Listings’ ladder shows all is not rosy for corporates
There isn’t an estate agent among us, I’m sure, who doesn’t keep an eye on our competitors’ listings. But one thing I’ve noticed is just how badly the big corporates are faring.
At Spicerhaart, we’ve created a very interesting listings’ league table in the areas where we operate and all the local independents, our own branches included, are way ahead of the corporates when it comes to property on the books.
LSL and Countrywide branches sit at the bottom of the table – with just half the number of listings of other agents on average; Connells Sequence branches fare only a little bit better.
So what’s gone wrong? Have these corporates taken their eye off the ball?
According to Countrywide’s market report for 2015, its estate agency business ‘underperformed’ with ‘some loss of market share to traditional competitors’, also citing the state of the market for an overall £10m reduction in group-wide profit compared to the previous year.
So what do the leading agents – and I cite my own among them – all have in common? Well, for one thing, we are all independent and offer local expertise. And, secondly, we are all listing with OnTheMarket.com.
Whatever the doom-mongers say about OnTheMarket, we appear to be doing something right. I say do the number crunching on listings in your own local area; then you can draw your own conclusions.
Now’s the time to sell
We’re forever telling vendors it’s a good time to sell; the same applies to estate agents, particularly those with lettings divisions.
We’ve noticed a trend in large corporates paying over the odds for smaller chains in order to grow their business.
What’s even more striking is how much more they are prepared to shell out, paying up to eight times profits before tax, compared to four just five years ago.
The corporates may be awash with cash right now but they could be storing up a debt mountain that could swamp them in years to come.
The big question for smaller agents is do they want to carry on the fight against the increasing number of competitors, both on the high street and online? Or do they want to throw in the towel and cash in now?
Desperately seeking…
… Conveyancers, financial service specialists and graduate recruits.
The recent surge in transaction volumes due to Stamp Duty changes has highlighted just how short we are as an industry in specialist support, causing delays to the transaction process which could result in sales falling through.
It is in all our interests to lobby our professional bodies and learning institutions to encourage more people into these roles.
Plus we’ve got to stop the Government from adding in more rules and regulations and red tape which are putting people off from signing up to learn.
Complicated changes to legislation have led to financial service advisers leaving the profession in their droves. If we don’t do something soon to stem the flow, we will all suffer as a result.
Comments (21)
Corporates paying 8 x profits that’s not what I’ve heard or experienced, I think you will find it’s closer to half of that. There will also come a point where the acquisition drive will slow down and so will the price they are paying so if there is a right time to sell now is proably it. Spicerhaart not a corporate?? I agree with pm83 they are as corporate as they come.
I’m with EJC on this one. Having worked for Spicerhaart, who brand themselves as a family run independent agency, they’re not. They are as corporate as they come. All those targets they give you, customer service goes out the window and that is why they lose business to independents, Countrywide have a diabolical reputation.
In fairness to Paul, he stands his ground on AM/OTM as expected. But away from the rights and wrongs of OTM, the article isn’t bad highlighting changing times were in.
For sure change has, is and will be happening. A lot of legislation has come in and there’s more to follow, that if looked into can help road map to plan ahead, to help stay ahead.
We’re also seeing some good prop tech coming through amongst a lot of the cr@p proptech and some false supported budget models that VCs with deep pockets are crazily supporting, no doubt to raise and raise to soon exit.
Bits like fixflo, and a measuring app I found last night can truly add real value timewise and compliance wise.
Its not all doom and gloom and the game in many respects is getting interesting.
Many of the corporate agencies have always tried to increase market share through acquisition as they see that as an easier and quicker way. However, where they go wrong is through their people, processes, policies and inflexible working arrangements. Some of their training is very good but they are are not great at retaining staff which is counter productive and that helps the independents.
It’s simple. When the market is tough for whatever reason, Corporate agencies start to target staff for sales, lettings conveyancing conversion rates, mortgage appointments and look to penalise them for not hitting targets. I recall one of my most profitable offices smashing their sales targets but being asked to put the manager on a performance warning for not hitting a conveyancing conversion rate. That said, I also remember being asked to do the same for a virtual office which seemed odd as it didn’t actually have any staff. Staff in some corporates are massively demotivated and probably earn a lot less than the independent agents next door who offer flexibility and can reward individuals without worrying about setting a precedent.
The PR team at OTM must face palm themselves every time Smith opens his mouth.Last time we were told to take a leap of faith. This time independent agents are winning the war all thanks to OTM.
So what is this? an advert for OTM with no substance whatsoever or an opportunity to have a pop at his nemesis CW. Either way it’s boring.
Maybe Mr Smith should employ Stephen Jury to avoid writing complete trollop
Just a thought
What nonsense! OTM has nothing whatsoever to do with a downturn in the business of the corporate agent. This industry does not work in the long term for corporates. It is inevitable that squeezing the last buck to boost year on year profits means that customer service suffers. The smaller independents put the customer first and we are in a world now where the man on the street knows it.
Apologies if this is a bit dim, isn’t Spicerhaart a ‘corporate’ high street agent?
Also, with regards to market share and instructions etc, vendors and landlords make a decision 9/10 on the actual person that comes round to their property, rather than whether the valuer/manager/whatever is attached to a corporate or a independent one man band office. No vendor or landlord understands the difference and certainly doesn’t understand the ‘portal wars’ other than if you list on OTM, no one sees the property at all.
Having worked in both, I would whole heartedly disagree that ‘indies’ have the better staff and that they pay more as well. Come join us, the waters lovely 🙂
Actually Mr Smith, Connells near where I live (not work) are usually number one or just number 2 for market share and have been for years.
So I cant agree with your analysis at all.
I did choke on my coffee a little when I read this Paul and I hope you have your tin hat ready.
What I think is fair to say, is that a lot of top independent firms did choose to support OTM, so has their local market dominance increased or has it merely sustained while others take bites out of what was their market share? I suspect its the latter.
Where these bites are coming from is, I think, that the corporates have been affected more than the independents by the online only agents. Whilst I hesitate in saying that as it probably helps Emoove in their desperate attempt to find a buyer, the plain fact is that for a while, although not all, many corporate agent offices have simply been a mechanism to list a property on the portals. Exactly what the online only agents do.
Smile Please, I run a medium size independent business in the SE. We have been running rings around our ‘corporate’ competitors for some tine now. The reason is nothing to do with fees, in fact we charge more than they do.
We value accurately, market well and do not tie clients into lengthy sole agency agreements preferring to keep them on board with the old fashioned notion of customer service. Taking a Rightmove report (yes we are on OTM too) demonstrating that our corporate friends take up to 6 times longer to sell a house and are the league leaders when it comes to price reductions opens eyes.
From some of my offices we can also prove that on average we are achieving 2% over guide. `This makes life a little easier when negotiating a 1.5% fee. Some of our corporate competitors seem to be rewarded on instructions rather than sales with the inevitable high valuations. When valuing we stress the importance of short agency agreements enabling us to pick up the over valued instructions second time round at a realistic price and a better fee.
We don’t offer any ‘extras’ we have a comprehensive package that we provide to all our clients. One that is tried and tested and gets results. Our staff are paid well but also enjoy their workplace with reduced pressure, no minimum number of prospecting calls to make, no minimum number of flyers to drop and no area manager peering over their shoulder.
All in all agency is not a particularly complex business, choose your teams wisely, look after them and constantly look to improve. The rest will follow.
We do have good market share and a good average fee i would put us a medium sized company.
I am not saying you MUST drop your fees what i am saying is you can take the option.
EG. You are called out to an £800,000 prop, you can give them a free epc, shiny details which cost naff all but the corporate would want £250 up front for, also you could take this at a fixed £7,500 fee where as you know the corproate cannot go below X
Its about the freedom we have to make choices, corporate agents cant. Same way you can say 0 weeks tie in, corporate need at least 12 and many by us go for 20!
Couple with the staff that over value as you point out at corporates (indies have the better staff) which is why we have far more market share.
Corporates gain more market share in a flat or negative markets and indies do better in a rising buoyant market, always been the case.
“If you think market share has anything to do with otm or any other portal for that matter you are deluded.” Really? I ask you to remove yourself from Rightmove if you really think this.
The corporate agents lack motivation as they are generating profit for shareholders and as such have no big take at the year end.
Can’t wait for the day we do remove ourselves from Rightmove. Finally slowly winding down in the local paper. On the right tracks.
I have said this many times before if Mr Smith is so convinced that OTM is the holy grail for instructions why have they just spent a huge amount of money with right move to ensure all their properties have premium listing status???????
Lack of confidence in his own conviction me thinks.
If you think market share has anything to do with otm or any other portal for that matter you are deluded.
It’s very simple why corporate agents are losing share. There is a lack of property nationally and agents are being driven into a fee war. Indies can make a commercial choice at what price they will take a property and what extras they can throw in for free. Corporate agents have a minimum fee and not allowed to give away bolts ons. Couple this with the higher than normal turnover the corporates are having and you get a loss of market share.
The corporate agents cannot attract good experienced staff. Indies are paying more, they are nicer to work for. If the you are a good experienced agent and at a corporate there are many options open to you to move.
*higher than normal STAFF turnover
Hear hear – it’s absolutely stuff all to do with OTM!
Minimum fee for corporates in my patch seems to be a packet of crisps or the opportunity to put up a board. I concur it has naff all to do with OTM and everything to do with the culture of those companies however.
To be fair surrey1 i am a suck for Walkers Cheese & Onion, might have to join them!