A quarter of agency branches may not reopen once the pandemic passes, an industry veteran has predicted.
Industry trainer and consultant Michael Day said it is too early to make concrete forecasts but predicted a mixture of cashflow issues and a realisation that firms can rely on technology rather than having multiple branches would mean some high street branches remain closed.
Day, managing director of consultancy of Integra Property Services, told EYE: “I wouldn’t be surprised if 25% of high street branches don’t reopen.
“That doesn’t mean firms will disappear but they will have downsized and realised they can cover a territory from one location.
“Some firms will be better placed to reopen but others are living hand-to-mouth anyway.
“Once they have got over the initial shock, agents need to turn their minds to what their business will look like in the future.
“After two to three months of working from home many agents may realise the costs of some high street branches aren’t necessary.
“The public is also getting used to doing things on Zoom rather than having to make their way to the high street and worry about parking charges.
“There will be a big paradigm shift.”
Day also predicted that agents will come to rely less on portals and may choose to use just one rather than all three due to a combination of costs and “realising who the customer is.”
He added that the agency clients he works with haven’t lost sales yet, adding: “In the main people are saying we are all the boat, they will wait two to three months.
“It may be different if this all lasts for six months to a year.
“If agents are working with up to speed solicitors those sales will still progress and will exchange and complete once contracts can move around
“Agents will then get a cashflow boost once the lockdown measures are removed and at that point we have to see how the market recovers.”
And my other job is writing horoscopes…
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Hi JW
Not an “In depth” article by me but a brief response to some questions from the writer.
You are right that it is a personal view and that time will tell.
Key factors will, of course, be length of lock down and therefore start of any “recovery” – my point is that agents need to be Thinking about and planning way forward. Hope is not a plan.
I wish you well.
In regards a horoscope – I think now is a good time to stay positive, stay strong and stay safe.
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A more interesting headline could have been written around this point “Day also predicted that agents will come to rely less on portals and may choose to use just one rather than all three due to a combination of costs and “realising who the customer is.” Firms may not need the premises they have now but will need people to trade if they still want to cover the same area and expect to return to previous trading levels. The debate should be where the money saved by closing offices is invested – savings, marketing and training and rewarding staff who have kept he business running. A good article but an interesting choice of headline. We won’t be going back to normal we will be adjusting to a new normal.
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A snapshot survey I am carrying out today on Twitter and LinkedIn currently indicates that over half of agents are saying they will run with one or none portals post covid-19. If they were running with one – just over 70% favour Rightmove, 20% Zoopla and 10% OTM.
Obviously only a small dataset but, if becomes reality it could become “life threatening” to the smaller two portals.
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utter drivel
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Cheers Ben.
At least I was asked!
I wish you well. Stay positive, stay strong and stay safe.
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I’m not sure most agents will get a ‘cash boost’ once lock down is over as suggested in the main article. I think this will depend on how long this goes on for and how many buyers stick with their purchases.
I operate three shops. All closed and all staff but two on furlough. There has been some resilience I’m pleased to say but it is early days. So far we have had to cope with some pretty meaty reductions which in the main have been agreed. We have also lost a few.
My principal concern is we are not replacing any lost or exchanged sales. In three months or less there will be next to nothing in the pipeline. Staff will come off furlough but sadly be laid off. There will be only a meagre income until the business is built up. It will be like starting up again but at least people will know we are.
As to expensive high street offices I’m sure a lot of agents will be looking at this. Of course one immediate problem will be existing lease obligations. Good luck with that one!
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Hi Andrew
Not a cash boost as such but, hopefully a burst of exchanges and completions but this will likely deplete a pipeline that has had little, if anything, added in recent times.
Anecdotal evidence at moment is that sales pipelines holding up as everyone in same boat. Clearly the longer it takes, the greater the risks of aborts.
Key will also be whether buyers can and want to get buying afterwards and how quickly that demand is realised.
Many agents fo not have a business plan so have nothing to readjust or work from. Clearly they need to change and a realistic cashflow plan will be key.
I wish you well.
Stay positive, stay strong and stay safe.
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I don’t think you can judge this situation as the “I can do this from home” trigger.
The only reason working from home seems quite easy, is nobody is allowed to visit your office! No new business levels and limitations on what you can do with your existing stock.
The High Street might well benefit from this lockdown and people are desperate for their freedom back…
I think this is a chance to “just maybe” reopen as if you started your business for the very first time… remember the excitement or each customer is the most important person in the world… or something like that.
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Hi Ric
I’m not suggesting the end of the High St but do believe this situation will accelerate a trend that is already there. Not necessarily to “back bedrooms” but other sites.
If I’d been negotiating leases on estate agency premises in recent years, I’d have had break clauses in my favour to give me greater flexibility.
I wish you well
Stay positive, stay strong and stay safe.
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Is this guy a ‘guru’, ‘legend’ or ‘influencer’?
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History is written by the winners so time will tell!
I wish you well.
Stsy positive, stay strong and stay safe.
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When I saw ‘Industry Guru’ I admit I had to have a look, when I saw it was Michael I thought to myself there is a man entitled to the description.
There are a couple of new gurus doing the rounds who don’t.
before all this COVID business began 6000 out of 17,000 branches on Rightmove had a register that did not warrant their portal spend.
Transaction volumes have contracted by about 2% a year for the past 12 years, the loss of income is masked by a 2.9% increase in transaction prices and put down to fee erosion from disruption.
I have no idea what is going to happen but MIRAS saw new agencies opening in place of those who closed but I have long thought we will contract back to 3 or 4 agents per activity centre- so Michael’s numbers sit right in the middle of that range
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Cheers Robert
Let’s be clear – the term Guru is not mine – I’ve been called worse but I shall leave it to others to decide!
Of course none of us know the future numbers but it is clear the current way of the world is unsustainable.
The pace of change will increase and the debate about the best ways forward will no doubt rage in the comments column of PIE and, perhaps more importantly, in the boardrooms of agents up and down the country and in the hearts and minds of a new generation who will be free of the baggage of old thinking and operations that may not be as agile as they need to be.
Stay positive, stay strong and stay safe.
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Where other people are describing themselves as all sorts I know that’s not your style.
When I read Guru I half expected a Johny Come-Lately reckoning based on events back to Fannie Mae but you saw first hand 1988-94, 2001 and 2007-08 and being so connected as you are have a very good idea who is thinking what
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I hope the editor gets better soon as this is V.Poor.
Within First two lines I stopped reading.
“may not reopen ‘ “it is too early to make concrete forecasts but predicted”
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I answered the questions asked.
Interested in your prognosis.
In meantime, let’s all support each other, plan and be agile to making changes.
I wish you well.
Stsy positive, stay strong and stay safe.
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Hold on ye doubters!
Michael will be proved correct to some fair degree, that many branches will not reopen, but I doubt for the reasons he suggests.
The reasons will be as follows; many have simply gone out of business, some will decide they are going change “and try it from home” and others, probably the larger organisations ,will move to more of a “hub” operation covering larger patches from fewer offices and incorporating some of the new tech and working practices we are all experimenting with right now.
But let’s be under no illusion. This current state of the market is a million miles from what is normal and the public will still need and demand “people” to do their business with when the lockdown is over and the boiler of the property market is stoked again.
Plus the fact that the only reason that some of us are just about coping working for home, is that we see it as short term. For the majority, looking ahead, having an office to go to and base themselves from, is fundamental.
But do lets take all we learn that is good and see if it can be applied when the market is busy, because it will be busy when this is ended.
One thing Michael is definitely right about is how we will use portals going forward. It has been nuts for agents to be paying for 3 portals which display the same properties. The one thing all of us will have learned very hard lesson about, is not spending money when it is not needing to be spent. And boy has this crisis highlighted how horrendously expensive Rightmove has been for a very long time. No one needs to spend that ridiculous amount ever again I fact no one can afford to do so going forward.
Stay safe and stay indoors for now.
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Well said.
Article is based on a short interview with the writer not a detailed piece of analysis written by myself.
I agree with your thoughts.
Stay positive, stay strong and stay safe.
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The agency clients he works with haven’t lost sales yet ???? I very much doubt that,
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Hi AgentQ73
Not my words but certainly anecdotal and other evidence from clients and round table industry forums I have been chairing over last few days, indicate far far fewer aborts than may have been anticipated.
With everyone in same boat, it seems most will wait in abeyance. Obviously time will be a factor and confidence around jobs key hence tremendous Government efforts to keep employment levels high.
What is your experience on your sales pipeline?
I wish you well.
Stay positive, stay strong and stay safe.
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What about all of the proper companies that have rateable businesses premises who have now benefited from the £10,000 per branch grant and have out their staff on furlough – they are probably better placed to survive than the one-man-band/bedroom agents who think that just because they put things on the internet, they have a business.
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But £10000 does not scratch the surface cost wise. On one of my shops the rent is £24,000 pa and rates £917 per month. Then you have water, electricity, insurance, maintenance all on top. The cost comes to around 90,000/100,000 before staff but including advertising, ‘it’ , phones software etc.
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Will certainly help but I believe that, once the shocks have been overcome and mitigation efforts have been actioned, business owners will need to turn their attention to recovery and the longer term. I wish you well
Stay positive, stay strong and stay safe.
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Offices will close, but as usual, the so called experts may have been out of agency for too long and forgotten how this works. The office is not the most expensive bill, not by a long way! People cost the most. closely followed by Portals/Marketing. In the most successful long term businesses, people buy people. Please just look at the US and how they carry out Estate Agency (Realty). They still have offices, but not necessarily high street. A lot of the their ‘people’ are self employed and will work from home, but will still often carry out meetings in the office and even do ‘desk’ time in order to capitalise on any walk in’s. You can not manage a team of employed agents without having an office base to work from. We may see some Hub models coming out, but actually I am with Estate Agent Memes above. It will be the high street office, with its 24 hour a day advertising which will come out strongest. Very few small agents will be able to afford the costly marketing that is needed to promote off high street, at home or hub concepts going forward. In fact there may be a few large companies that will not be able to afford this either.
T
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Some good thoughts.
A number of my clients have changed their models in the last couple of years. Still people orientated but less emphasis of need for expensive High St premises. A different proposition so need different management and marketing.
My survey on LinkedIn and Twitter today is, so far indicating that around 50% of agents will move to a one or none portal strategy post covid19
I wish you well
Stay positive, stay strong and stay safe
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I totally get the ‘off the High Street’ approach, but what our industry has already proven is, the hub model covering an area larger than the traditional estate agents in that area does not work. Look at Tesco and Spicer Haart and their abortive partnership. Other than working from a bedroom, which can be quite profitable for a one man band (but difficult to get holiday’s, sickness etc) these people nearly always either close or move into an office of some description, as if you need staff you need a base and a back bedroom really does not work.
The one thing I am wholeheartedly convinced of is that there will always be a requirement for a professional estate agency industry. If I could suggest some more meaningful topics for discussion are 1. Licensing of agents, if we want to be professional and charge accordingly this has to be and 2. The conveyancing process is not fit for purpose. The sales that are currently falling out of peoples pipelines, a proportion of them would have been completed by now if we had a good system. How about having all the relevant legal documents (planning permission, section 106, building regulations etc.) filed with the land registry and then use a title guarantee company to give cover. It would save weeks of work!
Your comments would be welcome.
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I disagree that the hub model has been proven not to work in the same way as I don’t believe that online is dead either.
There will be winners and losers as the market develops.
I do agree that the house buying process needs overhauling which is why I sit, with others and all stakeholders, on the Home Buying and Selling Group which is looking at how things can be improved.
Not easy as so many “vested” interests.
I support better qualification and regulation of the industry but fear that this will be kicked down the road for a while yet as imposing more “red tape” and costs coming out of covid19 may not be workable.
We also still need to agree syllabus and modus operandi.
We’ve had section 22 of estate agents act sitting in abeyance since 1979 – successive governments have always preferred competition over competency.
We s
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Your point about better qualifications and regulation of Estate Agents is well made. It is inconceivable that this will be pushed through any time soon when so many Estate Agents will be on their knees post C-19.
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Spot on FF one negs salary will cover most rental costs outside of the London area and will certainly give you less grief.
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It’s about planning and making choices
I wish you well
Stay positive, stay strong and stay safe
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The team environment and the passing on of sales skills happens best in an office environment and I dont think there can be any argument for that. So if EA sales skill is now no longer important then perhaps these coaching enviroments are no longer needed.I disagree.So agree FF
However it is inevitable some towns prosper and grow and others decline and there will always be those examples that agency will and can work both ways and likewise those that cant support a large number of agents.The dumbing down of fees by some, including some of the major corporates with fees at less than 1.3%, have not helped the traditinal model-but perhps looking at some of the buinsesses responsable and the focus on “conditional selling” they may well be exiting or having to change very soon. Rent/rates are one thing and perhaps rents will fall after all this but other costs of parking and property maintenance etc are just as important-and in older buildings this can be very costly-so it can be the enviromnt ends up being to be counter productive in terms of a motivational enviroment. Portals-I remember when running a branch that every year we met with the local newspapers and negotiated hard as there was always another viable option-too much and you would just pull out.Looks like that may be on the cards again with RM. Why agents dont just back the cheaper option like OTM I just dont know-we have another option-it works pretty well-we dont need others just now. Over the last few weeks we have heard companies say they will not be shutting any branches and in one specific case they were quoted as being looking aquire those that are indeed shutting down. In terms of credability this could well be highly embarassing-I dont see aquasitions being high on the agenda for quite a while yet unless I am completley out of touch.
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Don’t disagree although that doesn’t necessarily have to be within current physical constraints.
I don’t think many agents will stay on all three major portals when renewal time comes – most will, finally, analyse their ROI and take appropriate decisions acootdingly.
Stay positive, stay strong and stay safe.
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