A cull of agencies is “inevitable” as the industry landscape changes, a leading industry figure has said.
Consultant and trainer Michael Day says that his prophecy, made in EYE a year ago, that there would be “blood on the carpet” is coming true.
Writing on his own site, Day says there will be more closures and fire sale disposals to come.
He said a recent report that 7,000 estate agency offices are under financial pressure probably equates to 25% to 30% of the industry.
He said: “The traditional high street operators are suffering particularly due to their high operating costs, which are largely fixed, and they are often very conservative (small c) about embracing change.
“Transactional sale volumes have been steady in recent years at around 1.25m transactions but, when one removes new homes sales which have been artificially bolstered by Government incentives such as Help to Buy, the numbers in the second hand market have reduced and are estimated to be down a further 8% in 2018 over the same period in 2017.
“Lettings activity remains strong but the market appears to be shrinking as a number of landlords are choosing to exit based on greater regulation and potentially reducing yields.”
Day said: “A cull of weaker and inefficient agencies is inevitable and may allow the cake to be sliced a little more generously amongst those who survive.
“Good planning and positive action is needed to mitigate the downsides and take advantage of the opportunities that are still there, if a little harder to find and exploit.
“I expect to see big changes within the property portals too. Rightmove’s current subscription model does not look sustainable and UBS have recently suggested investors should sell rather than buy.
“Zoopla has been acquired by Silver Lake and will, no doubt, see changes although they are more diverse as a business than Rightmove with software and other services.
“Consequently they may be better placed to capitalise and build on change.
“On The Market is growing (albeit by giving the service away free to new agents) and, with pressures on agency costs, may start to do damage to Rightmove and Zoopla if it can achieve significant listing inventory and public recognition.”
Day’s full blog is here:
https://www.integra-ps.com/news/market-update-13.html
So – is there more blood on the carpet to come for agents this year?
I wouldn’t necessarily suggest that Mr Day’s comments, made one year ago- class as ”prophecy”… more a case of stating the obvious.
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So have rightmove got a plan for this? Unless they have worked out that they will make the same from bricks then 1000 estate agents closing they need to block payanyway agents from site.
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Stating the obvious, anything better to report?
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Yes Property Poke In The Eye- I ‘prophesize’ that tomorrow…will be Friday
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I have to say I don’t like the term ‘weaker’ agencies, many of those agencies under huge pressure right now are disadvantaged rather than weak.
Between 88 & 94 the market was against me and I quite literally starved my way through those years , my suits came from charity shops and my wife made and sold Honiton lace so we could eat.
One of my greatest motivations is to level the playingfield for agents not in a position to negotiate discounts and who are facing the pressures of investor funded passive intermediaries.
There will be agents who close but don’t think they are weak.
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30 months ago an agent with 35+ years under his belt was put in touch with me, he was really up against it. We went back to the basics of selling property well and that meant being brave on appraisal visits, standing by all the principles he learned 30 years ago and putting them to devastating effect. I’ve asked Suzanne to hear his story and to tell that story as I believe it’s an inspiration for agents who’ve got the market, their banks and their service suppliers all against them right now.
Those who are following my project know how careful I am to protect it from early copying. One part I don’t mind sharing is that my subscriptions will be based on the local house price index. If prices go up in an area my subs go up in line with prices, if they come down, and in many areas that is very likely, so will my subscriptions.
Copy that!!
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Thank you Robert for sticking up for the smaller Agents.
As one myself, the biggest problem in this market is less volumes means you have far less resources to market your agency…..you have to rely more on recommendations, referrals and new business ‘mining’…..which I do by doing as many viewings as I possibly can myself.
We had a good start to last year, and then it was like someone switched the light off when they called the general election….political uncertainty just stopped our business dead in it’s tracks, with hardly any new appraisals or take ons. Cash flow for the first six months this year was barely enough to cover overheads…..so little money available to pay me.
Looks like we will have a better second half of the year, as long as politics and uncertainty don’t drastically slow it all down again,
Really tough times, but I am determined not to give up…..I just love independent estate agency too much.
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If any other small Agents are going through the same as us, please make contact and let’s swop ideas, systems and strategies. It always just helps to talk.
in@agentv.co.uk
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Again V it is not just the smaller agents I’m sticking up for, some of the big boys in the playground are having a rough time of it right now. I see through the big boy facade and see 800 branches of staff who might have a salary but a lot less control over their future than you do.
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Thank you for sticking up for all full service agents, whether they be small or larger.
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You don’t need full service, estate agents is enough. As I’ve said elsewhere today listing on the internet is not estate agency and I’ll be getting Suzanne to tell the city and the public why.
An eloquent piece in say the FT and any credible news outlet that does not have a vested interest in distruption should suffice.
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Overheads are the biggest killer and it is the mid sized regional and corporate agents that are burdened with high central overheads; and a lack of money to invest in new technologies who are the most vulnerable.
How many 60+ year old directors are there, that can’t find the goose with the golden egg of retirement right now? It must be so frustrating that the corporates are no longer or able to pay over the odds.
The independent agent with low overheads and the ability to react quickly should be the ones who are best placed to survive; so long as they aren’t living beyond their means.
Provide a genuinely better more personal and flexible service and charge a little more is my advice.
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The mark of a well run agency is how management responds to a downturn.
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Hardly news.
Problem with estate agency is a lot of owners are just not very commercially aware.
If you are a good estate agent it does not mean you can run a business. It is a completely different skill set.
A phrase I like is “Cutting your cloth accordingly”
Too many agents only look at the here and now. Make silly choices which hamper them long term.
They also do not have a strategic plan. Other than take properties on and sell them. Naive at best!
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Taking them on and selling them has worked ok for us in the last couple of decades..
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Imagine how well we’d of done if all we had to do was take em on..
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Sadly, that is the truth.
We could adopt the PB model and be financially better off – but our clients wouldn’t.
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I sincerely doubt that!
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So many agents turn up just with that one idea in their head “Take on a property sell it” without any planning.
Recruitment and training if you own an estate agency are the most important, fiscal responsibility, creating a brand, planning, setting out a cohesive marketing plan, Looking at future proofing your business, taking time to see what others are doing in maybe in different cities and towns. Building relationships with the community and developers. Taking time to understand the different options and how they will impact on you. Review fees, contracts, bad debt, renegotiating with suppliers.
The list is endless.
I have so many agents round me i know are living on the overdraft, credit card or keep remortgaging i the hope a “good couple of months” gets them on track.
Then when a good period comes they update their car!
They have high staff turn over, offer very little in the way of service.
I have seen countless agents over my lifetime try and ‘buy’ the market. Low fee, list everything gain marketshare. Fails EVERY time, maybe last 2/3 years at most.
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Look at all the agency trainers.
Mike Day, Richard Rawlings, Julian O’dell, Sam Ashdown and others
All any of them offer is the same old back to basics or a tweek in advertising with some new fad be it facebook or a set of well written letters, to be fair some agents would benefit from this but the truth is 80% of estate agent owners need a course in how to run a successful business.
If any agent was looking at starting a business today, like i was X number of years back i would say spend more time working ON the business than working IN the business. That may mean you need to increase your start up budget to employ a ****** good estate agent from day one.
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I am loving your posts today Smile though I disagree about the trainers. I put Julian O’Dell in front of the whole Jupix staff and then in front of all their customers who could attend our Inspiration and innovation day. Jupix became a better system once Julian inspired and explained agency to the development and support team.
Professional trainers have a polished way of presenting cliché in a way that gets through. I still remember training I did in 1986!!
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The training you did in 1986 is the same training the others are trotting out today, just with a bit of shine on it 😉
The Trainers have a place, but to be fair none of what they offer to estate agents is earth shattering, they are good refreshers but nothing more.
i can see how Juilan (or others) would be of benefit to any third party supplier such as Jupix, because as we have seen numerous times third party suppliers do not understand agency.
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Going back to 1986 Robert, you may have had the valuable privilege of some excellent training from Peter McManus. A truly inspirational Yorkshireman, whose ‘keep you on the edge of your seat all day’ sessions serve me well to this day.
Were it only that he was still on the circuit now.
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Kerchingggg! that’s the chap. How many years have I spent thinking of his name?
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Agreed Smile but unfortunately we live at a time where Monarch Airlines can go to the wall but Ryan Air can thrive. The entire industry has been cheapened in terms of what’s expected service wise while many of us pay a website the equivalent cost of employing a human being.Madness.
Maybe some of us do need to change our attitudes to survive, cheapen the service, automate more, get rid of a skilled workforce, move off the high street. Its such a shame but I’m starting to believe this is where its going.
I won’t be doing any of the above of course, I’ll probably go bang as well but at least i’ll still have my integrity.
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Wardy,
Dont bin the skilled workforce, thats where agents are going wrong. a £1,500 member of staff can easily generate 5k per month if they are treated right, have direction and are inspired.
Some tech such as digital pictures, CRM sytems are good. The truth is it is a people business and owners should be embracing people and service. Owners need a clear idea where they want to get and how they are going to get there.
Exemple for me, I want X income and i do not want to be a salesman, i want a business that works if i am in every day or not.
I have to work back from my income, to figure out how i achive that whilst still maintaing a plan that allows me to work on the business not in it. I dont want to be doing 4 vals a day and managing my staff to book them or sell them. I want people to do this for me. I also want the staff to stay years not months so need to take care of them.
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Sorry i know i am harping on but i do feel passionate about this.
Prime example, yesterday a poster had a link to some leaflets, i clicked the link as looking at ordering some new one.
Pre-designed you can personalise, brilliant. Checked price £450 for 10,000 The guys i use are £200 for print and desgin for 10,000. saving me £250!
And because i save more money in most areas, i can do double what my competitors are.
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Even better is to make a sideline income out of the leaflets, so they pay for themselves and more. That’s something I am working on.
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Rightmove will be the loser in all of this. I know many agents are cutting their packages. If they don’t insist on each PB “LPE” paying them a fee as an individual business – which we have been told they are – then they deserve the incoming drop in share price and profit.
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Interesting debate
BTW I didn’t ask for my original blog piece to be published – I had published and issued to my own subscribers but it was picked up by PIE and run with which is fine
The number of agent “offices” is reducing sharply – lettings portfolios being absorbed into others, consolidation of premises etc – businesses are living, breathing entities but may seem to have little ability to recognise change and, as I think it was Charles Handy once stated about a frog in a pan of water who fails to recognise that the water is getting hotter and eventually boils to death!
My overriding point is the need for businesses to change – well done to Robert BTW on piggy backing on the thread to extol the virtues of his offering which is, at least, offering something different and something for agents to consider.
I do believe the portals, particularly Rightmove, will have to find other ways of monetising their business offerings as subscriptions will clearly be under pressure both from number of subscribers viewpoint – assuming numbers of offices fall as I suggest and, from an affordability viewpoint in the face of other offerings. Also if a big player acquires a small player the subscription revenue will fall as their busying power will mean paying lower levels of subscription.
I will take issue with the comments about training – I don’t actually personally run “off the shelf” sales and lettings training but if I did, and I know some of the other names mentioned do, it would be focusing on personal customer engagement, questioning, building trust and closing – old fashioned? Nah – selling! Too many in today’s industry are simply “order takers” – waiting for the enquiry to come in from a portal or for the phone to ring – pro-activity is key. Getting to the customer early and, despite GDPR, farming one’s database.
Technology obviously has a growing place and people should keep abreast of what innovation is out there. Not all of it solves real issues but some of it can and will.
Differentiation and innovation are key. Less moaning from agents about what Purple Bricks are doing and more concentration on what they as an agent can do.
Best wishes
Mike
BTW I did smile (please) at the comments that all the well recognised agency trainers do is offer a “back to basics” approach and then, later in the thread, bangs on about using leaflets (basically shoving a ran forest through doors to try and win business) – hardly revolutionary – OK of course if it works for you then OK (do you know? how do you monitor?) but it is hardly differentiating oneself from the other dozen agents shoving another rain forest through the doors – what about using guided missle marketing techniques rather than a scatter gun? The real cost of leaflets is usually more about the distribution than the print – don’t forget to work out your own time costs vs other opportunity cost if you are delivering yourselves.
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