The livelihoods of smaller agents are under threat because of the charges of some suppliers to the industry – particularly portals.
Robert Sargent, CEO of one of the UK’s largest independents, The Acorn Group, said: “Profit margins are being eroded by service suppliers to the extent that the founders of smaller agents are daily wondering whether it is worth their while carrying on.”
He said that in a tough market for agents, “suppliers’ current costs are adding to the load” – a load which includes a poor housing market, high business rates, increasing legislative requirements, and the tenancy fee ban which has seen £800,000 disappear from Acorn’s own revenues.
He said that suppliers hiking their costs are ignorant of, or oblivious to, the strains that agents – particularly smaller ones – are already under.
Sargent said that the three portals – Rightmove, Zoopla and OnTheMarket – are all a cost issue for agents “in varying degrees” and particularly “when there’s a lot of duplication and as an industry we probably only need one of them”.
Rightmove has notified new price rises according to agents on social media at the weekend. One said his rates were being put up 11%, and another 30%, adding: “Who in the world can protect high street businesses over this?”
While Rightmove is defensive of its prices, Sargent said he would welcome the day when Rightmove told its shareholders that in the interests of sustainability, it would not be raising its costs to agents.
Asked if he could actually see that day coming, Sargent said: “Eventually it will, because it will have to.”
Sargent said that as a large independent which has no dependence on borrowing or external investors, he is constantly being approached by smaller firms wanting to sell.
He said: “We are speaking to numerous small businesses whose owners are considering a change of direction.
“Increasingly the motivation for them to sell is linked to the continual pressure of marketing costs, particularly the ever increasing costs of the various portals, which is a contributing factor to making their businesses harder to sustain.
“At the moment, I never have a deal off my desk. From a corporate perspective, it is great to have the opportunity, but I do understand how tough it is for the smaller firms.
“It is also not great for the industry as a whole: you need firms of all types and sizes, and for the competition to be healthy. The costs of entry to the industry are prohibitive and so, for many, are the costs of growing.
“That worries me. We need the industry to be diverse and sustainable.”
Acorn, which operates in around London, currently has 450 staff and 36 offices, after doubling in size since 2013.
It started as a one-office independent 35 years ago, and this year is on track to report profits of between £3.2m and £3.3m.
Next year, Sargent forecasts turnover upwards of £33m, with a potential doubling of profits.
The firm grows both organically and by acquisition.
It plans to open new branches, while more acquisitions which are all funded by the company’s own resources are in the pipeline.
The company has recently acquired Uniplan, in Sydenham, and has just bought Property In, a firm in Dulwich, south-east London, established almost 20 years ago.
The previous owners of Property In, Stephen and Helen Smith, do not cite rising supplier costs behind their decision to sell.
However, Stephen Smith said: “Since opening our doors, the industry has changed, and although we welcome the increased compliance and legislation, it has been taking me away from the core aspects of the job that I love.
“For my wife and me, it feels the right time to leave the business, and having known Acorn and their CEO Robert Sargent for almost as long as we have been in business, his company seemed a natural choice and one that would build on our reputation and provide an exciting home for my team.”
Acorn is taking on the agent’s four staff and the business will for the time being trade under its existing brand.
The group already has a number of brands, including John Payne, Langford Russell, Start Financial Services, and MAP Surveyors, and Sargent is a strong advocate of well-diversified businesses. The Acorn Group includes build to rent, commercial, EPCs, estate management, planning, surveys and leasehold services, alongside financial services, sales, lettings and property management.
Sargent says it is a flaw of online agents that they are not diversified: “They are mining a narrow seam – sales, some lettings and maybe financial services. If they want to survive they will have to offer a full range of services.”
He says that none of the online agents has yet produced a viable, profit making model, adding that Acorn is 100% committed to a full-service, high street model.
“We spend as much as any agent on online, but estate agency is a labour-intensive, advice-driven business,” he says.
It is also, he admits, a business that cannot stand still. Profits are constantly re-invested into the company; the effects of the tenancy fee ban, which took £800,000 off the balance sheet, have had to be countered; and Sargent admits that as a firm, Acorn is always looking to the future.
“We are not for sale, and we are not for flotation,” he said. “We are keen to remain independent. But I always have an eye open for the next opportunity.”
Comments (32)
Could it be veryone else is charging what they feel they are worth, and estate agents are charging too low to make a profit as they are focussed on simply undercutting a competitor. Raise fees!
Sounds like this guy needs to get with the times and get off the high street. Can’t see him moaning at the council for putting up business rates, or professional bodies for putting their fees up.
How about some staff training to list and sell that extra house a month?
Seems to be it’s time to retire and publicising excuses in advance.
I think you need to read the story again, he’s talking about what it’s doing to other agents. He’s also saying it’s giving him an advantage and his business is profitable.
Do you know him as well?
Everyone seems to know him right down to the letters he does or does not send to the council……..
15,000 Agents/Offices or thereabouts?
15,000 wedges between them?
Until we start tossing the wedges away, we’ll continue to be sucked Portally/Annually
Our biggest strength (being competitive), is our biggest weakness
Just imagine what Rightmove would do if Agents spoke with a single voice
In the absence of that “Moses parting the portal sea moment” we have just the one option with Rightmove – DUMPmove!
I speak to vendors weekly, as I’m instructing their properties for sale. They are interested in viewers/quality viewers. Whether they appear from my briefcase/mailing list or exit a spaceship – the vendors I talk to don’t care. Sure they ask about RM and expect to be there, however when I explain the “Negatives” of their property being viewed by potential buyers on RM, a lightbulb illuminated!
This “Cartel” sh@te that is thrown up when one discusses about Agents collectively approaching suppliers like RM – it’s a Red Herring (does that offend Red Herrings?)
There is more to Rightmove’s Pricing Policy that needs to be openly investigated – and for now, I’ll leave it at that
I would ask vendors if they had used RM and what was their experience. All to often they said isn’t there a lot of properties to choose from, which prompted … who is selling your property, “me” or you being a single fish in a giant ocean with the thousands of other fish waiting to be found … sometime! A little more prodding and the vendors light came on and why the high street is so powerful and successful at selling pro-active, than on-line only re-active. Vendors buy your packaged service, not your internet advertising and is why 96% of the market is in the high street. Portals are nothing more than digital newspaper adverts and only a single string to your big bow.
Okay… Mr Sargent has a lot to say above – and a lot of it is about how well he and his company are doing. Why not – if it’s true, then let people know it can be done!
Who knows – maybe it will lift the bar of some others?
But at the end of the day, the first bit is right on the money. He’s only saying what many of us have posted here on EYE since its’ maiden voyage and pretty much every day since.
Words that very rarely get acted upon or carried out, unfortunately. Which further cements the problem firmly in place.
Maybe, as said above, Mr Sargent doesn’t really give a fuppenny about smaller businesses – but does that really matter? Or make the message less valid?
No. What he has said is right – and THAT is what matters.
#DO_SOMETHING
Spot on.
How much did it cost to advertise in the newspapers all those years ago?
Is it acceptable that one takes the pi22 just to be replaced by another?
J1 about the same as rightmove charge. Difference is you could market yourself and create a brand in the paper.
Now the consumer just has a ‘logo’ to choose from.
Setting, printing, transporting, distributing and wholesaling a product that had to provide news seller with an income and profit cost how much?
Using the newspaper argument to justify Peter Brookes-Johnson’s pledge to investors to get ARPA up to £2500 a month (£2270 profit per branch per month) is like saying every PC should cost £1million because that’s what a squash court size mainframe used to cost.
Its an argument that makes you look like a shallow thinker, please don’t use it again.
I remember spending £100,000 a year in newspapers for one office; and I actually truly believe it was better value for money than all of the portals combined.
It provided a local platform to promote one’s business and drive new instructions.
The portals are more of a digital window than a means of self promotion.
I asked the question to promote debate.
The portals need to change and drive traffic to our sites; to drive buyers to our registers………. until they do that they will remain a parasite…….
“The portals are more of a digital window than a means of self promotion…
The portals need to change and drive traffic to our sites; to drive buyers to our registers…“
I’m with you there, J1 – your wingman all the way.
I’m just going to park something here, if I may. It’s a post I bored you all with nearly three years ago – but it’s as if not more relevant now than ever.
” However much it pains me I have to comment on the power of t’interweb anf these portal malarkeys.
We’ve booked nine viewings so far today on a property which I received instructions to market late last night.
The response has been phenomenal. Unprecedented, in fact. It’ll no doubt be Sale Agreed to one of these viewers.
Of course, it hasn’t even had the chance to be advertised in the local paper yet so unfortunately I cannot comment upon the effectiveness or otherwise of the ‘New to the Market’ ad which will not now appear until mid next week.
But of course this is all about ‘it’s all gorn online, innit’? – so I’ll stick to the subject.
I carefully chose the imagery for our internet listing. Picked out some cracking buzz-phrases from my considerable armoury of factually correctish billshuttery for the summary.
I wanted people to slow down – to actually stop – at my little place on the hard shoulder of Information Highway, and not to whizz past at 69.8 miles per hour the way they do on roughly 99.87% of all listings if the quoted figures are in any way believable.
Nine viewings.
Someone else making positive enquiries as I type. H£11 of a result, I would say.
Can’t wait to upload it to the internet…“
You mean the time when agents’ offices had decent footfall, bringing people in to have actual conversations and build relationships? The time when people actually spoke to you about their requirements or gave you their details to register what they were looking for? The time when you could charge out for newspaper ads and, in some cirumstances, actually come out on top (which meant price rises didn’t mean as much)? The time when everybody dropped their newspaper advertising for the whole of December & August and kept the same rate when they returned after the break?
Yeah, things are so much better these days when it’s ‘all online’ and RM are draining businesses.
Tarkers 71 and Coleface it may help to tell us about your businesses to give your comments a little context?
Just to clarify… Agents with a certain level of critical mass and diversity can absorb rising suppliers costs. New and smaller businesses find the job much harder. This very fact is giving companies like ours a competitive edge that has started to show up in our numbers. Though I will always take a profit, The Acorn Group has been spawned from a one office start up over 3 decades ago.
N.B. For Forwardthinker we have a clear mechanism that guarantees business owners best value. So far no complaints.
Well Rob we know each other.
That’s my view. I’m not selling anyway 😉
Have a good day!
So, who is the mystery person that knows him so well?
Why don’t you “stick your head above the parapet?”
This firm is able to double it’s profits because of it’s strong grip in the land market throughout South London.
RS has a point, but i don’t think he really cares if other firms are endangered. if I chose to sell they are the last firm to approach because you’re not going to achieve best value.
I know loads of owners that want out, most switching to become an developer’. They cite various pressures, suppliers costs, tenant fee ban, the political and economic climate and even customers who are demanding more. We also have Ropa on the horizon.
This happens whenever the business gets tougher and those firms who are not able to diversify, who do not buckle up and work harder will not survive. This type of market always sorts out the wheat from the chaff.
Ultimately I don’t think Rob gives a flying pig about smaller firms failing, but he does love to portray himself as ‘the nice guy’. Once again his stuck his head above the parapet for his own gain.
Jealous much?
🙂 Not jealous no envious.
Rob’s done a great job from the one branch in Lewisham to what they have become now.
Having completed two high volume land transactions in the last three months, being in the process of a re-brand and planning our own expansion with no financial partners or bank funding certainly not jealous
Yup, that’s me above getting the 30% spanking of a lifetime.
Firstly, for those who know me (us) we do ok (we certainly ain’t on the breadline) 29 years of saving & investing well. Never needed an overdraft never made loss. 2018/2019 just finished for us and a very good year considering. That’s 29 years, every year bar none profitable. (I hear me think…. how much has RM taken over the past 10 years) We were not even on RM from the start… get that, we resisted temptation for many years… ARGH….. Just to set the tone… us coming off would not be we have nothing else to loose like it is for some. (Local agent I heard just coming off, stock of perhaps 8, defo nothing to loose)
None of my anger is because we cannot afford to continue paying, simply because when “fair” stops, it is not on. A 30% increase cannot be considered “fair” with ANY rational. Not even if I had the cheapest membership by 30%. Not my fault… stage the increase be fair.
Rightmove – They helped close another office of mine earlier in the year. To be fair the timing was perfect as we were switching area strategy and future expansion plans, so when I say help I mean they said “Why have so many offices”…. well RM that is because we were around before you were! Paying wages to local people BEFORE you were. None of the RM staff have taken my offer up on coming in and giving staff the redundancy chat when I say, yeh maybe closing offices is the way forward.
I’ve had a lot of Twitter chats over the weekend and been somewhat sceptical of the ease in which some say “Come off Rightmove” EASY to say…. if you know my area, you know we have some very strong agents. Good ones too, not about to say anything else. They are decent and each wants to earn a living. I would not blame them for jumping all over us if I make the first move. As for non agency trainers telling me to come off…. Stop it… no-one likes a smart **** trainer and anyone can deliver the ideal world situation.
So, what am I going to do about it… No idea, come off before 2020 and start 2020 as a RM free zone?
I think, although I have co-directors to consider and the wider implication of coming off RM not working and ensure we do not put jobs at risk because the dummy wants to come out… but I think I feel brave enough to do it.
Perhaps Crowdfund me though… I might need some help with a new venture if it goes wrong, but I do feel like I could come off now because we do not need RM… it is as simple as that… but it is “we” as I fear alone the sharks will circle and feed.
Ric, I agree with everything you say.
RM are squeezing our profit margins when they are already squeezed by tenant fee bans, fee erosion etc.
The agents that say walk away are small one man band letting agents who dabble in sales. Of course leaving RM did not effect your business, you were doing so little in the first place!
The so called industry gurus are a joke, there is a reason they are no longer estate agents “Those who can do, those who cant teach”
Just for clarity we do need RM to sell or get properties we are on it as otherwise other agents will slaughter us when we are up against them on listings.
Just for clarity we do need RM to sell or get properties we are on it as otherwise other agents will slaughter us when we are up against them on listings
You are on it because you are afraid to leave it. Became to reliant and is a run away train that many jumped aboard for fear of losing business to those that were on it, mainly the big companies. You don’t need to be on RM to sell or rent (the latter is a joke when it comes to fees, if you think sales is expensive). Many customers have moved away from ‘the place to go’, they now google search and all the portals results come up. Buyers and tenants will always follow the property where ever it is. As to a web portal being a listing tool … not anymore, that is down to how you present your service.
Whenever this chap pops up it seems he’s taking a cheap potshot at portals and suppliers. Perhaps twist it another way, would his profits be doubling up without said suppliers services? and I’m sure that if he didn’t think the service was required, he is more than able to terminate and find another supplier. Remember though Mr Sargent – buy cheap pay twice – the same line I’m sure your agency uses with your clients to help you get to those turnover numbers and the “Doubling of Profits”
With regards to the smaller agents – their market place and service offering will determine how well they are doing. I reckon if you went around every town in the UK there will be plenty of agents moaning the market is terrible, yet there will be several others having a great time of it, owning their market, innovating and using the right suppliers to up their game.
I would agree often… people pop at RM for no reason, it is what it is.
But 30% Tarkers71….. 30% increase…. come on… taking the ******* ****.
Rightmove rep?
Must be…
That’s what I thought. He’s reading a different article to me and has absolutely no clue about agency or the market.
Have I read this correctly, bemoaning rising costs while expecting to announce a doubling of profits next year?
im not sure that exactly hammers home the point.
I follow what he’s saying. Rightmove are taking the pi##.
Onthemarket took the pi##
And zoopla ran out of pi##
Whilst estate agents are looking down at a boiling pot of Pi**
” be like water ” Bruce Lee . = adapt. Rightmove is a boiling pan evaporating your water. Wake up agents.. What was onthemarkets comment on the 10-30% hike???