Online estate agencies will force poor high street agents out of business within five years.
The claim has come from property search firm The Buying Agents.
It said that traditional agents delivering bad customer service will shut by 2020 as a result of “the growing number of quality online-based agencies emerging in today’s market”.
It said high street estate agencies can no longer afford to charge high fees and deliver bad customer service “as the property market continues to evolve increasingly in favour of the digital medium”.
The firm also claimed that more than 90% of its clients would decide who they sold with, based on the service they received when they were buying.
Henry Sherwood, managing director of The Buying Agents, said: “We are seeing an emerging trend in the growing number of sellers who opt for an online agent as a result of their own buying experience with high street agents.
“Many feel they could do better themselves at a fraction of the cost by only paying for the services they actually require.
“As a result, agencies not meeting client expectations when they are looking to buy will quickly become a dying breed over the next five years.
“Encouragingly, the emergence of so many online agents has inadvertently acted as a kind of filter for ensuring that only quality agencies survive on the high street, which is great news for us and for the clients we look after.”
Separately, an agent has queried whether online agents have the 5% market share that is generally claimed.
Chris Wood, of PDQ Estates in Cornwall, said that he measured an area containing nine difference Truro postcodes.
Last year, according to Zoopla, he said there were 4,335 new instructions, including what will have been some duplications.
A total of ten different online agents listed 37 of that number between them – a market share of 0.85%.
Comments (30)
Those who give the customer the best value will surely win in this day of customer reviews and consumer information, regardless of model. Estate agents should focus on what makes them special and how they can give more instead of wasting time and energy arguing over how one should skin a cat.
“As a result, agencies not meeting client expectations when they are looking to buy will quickly become a dying breed over the next five years.” How is a professional agent supposed to manage buyer expectation when they have multiple offers on 1 property? EG 5 offers means 4 disappointed, disgruntled buyers (potential sellers) and 1 who thinks you are great. Is this guy saying we should favour “own to sell buyers” over others and make sure they get the right outcome or go out of business. Our clients are never our buyers only our vendors.
Good, ‘traditional’ style agents have nothing to fear from the online model in the same way that good restaurants don’t worry about McDonalds
I responded to a comment made ‘somewhere else’ to this same story earlier – seems appropriate to c’n’p it here – I trust the OP won’t mind (don’t know why but he hasn’t come over to The Dark Side yet…):
To “surely those estate agents offering poor customer service will die out anyway, regardless of whether online models are there or not.”
I replied “You would think so… but the same ones we were saying exactly this about two or even three decades ago are still there… on a High Street near you also, no doubt!
Other than that – this guy probably LOVES the Onlinies – let’s face it… they can’t negotiate themselves a Fee worth working for so the last thing they’re going to do is argue the toss with the likes of him to get their client best price…”
Only when on-line only agents start to offer a NO SALE, NO FEE service, can they can expect to start gaining instructions in meaningful numbers. The average home owner simply does not want to pay in advance for a sale which is perceived as difficult to achieve and not guaranteed, but they are happy to pay on results. On a no-sale no-fee basis, the problem for the on-line agent is will they really have the ability to sell as effectively as the high street agent? I strongly doubt it. So to my mind, their business model is fatally flawed – they are asking people to pay for something they can’t possibly guarantee to provide. Its like ordering goods from Amazon with only a 50% chance of receiving delivery – it simply can’t work.
The fact of the matter is that an online business can trade anywhere – as such their market place is huge far exceeding that of a high street agent which is by definition constrained by its geographic location. As such, a VC needs only to see a tiny increase in market share to ensure a decent return of their investment. Such a business is relatively cheap to set up and run compared to a traditional model. It seems the noise made by these on-line models is driven by the investors rather than the public. Low risk – huge potential.
I am thinking of selling – or rather my ex wife is. Using an on-line agent hasn’t crossed my mind to be honest, but in the interests of fairness checked one such agent and was told how much I could save – this figure was TWICE the fee offered locally on the High Street.
I called the local agent who has 3 sold boards in my road and send me a leaflet every weeks telling me they have buyers waiting. They are keen and enthusiastic. Commission is not a factor other than I want the satisfaction of ‘a deal’. I know what my house is worth and 1% either way is of little consequence as I am likely to get competing offers. I called them for a valuation. Six doors down sold for £9,ooo above the asking price.
They have recommended a local firm to sort out my overgrown garden and, after the valuation, even dropped me at the station. They wave as I walked past their office on the way to Sainsbury’s.
The next step is to drop my keys off with the people I have met and leave it all to them as I am away a lot. They even offered to feed the cat too. That was nice.
No doubt the odd lay-by has a decent roll n’ bacon van…. however most are poor to average…. ditto online estate agents. As a solicitor estate agent I have dealt with a fair number over the years and my experience of their service has been woeful…. disjointed, different person each time, no one knows what is going on, calls not returned etc….. simply poor service. All their effort goes into marketing their business to win instructions and get their upfront fee…. thereafter any comparison to High Street Estate Agency service standards is fantasy. I do believe there are some good online agents in the UK however the number is miniscule. And yes, there are poor High Street Estate Agents however these are often self filtered by the local market not using then. A sweeping statement that Online Estate Agents will eventually dominate the market demonstrates a lack of understanding that we are not selling widgets!….. we are in fact most often selling people’s most valuable asset….their home. Online advertising is certainly a useful tool for agent & consumer. The phrase cheap as chips springs to mind…. picture that when considering an online agent…. thing us, they are not, nor are they comparabile to a High Street Estate Agency.
Do you remember when insurance companies thought they could sell houses better than estate agents? Didn’t most of them sell their networks of four next to nothing? It could be the same learning curve for the investors pouring money into online agents. Without any barriers to entry the online model will be too fragmented to have traction and people want service and experience when they sell such a previous asset. Online isn’t transparent enough to be trusted. How do you know thesite isn’t run by a college student just trying to subsidise his uni fees? When i started in agency a tiny minority of sellers tried advertising privately in the local paper. What a great source of leads that was because most failed and we could add more than our fee to their price and still sell quickly. Good agents will remain in demand.
And the online ‘agent’ working in his pj’s on a laptop 200 miles from his customer is going to offer a better experience? Utter tosh. Pay peanuts – get monkeys 🙂
We must go with what the consumer wants. But the consumer must be able to make their decision based on fact, not on mis information, made up statistics and claims that can not be substantiated.
I have no doubt that online is here to stay but the size of their market share should in part be determined by fact not fiction.
Just seen on Twitter that Russell Quirk thinks its more likely to be 2018 than 2020. Methinks he is confusing that with his own firm so 2018? really? that long?.
A lot of sound bites, A lot of empty words, a lot of fighting talk……..
Truth is there has always been poor and cheap estate agents (and other trades and services) and there will continue to be for many many years cheap and poor estate agents be it online or high street.
But as a lot of poor cheap businesses they will go out of business at some point only to be replaced by another……… And so the cycle continues……..
How many times do you hear from viewers that they would rather see the property with you than the vendor? They are far more relaxed and can discuss openly how they feel, this gives us the opportunity to handle objections, make suggestions and get proper feedback. A huge advantage over the online agents.
If selling a property was as easy as buying a car, holiday or insurance online where a mistake perhaps costs you hundreds of pounds then yes I can see online only taking over, but it isn’t. In the same way you wouldn’t go online and invest ten of thousands with a stock broker without talking to them and getting advice, why would anyone trust the, pay me first, advice of any online only agent 200 miles away. The corporates invested as much money into estate agency with high street branches and where are they today; Prudential, Abbey, General Accident, Bristol & West, Black Horse to name but a tiny few. Those that say estate agency hasn’t changed it did; 15 years ago customers choose in favour of their LOCAL estate agent, whom they could get to know and trust. Now drive through any town in the country and with very few exceptions you will see the leading three or four estate agents now are local independent firms. Industries evolve towards MORE personal and direct customer contact not away from it!
It is a pity PIE doesn’t allow single word posts? One succinct word would have been enough!
Online isn’t the bit that is going to drive anyone out of business but it will be the thing that allows sub-mirco agencies to exist. Bedroom Billy or Betty with an instruction or two facilitating a centralised office a nationwide presence. One only has to look at ‘Europe’s largest blah blah blah’s attempt to get a foothold into the UK market to understand why Mr Sherwood is wrong. Basic economics suggest everyone has to earn a living. Picking up 2 or 3 or even 10 instructions per month and paying the majority away to centralised running costs means the area lister ends up with a 7 day a week self employed job that doesn’t pay minimum wage! I am not sure will be a queue a mile long for that sort of opportunity. It is possibly something to quietly supplement Universal Credit but beyond that I can’t see it paying enough to be viable. There is an obvious symbiosis between the Online selling listers and Online Buying agents so I guess this story is more wishful thinking than anything else.
Mr Sherwood, who is clearly related to Sherlock Holmes, has made comments this morning that have hit me like a thunder clap. A company offering bad service may not survive in business…astounding.
All joking aside, really? Is this something that anyone wasn’t actually aware of? Poor agents, poor service provides will generally only get one or two bites at the apple before word gets out and reputation is desiccated. As I have said on this forum on many occasion, the battle of survival will be one or lost on customer service. High street agents or on line, it matters not and those who do not consider their customer journey or the service that and their staff provide will not make it.
You buy cheap, you buy twice.
Unless you offer a deal to your local vendors offering them their “up front” fee off your high street fee when they don’t sell (most don’t, of course). It has worked well in our areas and it’s something other, good local agents should do. Not only will you get the fee and the board, but it helps spread the word locally about how bad some online agents are. Many won’t change to a high st branch as they feel they have “lost money”…….by offering them their upfront fee back you give them a way out.
Let’s put aside that this fella is doing a bit of self promotion and that there is a whole debate about the place of a buying agent in the world. The point is that a bad estate agent is a bad estate agent and deserve to have little market share but the idea that the country’s high streets are full of one office agency offices giving poor service that will grip on for another 5 years then close down and be replaced by budget agents is nonsense.
also this Cornish lad has a point on market share,mas that chart showed the other day you can be in the top 10 budget agents in the UK with 300 listings, it’s not a big thing – Jonnie
Agree. I called into a lettings agent in W London the other week. They had no client respect. They didnt deserve customers. Sincerely a good argument for that one to close.
Online only or traditional who do online – there’s good and bad in both. Those with Hg St offices generally have more investment in their business.
There are excellent high street agents and excellent online agents. Everyone cannot be lumped together. Customers will not pick an agent solely on cost. Some high street and online agents will close for many reasons, not just because they are online or high street.
The big bleet is when budgets say they save people money. The truth is their fees are normally low for a reason.
Many budget agents lack experience to negotiate best deals which in fact costs clients £housands.
If a budget can’t secure a decent fee for themselves. Do you really want the jokers agreeing a low stc price.
I dont agree with that, its not lack of experience that separates a good high street agent from an online one, its two things: Motivation to get the best price and then the same problem that affects smaller budget agents (whose fees don’t allow them to promote or staff enough to be bigger), which is, a high enough concentration of stock of property within a given area to allow cross selling of property (i.e If that’s not quite the right one I have this one for you).
Re: traditional agents delivering bad customer service will shut by 2020….
Try by end of 2015!
Everything comes down to customer service. And it is precisely because of this that stand-alone online agents will begin to go out of business. There will be a shift BACK to traditional estate agency services, particularly to the companies offering the very best of service, achieve the best price and get the referrals and recommendations.
We are right next to Martin and Co Sales, with them offering High Street estate agency for about £450 plus VAT. We are successfully listing numerous properties in Jan and Feb at the right price, selling them and averaging 1.5%.
People are not questioning fees, photos, websites, On The Market, Off The Market, RM, Zoopla, Prime Location et al. All they want is proper advice, for us to follow through on what we say we will do and sell the property. Answer calls, respond to messages, give proper feedback and subsequent advice.
Online agents don’t do this. Poor High Street Agents don’t do this. For those that do, come on down. The water is warm and getting hotter!
It’s a good job most Hg Street agents are also online too then 🙂
There are constant changes happening in technology and legislation. My observations is the most risk models are the budget models that often operate not knowing the boundaries of an “agent” model and a “passive” model.
For sure better fees often result in better quality staff. Budget models can scrape the barrel on staff quality, thus service levels get compromised.
Many budgets are now raising £millions which can buy good management. But how sustainable are budget models when agent error can cost £5k per time. It would be good to see the powers that be police rooky agents out.
What about the high street agents forcing the poor online agents out of business. Sorry never heard of the buying agents !.
Agree. But whilst vc’s have more money than sense were likely to see more budget models hit the headlines. My guess is vc’s come to tbeir senses in about 2 years.
Current portal models alone don’t fully fulfill traditional agents needs now. Budget agencies (and I didnt say good online models) budgets are like leaches. They can only exist so long as their is a main supply.
As budgets only make up 5% (likely to rise to 6-8%) over the coming 2 years, when places are created to exclude them more, they beckme non prime again.
Budget models have a limited life span
“Budget models have a limited life span”
‘Budget models’, in one shape or form, have been present in our industry for decades.
Exactly how long is this “limited lifespan” you refer to, Mr Mealham?
@PeeBee
I’d say budgets go from a 5% to 6% – 8% over the next 2 years for which many smaller budgets go pop.
What your then see alike Estates Direct they’ll need more and more top up funding. VCs will vet fed up in 3/4 years and start pulling out as most will be unviable leaving just a fes large budgets.
Equally tech will get better and more adopted tk support B2B between higher fee better agents as portals alone are inadequate.
Mr Mealham
Where does you 5% come from? According to every other source on the planet, Online/Passives have no more than two percent of the market.
Do you count ‘Half-Fee Harry’, the cut-price contender on every High Street in your “budget agent” numbers?
Either way, I guess you and I will just have to continue to agree to disagree on this ‘B2B’ stuff you keep pushing.
I am an Estate Agent. My clients employ MY company because they believe, as I do, that my company will secure them the best buyer at the best price, in the best timeframe for them.
In my opinion, IF I needed to MLS, ‘sub’ – or whatever other cutesy title you care to put on it – to do what my clients have hired me to do, then sorry but they shouldn’t instruct me in the first place.