The changing face of estate agency
‘Online’ agents have been developing their market share for a number of years, but have only recently the mass market. In the same way that Hoover became synonymous with the vacuum cleaner, if you ask about ‘online estate agents’ you’re more than likely to hear the name PurpleBricks mentioned, thanks to rapid growth and a very expensive media campaign. Despite their dominance, there is a wide market of ‘online’ and ‘hybrid’ estate agents, with the former operating exclusively digitally, and the latter offering a halfway house between the traditional high street agent and the arm’s length online only agent.
For the general public, the rise of online agents has been largely out of sight, with certain brands (YOPA, easyproperty) breaking cover to advertise nationally, but with most staying in the shallows and sourcing property owners on Google. As extra spending continues across the market, with investors adding money to a range of online agents, advertising will grow and more and more of this new breed of agent will enter the public consciousness. You might now be thinking ‘what’s the difference between an online agent and one who advertises property on Rightmove?’
As a concept, the online and hybrid agents exist to fill a void between a growingly savvy consumer audience, who live and breathe through digital apparatus, and a method of selling property that has existed in its current state for far longer than perhaps it should have. The traditional agent has a high street presence, a team on the ground covering, in the main, a fairly compact geographic area, and specific experience of that area. You can visit the agent in your lunch break, you can meet the agent for a valuation and know that they will be there from start to completion. It’s a proven model. But it does come at a cost – and this is where the gap has emerged for a different way of selling.
Online agents don’t have the bricks and mortar premises to support, nor do they have extensive teams set in each area. An online agent may do everything at arm’s length, may not guide viewings around the property and may also not cover any of the post-sale STC process. But, they may also charge less than a tenth of a traditional agent’s fee. Hybrid agents merge the two models, still doing without a high street presence, but delivering ‘local’ experts who cover a large patch, but are a dedicated point of contact. This comes at a slightly higher cost but it is generally around 25% of the cost of a traditional agent. That’s a huge saving, and as a country we’re ever more happy to entrust our lives to the ‘cloud’ – so it’s an attractive prospect. Spend a lot less, still sell your property and deliver the same end result, whilst being able to buy yourself a new bathroom with the savings.
That’s the promise. The reality? The traditional ‘high street’ agent, on the whole, is not overawed by the rise of online estate agents. They cite a reduction in service levels, a lack of local knowledge and a reduced incentive to deliver the best sale price for a seller. If a fee is paid up front, and doesn’t rely on the sale price, the argument goes, an online agent is happier to move property on for a reduced price, to press on with the next property.
How true is this? It’s debatable. There can be no doubt that the traditional model of selling houses is under scrutiny – Rightmove’s dominance of the buying market shows that consumers are more than willing to put the legwork into a property purchase, comparing floorplans, school selections and broadband speeds of a property from their sofa. You could argue a lot of the questions that would rely on local expertise can be answered before a request to a view a property has even come in. On the flip side, an agent who lives and breathes his or her patch will have a selection of potential buyers on their books, know the story behind why a house two doors away sold for 5% over asking price, and know exactly what features on a property in an area are attractive for whatever buyer trends have appeared in the area.
From consumer level, the marketplace is becoming crowded with a number of different ways to sell a property, but with little education as to why and when you choose one over the other. In an industry that appears to be delivering more variety by the day, our view is clear – a seller needs to understand what they can afford to pay, and how much they want to be involved in the process. If paying 2% to an agent is going to seriously stretch a budget, even if 101% of asking price is achieved, it’s not a viable option. But with agents regularly charging fees within the 1% – 1.5% region, the price difference between traditional and online/hybrid, whilst still marked, becomes less of a divider. Price is a great starting point – but it’s not the only thing to be considered. What it offers is a consistent metric to benchmark agents, and a basis for comparison. By taking the time to compare estate agents, you give yourself an informed starting point to a notoriously stressful process.
Our advice would always be to establish what you can actually afford, and then talk to agents that fit within that bracket. Invite a traditional agent and an online agent to your property to value it, then make a decision based on their services and the feeling you get from the agent. Valuations are usually no obligation so it pays to try both routes – you may save yourself some money or, by paying more to a traditional agent, you may make more on your property. Make the decision from an informed point of view and you reduce your chances of regretting your decision.
It’s one of the most interesting times in the estate agency world for a long time, with seismic change happening on a regular basis. The property market itself, post Brexit, still has a huge number of buyers for each property listed but confidence is fragile – this doesn’t mean it’s a bad time to sell property though. It will always be time consuming, but there are always buyers looking to move, they just may need reassurance. This is where a good agent helps, and there are plenty around, from the traditional high street agents to the newer online agents. The changes in the industry are positive for the consumer, with greater choice available – just make sure you pick an agent that you connect with, technology (including our site) gives you fantastic insight and takes out some of the awkwardness and stress, but you need a good personal connection with an agent to ensure that stress reduction continues until you exchange contracts. Ultimately, you’re choosing a service, not buying a TV – and no matter how much technology is involved, that service and personal connection will always be vital.