Online vs high street.
This is the most frustrating and, frankly, boring term that is still bandied about by the property industry and in particular by journalists and investors that remain ‘fascinated’ by the deemed divide.
The consumer (the house buyer or seller in this case) could not give a hoot as to what ‘label’ the sector has applied to a particular agency.
So why should we care, except to try and differentiate one from the other when in discussions with investors say – but which, I’d argue, is actually a pointless and unnecessary division otherwise.
The fact is, this all simply needs to be looked at via a consumer lens first and then from a commercial perspective.
In other words, work out what customers now want and then tweak the financial proposition accordingly.
The consumer in essence asks just four questions:
1) Can I trust you to sell my home?
2) Do you have the credibility, track record and incentive to get me the best price?
3) Will you look after me properly?
4) Will you charge me a fee that I can relate to?
That’s it. Nothing more. Everything else is window dressing.
Whether your estate agency business has a ‘centrally located office position’ or ‘is part of a group that has London buyers’ – no one cares.
For sure, lots of For Sale boards as proof points locally and so on are important. But they are bi-products of 1).
Reviews are important and are a demonstration of 3), etc.
The rather too binary assessment of online being on the ‘radical left’ and high street on the ‘conservative right’ is unsustainable.
The centre ground will win
It’s my strong belief that, actually, neither the right nor the left will prevail, rather, as with all cleverly fought battles of conscience in politics for example, it will be the centre ground that wins.
Here’s why. The current online model is generally tainted by allegations of there being no incentive to sell given its charging model and a perception that service levels are ‘basic’.
This latter charge has been levied by high street agents keen to show that their higher fees are justified in return for a better outcome.
Now, much of the high street argument is anecdotal and not supported by data.
However it’s a decent argument against some (not all) online players where many are indeed just listing agents, not estate agents. Perhaps the consumer agrees and this is why, for now, online agent market share sits at 8%. It’s growing, but quite slowly.
At the same time, the top three online participants (Purplebricks, Emoov and YOPA) are spending around £40m each year on marketing between them.
The gap between this spend and short-term revenue whilst long-term success is awaited, is a very, very big one to bridge. Chasmic, in fact.
On the other hand, high street agents are also caught by perception. A perception that they do little and charge a lot.
This, in an Amazon world, is also unsustainable. A ‘9 to 5’ approach and an opaque transaction is the antithesis of what the internet generation now insists on.
On fees, I’m amazed. I’ve been banging on that fees can and should be lower because they are predicated around the high fixed costs of multiple high street premises that are largely unnecessary.
A £3,000 bill that’s based upon the necessity to cover office costs when the office is less necessary nowadays? At first this seems ripe for attack by a disruptor like me. But then…
Public’s move to online slower than I’d thought
Then you realise that ten years after the birth of fixed-fee online agents, 92% of the public are still engaging an agent based upon a higher, percentage based contingent fee. The adoption curve has turned out to be much, much shallower and slower to grow than I’d thought.
And so, what does this all mean?
Well, let’s return to that centre ground point. The part of the spectrum, the compromise even, where battles succeed and hearts and minds are won.
What if there were a collision of left and right. A smashing together, to use another political analogy, of social conscience and free market capitalism. Doing the right thing for everyone and also not being ashamed of financial success.
What I am advocating here, in fact what I am predicting, is that the estate agency of the future is a blend of these things.
The credibility and trust that an established high street brand invokes with a semblance of a branch network to provide that visible comfort.
Combined with greater territorial reach via a ‘virtual branch’ approach too that allows higher revenues without the constraint of rent, rates and refurb costs applying to a model that otherwise insists that to survive, every village and hamlet across the nation ‘must have a bold and prominent corner office’.
Next generation of estate agents will be a compromise
The next generation estate agency model is not low service, upfront fees, nor expensive and unnecessary high street premises that few visit.
It is a mix of the established branch approach, albeit diluted, at a justifiably healthy fee and one where an understanding of being able to grow market share but without the suffocation of a 1980s physical branch ethos, is key.
This latter point needs to be laboured for a second because those reading this who have never orchestrated such a model will initially think ‘Yeah ok, that’s actually easy to do I reckon’.
Combining a totally different operational approach where listing negs work remotely and sales progression and admin is centralised and enabled by tech; with bespoke platform technology that does not exist ‘off the shelf’; plus a most unique way of marketing that combines digital and above the line, national and local – a truly multi-channel marketing strategy that ensures a business looks and feels local – is all very hard indeed to pull off.
It requires a proper experience of such a model and is not to be underestimated. But some will indeed under-estimate this challenge (think Countrywide and their catastrophic ‘Flexi’ endeavour or easyProperty and their B2B franchise offering).
Blend of online and high street
My suggested utopia is one of healthy revenues and lower agency overheads. But being clever about it. And agile. And unconventional.
With a challenger online brand bolted on in order to capitalise as this sector grows but whilst sharing the broader infrastructure of a parent company.
Think for a second where we’ve seen this before – the cigarette manufacturers buying eCig companies. BP investing heavily in solar and wind energy. And Amazon buying Whole Foods.
From the perspective of that all-important customer lens, this blended ethos ticks every box – the trust in an established brand/s to sell the home and to get a decent price.
The benefit of a business model that genuinely delivers efficiency and customer service at scale (centralisation tends to be more controllable and manageable that multiple branches). That is local. At a fee that, clearly, customers are happy to pay once sold.
‘Compromise is the destination of all successful arguments’ – as will turn out to be our industry’s motto.