Edited & published by Rayhan Rafiq-Omar

Proptech Weekly #50 – The Ghosts of Estate Agents Past, Present and Future

| Rayhan Rafiq-Omar

Friends, Feudal Landlords, Commoners,

It’s been a year many of us will never forget. But will we take the current lessons forward? Were we listening, or did we descend into (re)moaning?

Reading the comments under Property Industry Eye news articles reminds me of the story of Scrooge – he who ignored all around him and could see no further than his own selfishness.

In the aftermath of the EU Referendum, I remember being shocked at two facts: that people were surprised a Euro-skeptic population voted to leave the EU; and that there was a complete vacuum of leadership and/or ideas of what to do next.

And then I remembered some sage advice: Be the change, so change doesn’t happen to you.

The signs for estate agency have been there for a while: consistently one of the least trusted professions, countless attempts by politicians to ‘protect consumers’ and of course the rise of the anti-agent rhetoric of online agents.

So in the spirit of Christmas, we welcome a visit to the proverbial mirror:

Enter Foxtons, the Ghost of Estate Agents past. 

The firm famous for hiring people young, training and managing them military style and burning them out on the phones to play ‘the numbers game’ and win new business.

Foxtons knew they could annoy everybody who interacted with them, as there’s always more people out there unawares.

They were quickly one of the most profitable agents, and certainly the most visible – they also became the poster-agent for all that was wrong in the industry; and were consistently on the wrong end of legal action from their clients.

When other agents looked at Foxtons, they saw the bad kid in the playground and would say, “it wasn’t me Miss, it was Foxtons” as they unwittingly were influenced by the ‘cool’ kid and copied them.

Overvaluing to win business, charging new-fangled and completely unjustifiable ‘administration’ fees to tenants and tagging on service charges on top of work for landlords who were already paying a management fee. And they indignantly forget the wrongs they perpetrated on tenant deposits until legislation was introduced to put a stop to a very evil practice.

Their collective response: everyone’s doing it, so it must be ok.

But this wasn’t the worst of the behaviour: many agents would answer a call from a potential vendor and without much chivvying would undermine their fee: “we usually charge 2% + VAT but if you sign today we’ll happily take on your property for less.”

Now replace vendor with buyer and fees with asking price. It happens. All. The. Time.

The Ghost of Estate Agents Past drifts away without a further word, leaving the viewer seething with indignant rage at being slighted so.

It gets worse.

Enter Purplebricks, the Ghost of Estate Agents Present

The best in class of the current breed of ‘new’ agents have dismissed the high street offices, chucked their fees out of the window and yet largely kept the dodgy suits. Go figure.

Having not learned the lessons of Agents Past, Purplebricks repeats the tricks of the trade: promise the world, deliver as little as possible and own up to nothing.

In a world where increasingly information is freely available, Purplebricks refuse to confirm how many properties they actually sell.

Why does this matter? Unlike their predecessors, Purplebricks charge up-front and don’t even pretend to do the work: they leave it to the customer.

Like their technology, they must be embarrassed into obsfucating the details as best they can; much like their ‘profit’ being an accounting quirk for PR purposes (see what we did there…).

Lack of transparency continues to be the sin of Estate Agents Past and Present. Statistics to distract from the truth are no different to ‘Local’ Property Experts who are based tens of miles away.

But as the Ghost of Estate Agents Present vanishes, hope appears:

A beam of light tantalises as the Ghost of Agents Future flashes on your smartphone screen.

For argument’s sake, let’s call this Ghost Glenn Ackroyd.

Glenn understood that technology would be best served in the hands of trained and motivated franchisees. An army of them.

While very much dorky in his current adolescence, Glenn builds technology that empowers everyday people to transparently sell property.

Glenn looks around the world for best practice, bringing the most choice nuggets home and wrapping them in technology: like auctions where the vendor has a chance of getting the best price for their home in a predictable timeframe – just like they do in Australia.

But most importantly, Glenn’s agents tell the truth. About everything. Their fees, what your home is worth, and how long it’ll likely take to sell.

You see, Glenn gives his agents data to better serve their customers.

Glenns cares about his agents, which is why his agents care about their customers.

There’s much more to come from Glenn, as he settles into his new home at Martin & Co.

If he’s listening, in the absence of Coca Cola’s Santa would Glenn please deliver us from the actual problems people face when buying and selling property. Just liked Nested are doing with Chains, Viewber are doing with convenience and Fixflo are doing with communication. Thanks very much.

Comments

  1. KByfield04

    Rayhan, great to see someone put their opinion out there but whilst mentioning the good and bad of online/hybrid how about some words of the great and the good in ‘traditional’ agency? I say traditional- all modern, full service agents are hybrid we just dont say it because it’s a given.

    What about ‘my property genius’ by Knight Frank? Or facebook viewings by Next Chapter? The adoption of Virtual Tours by many….I could go on.

    Then let’s not forget others forging forward with proptech bolt-ons for agents including ValPal, Goodlord, Vaboo, Brief Your Market and many more. What about evolution by software suppliers? The ‘mypropertyfile’ site & app by PSG has been woefully under-reported in the industry (especially proptech) media as this delivers some awesome tools, brings much needed transparency AND is free!? Surely the best innovation is the developed and offered for free in line with an evolving industry?

    Last but not least- can I please know why I have read so many (if very brief) applauds for Nested? Personally I see this as a very dangerous site both to consumers AND to the (slowly) improving imafe of our industry. Since thewir launch I have made several visits, each time to test property values, and in every instance the valuations have come in at least 10% below market value and, often, closer to 15-20% below. This is shocking and a very worrying ‘offset’ to a quick sale. In my mind, this in no different to the ‘ambulanec chasers’ you get in local press offering to ‘buy your home for cash now’- targetting the most vulnerable and paying way below market rate. The simple fact is, to offset their risk, they will always have to downvalue (even if their accuracy improves over time) and this will always be substantially above an agents fee (traditional or otherwise) and is a huge price simply to negate the ‘stress’ of a traditional conveyancing route.

    Kristjan

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    1. rayhan

      As always, thoroughly enjoy your comments.

      My thoughts on almost all the Proptech you’ve described is that they are dull and just don’t improve the situation for consumers sufficiently to ‘move the needle’ or restore credibility to the profession.

      I’ll focus on Valpal and mypropertyfile. They are far from effective. Worse, they are embarrassingly presented and I would certainly not put my name to an endorsement of such poorly executed effort.

      Mypropertyfile vs Fixflo is just no competition. The latter is universally acknowledged as a genuine game-changer. You cannot say the same of Mypropertyfile.

      Valpal – for all Angel’s Media’s attempts to generate revenue – is being thrust down agent’s throats regardless of any feedback on the product being a poor relation of Zoopla’s AVM. And I’m record as saying Zoopla’s AVM is little more than a Random Number Generator.

      I’ll finish on the main point of the article: change is happening ‘to’ estate agents. The current level of service is – by traditional, hybrid and online – sub-optimal.

      I ask you: what’s your return on investment with Zoopla membership vs Rightmove? Agents have no idea that monitoring such things matter.

      So imagine how much customer service drops when you don’t monitor the effectiveness of agents’ individual and collective efforts.

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      1. mbevan

        Hi Rayhan,

        The topic about ROI is a great one and something we have done is evaluate the registrations that hit our client base. Some very interesting stats here: http://www.reapit.com/News/more_details/news-247-agency-254

        We can also do this for the specific customer and give them a real insight to conversion rarios/who is making them money or at least to define out of those 1000 leads the rep say they sent, how many of those were new leads. It’s a great thing to have

        Surprising zoopla clients aren’t already able to do this through their software being zoopla own the software and portal and surely every piece of data is being tracked somewhere along the lines

        Mark

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        1. Rayhan Rafiq-Omar

          Hi Mark,

          Thanks very much for that comment and link to the lead analysis.

          What I’m really looking for is the lead to transaction ratio. Which portals/marketing spend lead to the most/most efficient results.

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    2. rayhan

      Separately on Nested:

      1. They have a ‘differentiated’ value proposition that genuinely resonates with people. Considering how many purchases fall through because of chains, it’s disappointing to hear an experienced agent be so dismissive of a problem that many greatly suffer with.

      2. Unlike the ‘ambulance chasers’ Nested’s model is designed to ‘but you time’ to sell your property for the best price. The guarantee is for the interest-free loan.

      So it’s ‘risk-free’ for the vendor; far more than the vanilla no-sale no-fee model.

      And I would have thought many agents would be interested to see a new player succeed is increasing their fee by providing a better service.

      Granted, their valuations need work. But at least you get clear comps.

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  2. 123430

    An interesting read. I’m not too sure if you have tried any of these businesses/products as a ‘real’ client. We have and we think they are not great. Idea may be different but not sustainable and poorly executed. We also suggest you STOP plugging your investments (Viewber/Fixflo etc..) and be more impartial with your article but overall an interesting read.

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    1. Rayhan Rafiq-Omar

      Hey 123430,

      My only ‘investment’ is in Apply.Property – which I have disclosed when I mention them.

      Viewber is super early days, so they have a lot more important things to learn/achieve before making things look pretty.

      Fixflo – I’d be interested to hear specifically what you didn’t like, as it would be the first time I’d have heard an agency criticise the product.

      One last point: I oversee a lettings and management business in South West London. I’ve seen, demoed or paid for pretty much every piece of software (and hardware in terms of screens and displays) that is out there. So yes, most of the technology out there for estate and lettings agents really and genuinely is awful. I’m in agreement with you there and I do say that most weeks.

      But with that in mind I like to highlight the few that either:

      a. Provide a great service now, or

      b. Have the potential to massively improve the industry.

      If you come across anything, please do drop me a line at rayhan@rafiqomar.com

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      1. 123430

        Hi Rayhan, thanks for your reply. I thought in your previous posts, you expressed/had interest in the said businesses. Apologies if this is not the case. I too own a very successful independent agency in central London (by the way what is yours called?), but I also represent buyers and own a private London property portfolio in excess of £150m. I also own shares in a lot of start-ups, such as Rentify, Emoov etc.. so I am more than qualified to understand what they are doing, how they are preforming etc..

        Here’s a bit of insight, Movebubble are terrible and more likely to disappear soon. They had to remodel their business plan a couple of years ago because it didn’t work, into an app for Tenants. They do not charge Tenants, if they did no one would use them? Why would anyone download their app when they only look to rent once every 2 to 3 years, they just go straight to RM and Zoopla? They are now looking to charge agents (£80 per Tenancy), but their leads, their cancellations, their management of the process is terrible. Good idea in theory, but will not work.

        Nested, good idea but impossible to execute or sustain. We tried them with one of our actual properties. their online valuation tool is terrible, we called them up, someone who sounded like they got out of bed picked up, knew nothing about anything, asked how they were doing, said we have only sold 1 for the past year. asked how they can guarantee such liabilities, they said they will sell the property, we tried to book him in but he said the system was down (i.e. he can’t use calendar on office outlook) and never got back to us.. a bit of an idiot if you ask me.

        Rentify, changed their business model many times, just received crowdfunding, to become a ‘rent to rent’ company (like so many before them, thesqu.re, londonshared, all these dodgy agents guaranteeing rent etc……). We also tried them, their online valuation tool is awful. We then called them, we had someone come round who had no idea about anything, nice guy but not too bright, only started 3 months ago in data inputting (nothing to do with estate agents etc..), how on earth are they suppose to rent out and guarantee rent for a very expensive property, I have no idea.

        Viewber – we all think this is not a great idea and will probably never work. The only reason we know about it is because Ed Mead plugs it all the time.

        Online agents are not sustainable (and barrier to entry is 0, i.e. anyone can start one). They will all burn out of money soon, I know I also have shares in Purplebricks. There may only be 1 or 2 winners in this space, but my prediction is the likes of Quirky/Faisal Butt, Rob Ellice will be the casualties.

        I can go on and on but I do give these people credit for trying.

         

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        1. Rayhan Rafiq-Omar

          🙂 coffee sometime?

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        2. youhomeab27

          Dear 123430 really interesting insight – your hands on experience tells – we are doing interesting stuff at YOUhome (notting hill gate) – keen to meet up for a chat if you have time kr adrian

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  3. KByfield04

    Rayhan- it’s interesting to hear you give mypropertyfile such a lambasting. Also, that you compare it so readily to fixflo. Ive known Rajeev from pre-launch and have always loved the product. As a formewr user (and outspoken advocate) I had hoped to see it integrated with mpf when it was constructed but PSG opted to take an alternate route and build that element of the platform themselves. Whilst it’s not quite as slick as fixflo in the maintenance reporting it is damn close- especially if (as an agent) you dedicate the time to customising the menus and information (a commitment you also needed to make with fixflo if you wante the best performance from it).

    Its interesting, however, that you make a statement that they are ’embarassingly presented’. I couldn’t disagree more and wonder what this is based on?

    I think, importantly, what you have to look at is 2 things with mpf- the consumer experience and the agency efficiency it delivers. mpf delivers on all accounts in this regard- since rolling out mpf earlier this year (and let’s not forget the huge bonus with mpf- it’s a free addition to the software) we have had fantastic feedback on the new Tenant app. Our Landlords have loved the Landlord portal since it rolled out 3-4 years ago and now the Tenant app manages the other side.

    We have clinched deals (both in terms of instructions AND tenancies) off the back of an app presentation at the property. The most common comment (from Tenants and Landlords alike) being ‘Why don’t all agents have this?’.

    Whilst there are lots of very clever people out there trying to dramatically reinvent the wheel (and this is great) there is also a need to (relatively simply) enhance the digital experience offered by more traditional agents. This also plays in to the psychological adoption of proptech BY the industry. Go in to any office and present a product that turns everything on its head but assures the agent ‘this will be a game changer’ and it’s a tough sell. However, if we help agents, big and small, evolve digitally over the next 5-10 years we will then be in a greatly enhanced industry AND have an industry more open (and knowledgeable) to ‘what’s next’ having seen the proof in the pudding.

    There are a lot of PT companies making some very outlandish claims and, as agents and business leaders, we’ve all heard of game changers before. We all been promised the earth in some service sector (if not multiple) and been left bitterly disappointed.

    As for Nested- I guess we will have to agree to disagree. I think this is an ambulance chaser in a nice suit solving a small problem but hiding a huge issue and I also dont get how this model is meant to benefit the industry?

    As for our returns- strong on both accounts. Maybe because we are a London agent, but I have always placed great value on both ZPG & RM and ultimately think that they deliver value for money both in terms of evolving products AND ROI.

    Agents, if savvy, can adopt many of these ‘dull’ protech solutions to deliver an entirely new UX, digitally underpinned but still driven by personality and service- the true conerstone of traditional agency. What’s more these, and the proper adoption/use of good software (we use and love Jupix having been one of the first 10 clients) can streamline a business making it kore efficient, more service focused and more enjoyable to work at. Our efforts deliver on all counts with us wining awards based on consumer experience (and sometimes what our industry thinks of us) and acheiving x4 the industry average in profit.

    With so many revolutionary/extreme PT products as yet financially unproven and bouyed by extreme press hype and the desperate investment by those seeking the next unicorn I personally dont think its at all surprising that agents, for now, ignore a lot of it.

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    1. Rayhan Rafiq-Omar

      OK, that’s made things a lot clearer:

      You’re (one of the few) agents who puts the effort into shaping your services – and I’d guess properly training your staff.

      The vast majority use software as a turn key solution, after the usual template set-up process has been completed.

      As someone who has tried to purchase licenses to CFP and Jupix many times, I found them inflexible to customisations which is what broke the deal for us (we’re lettings and management only).

      I most recently had a demo of mypropertyfile at the Lettings Live 2016 event – I take the point about customising it to make it work for your requirements. I guess I’ll have to organise a viewing with Base.

      Saying that, I just visited baseps.co.uk and clicked on the ‘report a maintenance issue’ link right at the top of the page…. it goes to a dead Fixflo link….

      And I love that you still display the now defunct Globrix logo on your website – those were the days. 🙂

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      1. El Conto

        Item 9 is the sole reason that I would not choose to use the product:

        https://baseps.mypropertyfile.co.uk/terms-of-use

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      2. KByfield04

        Our website is currently very poor after our new site was delayed (due to being too busy not the fault of our supplier) but this is now back on track and should launch early 2017. Indeed that link is broken but go to either the Landlord or Tenant menu and find the links to mypropertyfile (still listed there in its former ‘epropertyfile’ styling).

        With Direct Messaging now starting to roll out on MPF this is a major game changer as this will massively simplify tenancy dialogue woth Tenants and Landlords pocketing conversations and all stored in Jupix with no additional steps nececssary. In a world of increasing regulation and the need to keep immaculate records this delivers in an effortless way.

        2017 is going to be an interesting year for agents and PropTech.

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  4. Thinker89

    I just received this post printed on shiny paper as part of a package sent to me by Glenn of Ewe Move. Were you aware he is using your writing as part of his new propaganda machine?

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