What does Rightmove’s decision to turn down a staggering £6.2bn takeover bid from News Corp’s REA Group really say to estate agents struggling to cope in a volatile market?
Describing the offer from Rupert Murdoch’s company as “opportunistic” and claiming it undervalues the company’s future, Rightmove has sent a clear message that they believe they can deliver higher profits without external intervention.
How will they achieve this? By charging estate agents more? By inviting home owners to sell directly on the platform? By becoming an estate agent themselves? Or something else?
We can see from their half yearly figures that they’ve upped their spend on technology, focusing on new AI offerings, which will inevitably reduce the role of estate agents in key parts of the transaction process.
And while this might be great for enhancing their platform for customers, it doesn’t address the fundamental issue that our industry faces in rising costs and shrinking margins.
According to the Insolvency Service, the industry is already under enormous pressure, with 286 firms going bust in the 12 months leading to July 2024, a third up from the previous year.
The idea that we’ll benefit from even more tech-driven offerings, while Rightmove continues to raise fees, feels increasingly unsustainable.
For many smaller agents, this could be the tipping point. If Rightmove continues to prioritise profit over partnership, we’ll likely see more closures and consolidations in the months ahead. I know from our acquisition conversations there are many businesses on the edge.
With the entry of CoStar under the OnTheMarket banner and the significant investment they’re making in tech and marketing, surely Rightmove’s margins are under threat, or they’ll have to rethink their marketing costs. Are they going to change their model i.e. charge by listing or price per property per week? Or a pay per click?
The REA Australian model of charging is very different and starts at AUS $1,000 basic up to AUS $5,000 for the full display but as their market works at 2% to 3%, fees are higher.
As an industry, we need to be asking tough questions about whether Rightmove’s vision for the future aligns with the reality we’re facing on the ground. Rightmove’s future might be looking bright, but for many agents, the outlook is increasingly uncertain. If they think there’s some cash under our mattress, they may be wrong.
Paul Smith is chairman and founder of Spicerhaart
Correct analysis – as posted previously long overdue for agents to jump ship from Rightmove – with a sensitive market, agents competing on fees, Labour for next 5 years ….. Rightmove will screw most into the ground & their arrogance exceeds even our MP’s & Government.
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Co-Star will screw us even more than Rightmove ever did.
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Nobody is holding a gun to agents heads. If RM isn’t working for them, come off it. Why shouldn’t a business charge what a market will bear?
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It’s like drug addicts they (rightly) blame the drugs for their addiction but like the drugs why would RM do anything different if the behavior of the addicts continues unabated!!
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If you look at the share register of not only Rightmove but Foxtons as well, the two big remaining names left in the sector not owned by hedge funds and you will see that US banks and private equity are the biggest shareholders in both. Do you honestly think that they want to see anyone else apart from them taking over these two companies, of course not. They’re in charge not the management, Murdoch hasn’t got a chance and Foxtons will eventually succumb to a US buyer as well before the year is out
Nailed on !!
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