You might be surprised to see a traditional agent happy to discuss ‘the competition’ but it’s a subject that has been crucial to my industry for the last couple of years and it would be churlish to ignore that fact.
You might also be surprised to hear me say it’s not all been negative, but I do have some very clear opinions on the two key good and the bad impacts they’ve had.
The good bits
They have sped up the integration of technology in the industry and whilst not all of the innovations are particularly effective, it has forced the more sleepy traditional agents to embrace technology rather than fight it. Our own website has been completely rebuilt, in part for this reason. We’ve made the customer experience easier to navigate, and the booking process as quick and simple as the modern homebuyer and tenant demands.
It’s added more choice and traditional agents have had to cut margins to retain market share bringing fees down for the consumer.
The bad bits
I believe the online exclusive offering is flawed and the public have been hoodwinked somewhat into a false dawn. The online model whereby you pay in advance irrelevant of whether your home sells or not, incentivises those businesses to do one thing only – that is to obtain your signature on their contract. The very moment you have, the motivation for them disintegrates. They’ve been paid. What it suggests is that properties sell themselves, but this is patently, blatantly untrue. That’s not to say you can’t get lucky sometimes, but to ignore the fact a rewarded, quality individual and company can make the difference over whether your property sells or not, and for how much, is wildly short-sighted. What I can understand is the public don’t like agents generally and so the minute an alternative came along, it was tempting to go with the new flow. Particularly in light of the negative TV campaigns that played on the negative perceptions. What I find especially galling about this, is that these online business owners, who were generally agents previously, have championed themselves as consumer saviours when in fact they have espoused many more falsehoods, untruths, dubious quotes and dodgy figures than the traditional agents they try to undermine.
I don’t like the outrageous claims of the business owners in terms of market share they would gain and profits they would make. To date, almost zero profit has been achieved by any and market share is not non-existent but a mile away from what they predicted. Nor are the star ratings that are claimed or the consumer savings they make based on realistic numbers. And so on and on… I think this reflects badly on the industry. The problem they have for starters is they need a really good selling market to get sales to just happen. If the market is tough, they will sell a very small percentage of their stock (because no one is actively pushing the properties and no-one is earning more money if they do or don’t sell). They will then have a lot of disgruntled clients who have paid up front for nothing. My own view is the sales rates are probably no more than 30% over the last year in terms of the percentage of stock they have actually sold and completed on. Which means 2 in 3 people have paid in the between £800 and £1500 for nothing. That’s scary and the public don’t realise this…yet! This fee does not make these businesses a profit on these volumes. Not even close. So something has to give.
Despite my own view on the flawed model and false claims, they probably have been a beneficial introduction for the consumer. Not in the way the business owners hoped, in terms of making profit and taking over, but in challenging existing agents that to survive, it’s necessary to constantly innovate and stay sharp. Agents need to commit to a quality and value offering to the public who don’t take kindly to overpaying for average quality.
If High Street agents keep adapting, stick to their best service standards and charge fairly, I don’t see how the online model could take over. It won’t get the market share it needs to make a profit and at some point the funding has to run out. Several are already in serious trouble.
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