated. Eliminating false and misleading data is in our interest in raising the overall perception of our industry.
And if you’re a full-service agent struggling to explain why you are worth more then you really need to take a good hard look at what you do for your clients. If you can’t explain the true value and quality you deliver for your fee then maybe you’re just not worth the fee you’re asking for.
In my opinion all upfront models are fundamentally flawed. They are flawed because, as an agent, it is in your job to get the seller the best price for selling that property.
I would feel uneasy taking money upfront and then keeping it if I could not sell my customers property. I also enjoy working for a percentage of the final fee, it motivated me a lot.
I know all of this and I have only been in estate agency for a few months.
Agents could easily quantify (or guess like upfront agencies do) the opportunity cost of selling with the likes of an upfront model; make it a headline statement in the header of the home page like they do. Will they? Nope.
They could also work together. Will they? Nope.
FromTheHip64.
“PB stand as much chance of selling a property as we do”
Bwah ha ha ha ha !!! hee hee hee hee!! ho ho ho!……….Bwah ha ha ha!!
oh, thanks for that, havnt had a good laugh like that for ages.
Merry Christmas – I look forward to reading more of your comments next year!!!!
Thanks for the feedback and also direct emails – it’s not difficult to google me and contact me directly without posting details on this forum (agentV).
I am tempted to suggest a couple of the comments above are there to be controversial for the sake of it – if you really think you have no impact or influence as an individual or as a good, effective team member in the property market then I actually feel sorry for you.
Furthermore, the article doesn’t even touch on making phone calls (albeit an important function of our trade) rather it elaborates that as an industry we are not highlighting the chasm of difference in service credentials and providing the public with evidence how those service credentials puts more £ in their pocket.
FromTheHip64 ”Honestly….how many viewings really come from picking up the phone and ringing an buyer?”
erm…..lots if your doing your job correctly.
FromTheHip64, you say
Honestly….how many viewings really come from picking up the phone and ringing an buyer?
That all depends on how big, how current and how detailed your buyer database is.
And of course … whether you can actually be bothered to ring them + whether you ring buyers with any old property or one that is actually closely matched to their requirements.
Get any of the above wrong and NO not many viewings will come from calling buyers.
Get all of the above right and you’ll get PLENTY of viewings … and some stonking good offers as well.
Trust me.
It’s true.
If a property’s on RM, OTM and Zoopla, the phone will ring whether its a high street agent or an online agent advertising it.
These websites are where we get our viewings from. Lets not try and pretend we get better prices because we have a huge database of buyers. Those buyers are looking on the internet and will find the property. Honestly….how many viewings really come from picking up the phone and ringing an buyer? Lets not kid ourselves. We are more receptionists than we have ever been. PB stand as much chance of selling a property as we do, so long as it’s presented well on the internet.
Yes, but if the price is wrong from the start it deters interest and price reductions then put the property on the back foot with buyers knowing they are being chased rather than the other way round. That leads to lower offers than otherwise would have been attained. That’s how it works where we are anyway.
Also, what about negotiating the offers……we can quite often lift initial offers by 7 to 10% or sometimes more to get the final sale price agreed
FromTheHip. Youre either an onliner or a terrible agent, in my view both the same thing, How can you say thats how properties are sold? The job is to get the vendor best price. Yes we can all get the same enquiries once a property is on RM but as Agent V says if its the wrong price at first the shine goes off it and getting it back to where it should have been takes skill and thought. More importantly when the offer(s) come in, rather than jumping for joy and taking the first offer further skill is required to negotiate properly and get the owner the best price.
Ive spoken to two property investors recently that said they love buying off PB as they haven’t a clue how to negotiate so they tend to advise the vendor to take virtually the first offer as long as you play hard ball. On top of that their “ability” to see a sale through is woeful. The tag line for these jokers should be “save hundreds on fees lose thousands on price”
Intgefield,
I totally agree. With the model of PB, getting the vendor to accept the first offer that comes along is more profitable for them, as it means less work, and more time to start work on the supermarket conveyer belt of new properties. It’s far more efficient for them not to encourage further offers or negotiate!!! It’s a pity more vendors don’t understand that.
It’s like ‘wholesale clearance property selling’
sorry typo ‘inthefield’
FromTheHip64… at last, someone willing to say it how it is. Thank you, you are exactly right. It is sad but very true that a lot of high street agents don’t bother with mailing lists now – some do just rely on the portals for leads. All you purveyors of negativeness who love to comment on these on-line bashing articles… where did all the people on your mailing lists come from – are they all really walk-in inquiries? No, thought not. I bet you’d hate to admit where the leads actually originated. Also, we all know service is only as good as the people involved, high street or on-line, it doesn’t matter. Accurate valuations and first class presentation? Of course, we should all have high standards here…. but there are plenty of high street agents who can’t get that right either. Over-valuing to win the instructions and incapable of negotiate the best price, being too busy worrying about meeting their sales targets or lining their own pockets. So, all in all, and generally speaking of course, it’s makes no difference having a window if your staff are just sat there waiting for the phone to ring. But it does gives people eating fish and chips or waiting for a bus something to look at.
jediagent. Youre obviously another online or poor agent. If you really believe what you say here and you are an agent whether call centre or proper, you should look for another career, you obviously havent grasped this one properly. I suspect that there are reactive agents out there but they’ll never get anywhere and I certainly wouldnt employ them. Sounds like you and you colleagues just go in and wait for the phone to ring. Laughable.
Of course agents of differing ability acheive different prices. Savvy buyers, especially in the current climate, would be mad not to negotiate but it is the agnets job to get those offers as high as poss and advise the seller whether they should accept. Not rush throguh the first offer and claim ‘success’. Like AgentV says- if this is how you opwrate you’re either online or a really bad agent. We recently had an onlinr value a prop at £850k- we took it on at OIEO £895K and it is under offer at £925k. But, yeah, you’re right, that’s pretty much the same thing especially once you factor in saving around £8k in agency fees. Practically identical.
We have never and will never recommend a chain to a vendor where an online agent is in place at any part of it.
if we tightened up and all took the same view then people would soon realise selling with these pond feeders actually harms their chance of an onward purchase, but of course they could still purchase the 3-5% of the properties marketed by their fellow listers!
Why don’t you think any of the px companies or new homes developers use online agents….because they new houses sold not listed!!
A complete chain of 5 to 7 properties all being sold by online only agents, just imagine that!
I’d ask for my money back
Great points Donald,
There is a small but growing movement, and you and all others would be welcome to join us! Just put a post in the thread with a way of contacting you and we will be in touch.
We are a group of small independent agencies and supporters that aim to collate experience and ideas for the benefit of us all…. and also develop the next generation of tools to help in the fight back against the online threat.
We will have the passion and the drive to shout from the rooftops ‘the benefit of the best walk away result …the advantage of using the full service hghi-tech independent’.
Vive le independent !!!!!
Long article stating the obvious, almost fell asleep reading it. But I don’t think the ‘good’ agents are worried about the onliners. I think its the rogues, the dodgy bedroom agents that tar the good ones which they are annoyed with. The slight problem with the industry is that anyone can start an online or a ‘high’ street agency, I mean anyone… including criminals. Like most industries and businesses, it is the best that will survive. I can name 100s of online agents who have disappeared and also in equal measures name 100s high street agents who have disappeared in the last 4 years. The industry needs a good clean up over the next 2 years. Lets see who can survive and thrive and who will disappear. I’ve already made my predictions.
123430,
Any major predictions we might know the name of?