High Street vs Online Agents, as featured in The Sussex Business Times
The Sussex Business Times recently wrote an article about High Street vs Online Agents and asked me to comment. Here is the article in full, or you can read it online.
"The Internet has revolutionised the way we buy and sell property with disastrous consequences for traditional agents. Clive Janes advises on whether traditional estate agency is in fact dead, or just changing"
The digital revolution seems to have taken over every walk of life and every sector of business. Just as Airbnb has shaken up the world of travel and hotels, now it seems online estate agents are trying to blow apart the old system of buying and selling property on the high street.
The number of online estate agents is growing, as with the rest of the business world, and it is predicted that by 2020, 70% of homeowners will be selling online rather than by traditional means. Buying online has also become far more likely than buying in a high street agency, which has led to many frustrated independent estate agents in the streets of the South East as well as the rest of the UK.
In 2013, Rightmove obtained 14 million page views compared to the Queen’s Speech’ 7.8 million views, putting the state of the market, and the UK populations’ priorities into perspective. The UK also spend an average of 17 hours a month on property sites in 2015.
The online sector has come a long way since eMoov, now one of the top dogs in the world of online estate agency, began selling homes for a fairer fee than the high street in 2010. Now, due to the prevalence of the likes of Rightmove and Zoopla (98% of buyers and tenants are said to go straight to these sites) every agent is now an online agent. However, it’s no longer just about providing a cheaper alternative, but about offering a more empowering service for the consumer.
Recently, easyProperty CEO Rob Ellice and his horse-drawn coffin led a cheeky, and quite outrageous PR stunt in London. It involved a funeral procession through the streets, mourning the ‘death’ of the high street estate agent. The march got under way as online ‘estate agents’ in pin-striped suits, and holding brick-sized mobile phones to their ears, filled the streets. They carried red wreaths behind a horse-drawn coffin.
Rob Ellice said: “Consumer behaviour has changed. No one walks into an estate agent’s office to start their search for a property anymore. With traditional estate agents, you are still paying for their high street offices, a fleet of branded cars and cafes – even if you don’t want these services.”
More and more people are turning to online estate agencies due to the cost comparison. Online estate agents often offer a far more flexible, and more affordable package choice, plus have an upfront fee for their services rather than high street estate agents’ often high fee that can rise above and beyond your expected budget due to the cost of the house itself.
Clive Janes is a Sussex based landlord who setup CRJ Lettings early last year - a small independent letting agents, based in Chichester, West Sussex. He doesn't have a high street presence, viewing it as in fact a hindrance to his particular business model, however is local to the area and knowledgeable of Chichester’s property market. He shared his opinion on the topic of online vs high street estate agents, their differences and some of the advantages and disadvantages of online-only agents: “The fundamental problem with many of the online-only agents is that they operate too broadly geographically. People still largely use local agents to rent and sell their property because they are presumed to have good local knowledge of the area and a solid grasp on the price of any given property, whilst being on hand to conduct the viewings. In contrast, online-only agents lack this in-depth local knowledge and often need to consult with local agents to ascertain the correct sale/rental figure!”
Clive adds: “Another negative to the customer that most online-only agents have put into their business model, is charging their fees upfront; meaning it is a sunk cost whether you sell/let your property or not.”
This is something that has previously come up as an advantage for online agents – with such high and changeable fees, some customers may like the ‘flat fee’ approach. However, Clive suggests a downside in performance: “Sceptics may also suggest there is little motivation to perform the task in the vendor’s best interests when the fee has already been paid.”
So, what’s the solution to this battle between online and high street agencies? Clive believes that, going forward, a ‘hybrid’ of the two formats will best serve the public: “I expect the future to consist of more mobile property professionals who focus on a local area and take full responsibility for each property they take on. Not being tied to a high street shop nor weighed down by its inherent costs means a passionate individual can offer truly expert, local and tailored advice, offering good value rather than simply being ‘cheap’.”
This may prove more difficult than it sounds, however, as Clive comments: “It's very much a case of the chicken and the egg; to take on properties you need to be able to prove competence, trust, dedication and that you will care, but without the property in the first place it is very difficult to prove you have those qualities. Whether you are online-only agent or on the high street, it is this you need to overcome so as to engage with homeowners and landlords to trust in using your service.”
Perhaps estate agents with a more high street approach don’t need to be quite so afraid though, with customer perception of quality and service often far ahead the costs involved: “Ultimately landlords just want their property let and managed proficiently, by a competent agent who they believe they can trust and cares for them. The biggest thing online-only agents have missed whilst banging on about their ‘cheap fees’ is that property is largely a people business and until they can actually add value to the end-user, they won’t make the impact upon the market they expect to.”