Future of estate agency will be customer-led as onliners increase fees, City investors agree

Investors were told yesterday that the future of estate agency will be bricks and clicks – customer, not technology, led and with a strong hint that operators such as Foxtons have got things right.

They also heard that online, or hybrid, agents have been raising their prices – erasing claims about savings for sellers.

The Home Truths seminar, held by City analysts at investment bank Jefferies, was held under Chatham House rules, meaning anonymity for participants. Speakers included Countrywide’s head of retail Sam Tyrer, eMoov’s Russell Quirk, and Mark Goddard, head of property services at Zoopla.

Attendees in the queue were puzzled to see one well-known agent, Bob Scarff, formerly head of Countrywide estate agency, politely denied entry into the room, at the Savoy hotel in London. This was despite Scarff having been invited.

It is rumoured that his being barred from the room was one of the speakers said they would not participate if Scarff were present.

Anthony Codling at Jefferies, reported on the debate last night to EYE: “There was agreement in the room that the future structure of the UK residential services industry will be customer, rather than technology, led.

“In many other consumer facing sectors, a digital channel is not a ‘nice to have’, but a ‘must have’. In order to succeed we believe that agents will need to have lines of communication open outside of the old-school ‘nine to five’.

“Consumers also want to choose which channels of communication they use and transact through; those that offer the fewest channels are likely to attract the fewest customers.”

Codling added: “It was interesting to note that the hybrids have all been raising fees over the last two years, suggesting that the headline grabbing low fees may well be unsustainable and over time will be less of a differentiator.

“Low fees are nothing new in the industry: many traditional agents have launched with low fees, but we cannot think of one which has successfully changed the mould.

“The fact that hybrid fees are increasing in our view demonstrates that consumers are willing to pay for customer service when they fully understand what they are paying for.

“We believe that there will be less fee pressure for estate agents of all types who can clearly communicate their service proposition.

“In this regard a certain high-profile London-based agent comes to mind.”

x

Email the story to a friend

25 Comments

  1. Trevor Mealham

    As with any market. It will come down to supply and access to supply.

    The budget models have to up their game as the £600 to £1,000 models are seeing cheap £99 – £399 entrants

    So why such privacy? Were investors subjected to a play on what the organisers wanted then to hear?

    There’s big investment gone in. Have some investor been encouraged to invest in failing models?

    Who was the person kept out?

    Report
  2. AgentV

    I need to print and frame this story, and put it up on my wall.

    Report
  3. AgentV

    The question is how many more investors still want to burn their money in the vain hope that an unsustainable low fee non disruptive model, that loses millions in order to buy a market share, will make them huge profits.

    If there are any I am starting up ‘Intergalactic Homes’ which will use black holes to conquer the property universe. Far more reaching and totally disruptive (down to the molecular level), we can’t possibly lose. And as far as investors are concerned….. the more black holes we can create…. the more successful we are being

    Report
    1. propertywizzard

      Totally on the ball, your business model will attract millions, I hereby nominate myself as your black hole advisor, please e mail details, if I don’t reply its because I’m surveying a black hole 🙂

      Report
  4. inthefield

    About time these stories started to emerge. PB share price has dropped 10% in the last 2 days and i suspect as soon as this story starts to circulate investors will take the cold view to take their money and run. What USP have PB and the likes got if they haven’t got low fees? Beginning of the end for onliners?.

    Report
  5. Property Paddy

    So what you’re saying is good old fashioned estate agency, like how it was done in the 1700’s, 1800’s, 1900’s and now in the 21st century hasn’t changed a jot ?

    Next you’re be telling us……………….!

    Well you know what I mean.

    Report
  6. Woodentop

    Well hello …. less fee pressure for estate agents of all types who can clearly communicate their service.

    Report
  7. PeeBee

    “Attendees in the queue were puzzled to see one well-known agent, Bob Scarff, formerly head of Countrywide estate agency, politely denied entry into the room… It is rumoured that this was at the request of one of the speakers.”

    Maybe even two speakers… who knows?

    Report
  8. AgentV

    Supposing that you had a truly disruptive model designed to be operated by ‘high street agents’. Wonder what that would be worth.

    Report
    1. Robert May

      £3.774 billion- plus all the vertical opportunities

      Report
      1. P-Daddy

        Quick, invite Jeffries to do a broker note, float it on AIM as Realbricks.com..sorted! £3.774 bn seems conservative!

        Report
  9. Moolamarkie

    Are there any real great surprises here?

    My take on this article is that technology continues to make inroads and as it becomes the new normal there is scope for fees to rise.   There’s always been competition based on fees.  We were always encouraged when taking over a different office or opening a new open to cut fees dramatically, get a board on everything and four to six months down the line, push fees back up.  Easy to do on a local level where the initial cost is absorbed by other offices/parent company.  Harder to do on a national level, as PB have learnt, which is why their fees have risen.

    If the online gang can maintain their poor service and increase fees, surely the traditional agents start to look like good value for money?

    Report
  10. Moolamarkie

    Mark Goddard from ZPG has just posted the following job to LinkedIn.  More consumer based recruting to follow…

    https://zpgcareers.zpg.co.uk/vacancyView.php?requirementId=1122

    Report
    1. PeeBee

      JEEZ – the advert reads like the Lexicon Of Cr@ppy Buzz-Phrases (Volumes 1-infinity…)

      ‘User centricity champion” – I’ve heard it all now…

      Report
      1. AgencyInsider

        I take it that since I have no idea what these all mean I should not go ahead with my application for the post?

        ‘manage the idea funnel’, ‘refine acceptance criteria’, ‘prioritise the features backlog’, ‘backlog grooming (that sounds well dodgy)’, ‘ UX sensitivity’, ‘Conversant in Scrum and Kanban methodologies’ ‘Lean Startup principles’ and ‘multivariate test’

        But since they sound fun I am going off now to polish Scrum and Kanban methodologies. Which polish should I use please? Will a tin of ‘Utter B*ll*cks’ do?

        Report
      2. Mark Walker

        Fighting the desire to re-write that and put it on Indeed…

        Report
      3. Mark Walker

        But really “data acquisition” is the key phrase.  That’s all Zoopla wants to trade in.

        Report
        1. PeeBee

          Some may suggest “data acquisition and redistribution…” be the correct buzz-phrase in this instance…

          Who am I to argue?

          Report
  11. LondonR90

    This happens in every business.

    The influencers hype things up, buy stock, people follow. Share price goes up and they profit.

    When enough has been ripped out and the flood banks cannot hold it any longer they sell up. Then it all crashes.

    The investors who have been fooled and lied to suffer.

    Jeffries is controlling all of this.

    Report
    1. P-Daddy

      They are the brokers who wrote a note that Rightmove in the future could become an online agent due to the data and the number of properties they carry. Does anyone have any ideas on how agents can protect their data and derive income from online advertising on property portals…making sure that city shareholders and others don’t profit from your hard work? Now let me think….

      Report
  12. Eric Walker

    Technology continues to make inroads but is available to all. The USP of the online models was being cheap but the gap is closing. What is left that sets them apart? I am grateful to the ‘Onliners’ as they have made the High Street raise it’s game, but when I started in this business 30 years ago, I was told “Cheap agents go bust”.

    Report
  13. JWVW

    Errrm….Jefferies? Those ultra sharp City brokers used by Zoopla to Inflate their true worth at every possible opportunity? I wonder why the message from this worthless meeting was as it was.

    Report
  14. Robert May

    I have concluded this wasn’t 3 gurus sat there giving  any sort of  meaningful insight into the future, it was  3 firms who need to  convince investors their respective ships are on an even keel. Firms that are more reliant on investment than income.

    Trying to retail a service industry is just stupid!  disruption simply doesn’t work and doesn’t pay,  alienating a customer base and harvesting  BIG DATA? that IS going to end in tears.

     

    Report
    1. PF21

      Robert,

      You say “Trying to retail a service industry is just stupid!” well yes I agree but try telling the CEO of Countrywide she is wrong,

      Maybe she is just beginning to realise it and will she be there much longer? I doubt it somehow.

      PF21

      Report
  15. PF21

    All views my own and do NOT reflect company policy or those of any of the organisations mentioned below!

    Is there such a thing as an “on line agent? Those who use, with an on street office(s) or not, the services of Rightmove, Zoopla and the other one or two smaller portals are all in fact “on line agents, so what is the future?

    We are all becoming “dumb terminals” to the Portal machine and the role of the “Estate Agent” as we know it today will be gone in 10-15 years IMHO.

    Yes there is a role AT THE MOMENT for the “contact” between advertising and completion but that role will change. The role of the on line “dumb terminal” will increase. The shop front will not say “ABC Estate Agents;  but the portal name etc.

    IMHO there will be only a handful of “Agents” otherwise known today as the Portals but the “dumb terminal” will be only a contact point and then again only if the seller does not want to promote their own property.

    Rentals are increasing (you need more than just a dumb terminal for this service of course) and that is another nail in the  “for sale coffin” will the next generation want the hassle of owning their own property?

    Take heed there are changes afoot and you will either be there (a Dumb terminal) be on the square (rentals) or gone!

     

    PF21

    Report
X

You must be logged in to report this comment!

Leave a reply

Thank you for signing up to our newsletter, we have sent you an email asking you to confirm your subscription. Additionally if you would like to create a free EYE account which allows you to comment on news stories and manage your email subscriptions please enter a password below.